Summary
Are Northrop Grumman and partner EADS really focussed on the KC-X tanker requirements?
Or is their attention to being in the media spotlight a more pressing need?
Or is their attention to being in the media spotlight a more pressing need?
Analysis
Barely a month has passed since Northrop Grumman was shouted down by the USAF over pricing information handed to Boeing on their failed tanker contest and now EADS wants to join the "criticism parade."
The USAF had categorically stated that the information given to Boeing provided no competitive advantage.
Just as the Mobile, AL-based media systematically fail to highlight the USAF’s position on this sensitive matter, EADS’ CEO Louis Gallois is singing a tune no one wants to hear, much less care about.
One would have thought that as partners, Northrop Grumman would have taken a lead on this to advise its partner “not to go there”, particularly as there is no case to answer.
Undersecretary of Defense, Ashton Carter, rejected out of hand such assertions.
“[We have] examined this claim and found both that this disclosure was in accordance with regulation and, more importantly, that it created no competitive disadvantage because the data in question are inaccurate, outdated and not germane to this source-selection strategy," Carter affirmed.
If Gallois and Northrop Grumman are unable to understand such a premise, then is their participation in this contest actually of any tangible benefit to the USAF, the US Government or the US taxpayer?
Aside from the financial drain on the commercial side announced yesterday (click here), Boeing’s IDS division performed well, providing double-digit growth margins alongside healthy deliveries of both satellites and military airplanes.
This is what EADS and Northrop Grumman should be focussed on challenging as the US Government looks to scale back military expenditure.
But as Boeing CEO Jim McNerney pointed out astutely in the conference call, the WTO ruling implies that all Airbus products are recipients of illegal aid – a salient point I noted just a month ago (click), again, overlooked by Northrop Grumman and the media machine in Mobile, Al, not least because the stark possibility of retrospectively applied punitive penalties that EADS will have to deal with and no amount of “talking” will wash that stain away.
If it is a contest the USAF sought, it’s certainly got one.
Boeing has taken a cautionary approach thus far and aside from McNerney’s comments yesterday, it hasn’t gone through the media to state its case like its tanker rivals seem to continually do.
Only the USAF can determine whether the approaches taken will yield a winning result next summer, but the critical point that needs to be highlighted here is that public quibbling mars everybody.
The quicker Northrop Grumman and EADS stop living in the past and wake up to the reality that there is a new KC-X contest underway, the better it’ll be for the USAF when it comes to finally selecting a KC-135 replacement.
As it stands, the untested unity between Northrop/EADS is doing a fine job of ostracising their capability to compete.
This author consults with leading institutions through GLG
Analyses are solely the work of the authors and have not been edited or endorsed by GLG.
