DoD Buzz

EADS Steps Gingerly To KC-X Bid

In a move that could make for one of the most exciting defense procurements in modern history, EADS formally confirmed this morning that it is considering an independent bid on the KC-X program.

The press statement said that the Pentagon "indicated" yesterday that "it would welcome a proposal from EADS North America as prime contractor for the KC-X tanker competition." In a bit of masterly understatement, the company notes that, "This is a significant development."

But the company, known for its political attennae, does not go overboard. Instead, it very carefully reminds everyone that the same factors that led Northrop Grumman to drop out of the competition remain in force. The press statement says that the Pentagon's positive noises are "a positive sign that the DoD seeks competition, it does not address EADS’ underlying concerns that the RFP clearly favors a smaller, less capable aircraft, and that the additional combat capability offered by our system may not be fully valued."

If the Pentagon is serious about encouraging EADS to bid it should offer "a significant extension to the period within which to prepare and submit a proposal," EADS says. And even then, the company may not bid unless the RFP is amended. If Robert Gates and Ash Carter are serious about encouraging another company to bid on KC-X, they will probably have to reinject some form of a best value proposition in the RFP. Given how strongly our closest NATO allies have reacted to Northrop's decision to drop out of the tanker competition, there may be good reason for the Pentagon to rethink the tanker RFP. This will highlight the essential conflict between strict rendering of military requirements and the capability approach, which takes best value into account. Which way the Pentagon tilts will be closely watched by the defense companies and our closest allies for very different reasons.

Note to Buzz readers: Senior Air Force, OSD, Capitol Hill and EADS officials read every word we write on this subject, so if you want them to know what you think post away and tell 'em!

Below is the EADS press release in full:

EADS will assess new situation on US Tanker Request for Proposal Leiden, 19 March 2010 – Yesterday the US Department of Defense (DoD) indicated it would welcome a proposal from EADS North America as prime contractor for the KC-X tanker competition. This is a significant development. EADS is assessing this new situation to determine if the company can feasibly submit a responsive proposal to the Department’s request for proposal (RFP). And while this development is a positive sign that the DoD seeks competition, it does not address EADS’ underlying concerns that the RFP clearly favors a smaller, less capable aircraft, and that the additional combat capability offered by our system may not be fully valued. An important prerequisite for our consideration of entry into this competition will be a significant extension to the period within which to prepare and submit a proposal. EADS welcomes the DoD’s recent statement which indicated a willingness to extend the timeframe. Though this is essential, it is only one factor in making a decision for EADS to compete. In the end, the company will only submit a proposal if there is a fair chance to win, after evaluating all relevant factors.
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