BACK ON TRACK

The U.S. Air Force's replacement tanker program has languished for two years while enduring a blizzard of analyses, but KC-X is finally being launched with a contract award expected in mid-2007.

The program will contain a few surprises. The contract award date already involves a slide of about three months--from spring 2007 to summer--beyond earlier projections. In addition, the initial request for information (RFI) will ask for input from service providers as well as prime contractors. The former are companies that would supply (on a pay-by-the-hour basis) tankers and crews for training, test and other missions conducted in the U.S. That would free Air Force aircraft and crews for overseas deployments and could reduce the number of tankers the military would need to buy. The RFI is expected to be released during this week's Aerial Refueling Systems Advisory Group conference in San Diego.

"The inclusion of service providers represents a shift in Air Force thinking," says an aerospace official with insight into the program. The military has some experience with the concept. A contractor is currently providing a tanker to the U.S. Navy for day-to-day refueling training. The question is, where would the service providers get tanker aircraft, and would those aircraft have to be new with all the advances associated with the replacement Air Force tanker? If new tankers are required, it could provide new customers for the prime contractors.

Kenneth J. Krieg, undersecretary of Defense for acquisition, technology and logistics, signed the Acquisition Decision Memorandum, which directs the Air Force to begin the requirements and acquisition process. That will include soliciting replies from industry to the RFI.

In addition, the Air Force will have to refine operational capability requirements and develop an acquisition strategy. That means planners also will have to decide whether it wants its tankers to carry cargo in addition to fuel. That decision, in turn, may dictate whether the service buys large or medium-size tanker aircraft. Given the Air Force's mandate to search for the lowest cost, early predictions are that the choice will fall on the medium-size design once again. However, contractors are still expressing confusion about whether the Air Force will differentiate between medium and large tankers by gross aircraft weight or wingspan.

The Air Force's cryptic tanker recapitalization memorandum gave rough timelines but no numbers for the program. It reemphasized the KC-135's 45-year-old age, but said the Defense Dept. has "sufficient time to structure a traditional competitive program to gain the best value." The document called for RFI release by the end of April, a draft request for proposals in fall 2006, a final RFP in January 2007 and, finally, a contract award during the summer of 2007.

To fund the program, the Air Force is asking for $239 million in Fiscal 2007. When added to residual 2005-06 funds, that could provide a total of $428 million to start development. In subsequent years, planners want $1.2 billion in Fiscal 2008 to start three tankers, $2.1 billion in Fiscal 2009 for seven, $2.1 billion in Fiscal 2010 for eight and $3 billion in Fiscal 2011 for 12. Those amounts include military construction, research and development costs, as well as operations and maintenance charges. The Air Force wants to stabilize production at about 15 aircraft per year. The first order is still expected to be for a lot of 100 tankers.

Eventually, the Air Force would need to replace about 500 KC-135s with a smaller number of new aircraft. The primary contenders for the contract are certain to be the team of Northrop-Grumman and EADS, offering the Airbus-built KC-30; and Boeing, which will again present its KC-767, versions of which are operating with the air forces of Japan and Italy. These are considered medium-size designs. However, the recently completed analysis of alternatives raises the option of buying large tanker aircraft such as the A340 and 777 that could also carry significant cargo payloads. In fact, Australia chose a larger Airbus design (an A330 with larger A340 wings) over the 767 because it could carry larger loads of fuel and cargo simultaneously over greater distances, say Australian acquisition officials. That was possible because the Airbus design provided a below-decks baggage compartment that could handle palletized cargo. It was also cheaper at the time of the Australian decision because the U.S. tanker program had stalled over ethics violations related to the acquisition program. In addition, the EADS program to build a refueling boom was thought to have less risk than Boeing's program to add two hose-and-drogue refueling pods to the wings, the Australians said.

The new tanker program could produce hundreds of jobs (perhaps up to 1,000 new positions, says an EADS official) in Mobile, Ala., where Northrop Grumman and EADS are building new facilities, or in Wichita, Kan., where Boeing has just announced a new round of defense-related layoffs. Boeing made a cut last week of 900 positions from its Integrated Defense Systems workforce. That's in addition to 330 previously announced slot reductions. None is related to the long-delayed tanker program, say Boeing officials. Boeing's Wichita facility does work on designs being considered for the competition. Moreover, the site is already involved in converting 767s into tankers for the Italian and Japanese air forces.