Seattle PI
By Aubrey Cohen
The Air Force’s recent choice of Boeing’s 767-based aerial refueling tanker for a 179-plane contract isn’t necessarily the last triumph for the 767, Boeing Commercial Airplanes President and Chief Executive Jim Albaugh said Friday.
“We’re not done. We’re going to build 179 of these, and then we’ll build another 179 for the U.S. Air Force,” he said after a celebration of the company’s tanker win with U.S. Reps. Norm Dicks and Rick Larsen, both D-Wash. “My guess is there are a hundred (orders) out there internationally.”
Just as the new tankers will replace Boeing 707-based KC-135 Stratotankers, there are other 707-based military aircraft still in operation, such as the E-3 Sentry airborne warning and control system (AWACS) and E-8 Joint STARS, Albaugh added. “They all need to be re-platformed and I think this is a great airplane to do it on.”
That appears to have been part of Boeing’s calculation in making a tanker bid that is aggressive by its own admission. But Albaugh rejected competitor EADS North America’s contention that Boeing’s bid was too low to make a profit.
“I don’t like losing, but I’d rater lose than win and lose money. We’re going to make money on this airplane,” he said. “We took bilions of dollars out of the bill of materials, and we have a profit margin built into this program that, while standing here today might not be as attractive as we have on other programs, over time I think we can make this program very profitable.”
Part of ensuring that profit will be protecting against a creep in the scope of work, Albaugh said. “(I)f additional requirements are needed by the Air Force, that’s fine. But they’re going to have to pay for it.”
During the celebration, Dicks congratulated Boeing for its “courageous bid,” joking: “I didn’t realize how courageous it was until Airbus was explaining it” in announcing it wouldn’t protest the award.
But Friday was mostly a celebration of Dicks’ decade of work promoting Boeing for the tanker contract.
“I think if there’s one singular person among all the people who worked so hard on this program, who allowed us to win it, helped us to win it, it’s Congressman Norm Dicks,” Albaugh said during the ceremony.
“Every time that we had something that had to get done Norm was there,” Albaugh said, noting that Dicks pushed Boeing to protest the Air Force’s 2008 choice of the then competing offering from a Northrop Grumman-EADS team and made sure that the Government Accountability Office “did their work” in reviewing that award and finding flaws that led Defense Secretary Robert Gates to declare a new competition.
“About three weeks later, the Air Force came out with a new set of requirements, and it was a set of requirements written around a big airplane,” Albaugh said. “Norm cried foul and the Air Force withdrew that set of requirements.”
Northrop sat out the new competition because it saw the final requirements as favoring Boeing’s smaller tanker, which generally costs less, requires fewer modifications to hangars and runways and, most notably, burns less fuel.
“Key in our winning this competition was Norm calling the Air Force and telling them that they had to look at the life-cycle cost of this airplane not over 25 years but over 40 years,” Albaugh said. “I think that one small change was instrumental in our winning this program.”
The 767-based tanker will use $11 billion to $36 billion less fuel over those 40 years, Dicks said.
“I wanted 50 years,” he said. “I said: ‘Hey, you’ve got these KC-135s that are 50 years old now. They’re going to fly, some of them, until they’re 80 years old. Why not 50?’ I couldn’t sell that, but at least we got 40.”
Dicks said he also talked then House Defense Appropriations Committee Chairman John Murtha, D-Pa., out of promoting a split buy between Boeing and EADS. And he said he and Larsen plan to push to accelerate tanker production to 24 a year.
While Dicks got the biggest chunk of love Friday, Albaugh called Larsen the left hand to Dick’s right in the tanker one-two punch. He also noted that Larsen, whose district includes the Everett plant, pushed a measure that would have required the Air Force to account for illegal subsidies to Airbus in the tanker competition (with Boeing’s win, that never came into play).
One reason for Friday’s celebration was that Dicks and Larsen missed the parties the day Boeing won the contractand the day after that, although Dicks spoke by phone.
“How many times are we going to celebrate this,” Larsen asked Friday. “Forever.”
