Appel d'offre USAF pour avions ravitailleurs

FRANKFURT and LONDON — EADS plans to decide whether it will bid for the U.S. Air Force’s tanker within the next two weeks, Airbus CEO Thomas Enders told Aviation Week. But at this stage, Enders is “still skeptical” if EADS should go ahead with a bid.

Enders says that “we will not submit a dumping offer,” pointing out that the billion euros in cost overruns in the Airbus A400M program leaves the company less financial room to maneuver. But he hopes to negotiate a package with a U.S. defense electronics supplier that is more favorable than the Northrop Grumman proposal.

Views are split within EADS over the wisdom of moving forward given the wording of the current request for proposals (RFP). The Pentagon has held out the prospect of giving EADS more time to submit a bid, something EADS CEO Louis Gallois has indicated would be a prerequisite. However, the U.S. Defense Department has turned a cold shoulder to the idea of modifying the current RFP. EADS officials have been vague about whether an RFP change is required for them to consider making a prime contractor offer.

Northrop is said to have built significant profit margin into the former tanker offering because it was not core to its strategy and relatively small in terms of its overall volume. If EADS North America managed tonegotiate a supplier deal significantly below that, it could very well have a chance to come close to the Boeing offer in terms of pricing, Enders says, making it difficult for the Pentagon to discount the EADS offer.

Boeing officials have said they are still preparing their proposal, including pricing data, assuming they will face competition.

One industry official suggests an EADS announcement could come this week. Enders did not disclose which U.S. supplier EADS is talking to about forming a teaming relationship. But industry sources say Raytheon or L3 Communications are much more likely options than Lockheed Martin; Lockheed Martin and EADS were in talks several years ago about teaming for the U.S. Navy maritime patrol program that led to the Boeing P-8A, but the trans-Atlantic discussions faltered before a bid was submitted. As EADS canvasses the U.S. marketplace, even BAE Systems North America is being named by industry officials as a potential partner. BAE Systems is already much further established in the U.S. than EADS.

A U.S. team member is seen as important to handle some of the systems integration needs associated with the tanker program. However, an industry official says that EADS could meet Buy America rules in terms of U.S. content on the A330-based offering even without an American partner

Le Pentagone veut sonder les intentions d'EADS sur les tankers

WASHINGTON (Reuters) - Le Pentagone doit savoir si EADS a réellement l'intention de préparer une offre pour le contrat de 179 avions ravitailleurs avant de décider de prolonger le délai de l'appel d'offres au-delà du 10 mai, déclare le chef d'état-major de l'US Air Force.
Si tel était le cas, une prolongation "modeste" permettrait alors sans doute de s'assurer que les nouveaux appareils soient le produit d'une véritable compétition, a précisé le général Norton Schwartz à des responsables de l'industrie de la défense à Washington.
Il a ajouté que le Pentagone discutait avec EADS de sa requête d'une prolongation de l'appel d'offres de 90 jours et affirmé qu'une prolongation mesurée du délai n'aurait pas d'incidence sur l'actuelle flotte de tankers KC-135, lesquels ont une moyenne d'âge de 50 ans.
Cette prolongation pourrait permettre à EADS de présenter éventuellement une offre en solo après le désistement de son associé Northrop Grumman au motif que le cahier des charges avantageait indûment Boeing, selon lui.
"Il faut qu'il dise qu'il est sérieux (dans ses intentions) et alors le département (de la Défense) décidera du délai à accorder", a déclaré Norton Schwartz à Reuters, après ses déclarations aux responsables industriels. Il a ajouté que la question n'était pas encore réglée et il n'a donné aucun ordre d'idée du temps que prendrait la décision du Pentagone.
Northrop Grumman et EADS avaient remporté l'appel d'offres en février 2008 mais le contrat avait été annulé sur plainte de Boeing, qui lui-même avait remporté le tout premier marché des tankers, avant de voir le Congrès annuler le contrat.

EADS réfléchit au délai de 60 jrs proposé pour les ravitailleurs

WASHINGTON (Reuters) - Guy Hicks, porte-parole d'EADS pour l'Amérique du Nord, a déclaré mercredi que l'avionneur européen allait réfléchir à la proposition du Pentagone de prolonger de 60 jours le délai de l'appel d'offres pour le contrat géant des avions ravitailleurs.
"Puisque le département de la Défense a signifié son intérêt pour une participation d'EADS en tant que primo-contractant dans l'appel d'offres pour les ravitailleurs KC-X, le groupe va étudier avec attention les nombreuses demandes nécessaires pour participer", a-t-il dit.
"Nous avons indiqué fermement qu'une prolongation de 90 jours serait le temps minimum nécessaire pour préparer une proposition responsable pour ce programme de 40 milliards de dollars. Nous allons étudier la décision du département d'offrir un délai de 60 jours".

* L-3, No. 8 Pentagon supplier, declines comment
* Top L-3, EADS officials served in Pentagon at same time
By [url=http://blogs.reuters.com/search/journalist.php?edition=us&n=andrea.shalal.esa&]Andrea Shalal-Esa[/url]
WASHINGTON, April 6 (Reuters) - Europe's EADS (EAD.PA) would likely choose L-3 Communications Holdings Inc (LLL.N) as a key supplier, should it decide to challenge Boeing Co (BA.N) for a U.S. aerial refueling contract worth up to $50 billion, according to analysts and sources closely following the matter.
"Based on what we know today -- and things can change -- it appears that L-3 seems to be the likely subcontractor," said Scott Hamilton of Leeham Co, noting that there is a large faction within EADS that wants to move ahead with a bid.
Analysts say a strong teaming agreement could help EADS in what is seen as an uphill battle against Boeing, maker of the current fleet of KC-135 aerial refueling tankers, especially given simmering protectionist sentiment among U.S. lawmakers.
EADS, the parent company of Airbus, has been in discussions with several companies, including L-3, Raytheon Co (RTN.N) and the U.S. unit of Britain's BAE Systems Plc (BAES.L), the sources said.
But BAE Systems, which owned 20 percent of Airbus -- a unit of EADS -- until 2006, would not join the EADS team, according to industry sources not authorized to speak on the record. BAE declined comment.
Raytheon had no immediate comment, but the company has few if any major aircraft integration operations in North America, having sold its E-Systems unit to L-3 in 2002, said Loren Thompson with the Virginia-based Lexington Institute.
"From what I know, L-3 would appear to be the most likely candidate," said Thompson.
L-3 spokeswoman Jennifer Barton said the New York-based company does not comment on rumors or speculation.
EADS declined comment on the latest chapter in a long-standing rivalry between Boeing and Airbus.
This is the Air Force's third attempt to begin replacing its aging KC-135s, which are nearly 50 years old on average.
EADS was a key subcontractor to Northrop Grumman Corp (NOC.N) when the team won the last tanker competition in February 2008, but the Pentagon canceled the deal months later after government auditors upheld a Boeing protest.
EADS DECISION AS SOON AS NEXT WEEK
Northrop withdrew from the competition last month after concluding that the revamped terms of the Air Force competition were skewed to favor Boeing's smaller 767-based tanker versus the larger A330-based tanker that Northrop and EADS were offering.
But the Pentagon told EADS, which would have provided about 87 percent of the plane's content, that it could bid as a prime contractor. Last week, defense officials said they would give EADS 60 extra days if it agreed to bid -- a significant extension, but short of the 90 days EADS had sought.
EADS, which had also wanted some changes in the request for proposals, is considering the Pentagon's offer. Industry sources expect a decision from EADS as soon as next week and say any announcement could name a U.S. partner.
Boeing last week said it was disappointed that EADS was trying to delay the tanker competition further and was reviewing its options. Some analysts said that suggests Boeing could protest the competition terms if EADS entered the fray.
Analysts said a teaming agreement would clearly benefit L-3, which has been trying to expand its profile as a major player in the U.S. defense market. L-3 was the Pentagon's No. 8 supplier in fiscal 2009, with $7.1 billion in prime contracts, according to www.usaspending.gov, a federal website.
L-3 is the prime contractor on the Pentagon's Joint Cargo Aircraft, the C-27J, but it is partnered on that deal with Alenia, a unit of Italy's Finmeccanica SpA (SIFI.MI).
That plane is "far smaller and less complex but certainly along the same lines" as the refueling tanker, Hamilton said.
EADS North America Chief Executive Sean O'Keefe has also known Robert RisCassi, the retired Army general who runs L-3's Washington office, for years.
RisCassi was vice chief of staff of the Army when O'Keefe was the Pentagon's comptroller in the late 1980s.
EADS NEEDS DOMESTIC POLITICAL COVER
But Lexington's Thompson said L-3 lacks the stature of bigger prime contractors like Northrop, Boeing or Lockheed Martin Corp (LMT.N) to undergird an EADS bid for the tanker work.
"EADS really needs a major aircraft integrator ... to give it domestic political cover in the United States. They don't really need a partner at all, but an American imprint for purposes of presenting themselves to the political system."
An agreement with L-3, a second-tier company, would not allow EADS to "present their team as having a big American footprint," Thompson said. "It will be obvious the government is buying a European plane if EADS prevails," he said.
EADS is the prime contractor for a large Army helicopter program, and also builds equipment for the U.S. Coast Guard and Department of Homeland Security.
But Boeing supporters in Congress argue that EADS should not be allowed to bid for the tanker work given a recent World Trade Organization ruling that the company benefited from illegal government subsidies, including aid to develop the A330 wide-body that it would pit against Boeing's 767 tanker.
The trade organization is due to rule on a European Union counter claim about illegal aid to Boeing in coming months.
Any EADS bid would also include many of the same companies that were involved in the joint Northrop-EADS bid, including General Electric Co (GE.N), Honeywell International Inc (HON.N), Rockwell Collins Inc (COL.N), Goodrich Corp (GR.N), and the U.S. unit of Britain's Cobham Plc (COB.L). (Additional reporting by Tim Hepher in Paris and Rhys Jones in London) (Reporting by Andrea Shalal-Esa, editing by Gerald E. McCormick)

Analyst: EADS can't win tanker contract without subsidies
Airbus parent European Aeronautic Defence and Space Co. cannot win the U.S. Air Force's aerial refueling tanker contract without unfair subsidies from European governments, a defense analyst wrote Monday.

While EADS wants more of a foothold in the U.S. defense market, it can't throw money away while it supports the troubled A380 and A400M programs, and develops the A350 XWB, wrote Loren Thompson, chief operating officer of the non-profit Lexington Institute. "Some simple arithmetic suggests there's no way EADS can afford to bid on the tanker unless it is expecting a sizable infusion of money -- meaning a subsidy -- from European governments."

(Note: Boeing funded Thompson's recent report, "European Aircraft Subsidies: A Study Of Unfair Trade Practices")

EADS has not yet said whether it intends to bid on the tanker contract following former tanker partner Northrop Grumman's decision last month to drop out of the contest.

Thompson noted that Northrop pulled out because it didn't see how its larger tanker could compete, given criteria that favor the cheapest tanker that meets basic requirements and penalize the larger plane for using more fuel and requiring more alternations to runways and hangars. He calculated that the EADS tanker would cost around $9 billion more -- $50 million per plane for 179 planes -- before modifications and not accounting for extra fuel and construction costs.

"The bottom line is that EADS can't bid successfully unless European taxpayers are willing to be socked with a huge bill to make their planes price-competitive," Thompson wrote. "Even if the Europeans are willing to pay that bill, it isn't so clear that the U.S. Congress would allow such transparently unfair tactics to be used in winning a major weapons contract."

Boeing-friendly members of Congress already are pushing the Pentagon to penalize any bid of an Airbus A330-based tanker based on a recent World Trade Organization ruling that European governments improperly subsidized Airbus programs, including the A330.

UPDATE: Norm Dicks and William Lynn comments added below.
L-3 Communications, which as been viewed as EADS' most-likely new American partner for a U.S. Air Force aerial refueling tanker bid, has backed away from joining the effort, Reuters reported Thursday, quoting unnamed sources.
Airbus parent EADS requested a 90-day extension of the tanker bid deadline following former tanker partner Northrop Grumman's pullout from the contest last month. On March 31, the Pentagon announced it would push the deadline by 60 days if EADS gives formal notice of its intention to make an offer. EADS has not yet made such a commitment.
One big concern of potential U.S. partners is the political fallout possible from teaming with EADS against politically connected Boeing just after a World Trade Organization ruling that European governments improperly subsidized Airbus aircraft, including the A330, which is the basis for EADS' tanker.
In fact, House Defense Appropriations Subcommittee Chairman Norm Dicks, D-Wash., told reporters Wednesday that he "would hope" that U.S. defense companies would not partner with EADS on the tanker, The Hill newspaper reported.
The Hill quoted Deputy Defense Secretary William Lynn saying EADS is on "the verge of a decision" on whether to bid.

PARIS/WASHINGTON (Reuters) - Airbus parent EADS is poised to bid alone for a U.S. refueling plane deal valued at up to $50 billion after failing to recruit L-3 Communications Holdings or another major company as a key supplier, sources familiar with the matter said.

EADS will still be backed by a big team of suppliers in its challenge to Boeing Co, including engine maker General Electric Co, Honeywell International Inc and Rockwell Collins Inc to name a few, said the sources, who were not authorized to speak on the record.

But the team will not include -- at least for the time being -- a U.S. company that would have done some classified work on the A330-based tanker and helped to manage the huge program, the sources said.

"EADS will be on its own for now," one source familiar with the matter said, following weeks of debate triggered by the loss of its original partner Northrop Grumman Corp

An announcement was expected this week, possibly as early as Tuesday, said the sources.

Guy Hicks, spokesman for EADS' U.S. arm, said the company continued to examine its options and declined further comment.

EADS, spurred by Pentagon officials to consider a solo bid, had talked with L-3 and other companies after Northrop withdrew from the politically-charged competition last month, arguing that revamped rules favored Boeing's smaller 767-based tanker.

EADS and Northrop, which had been the prime contractor, won the last tanker contract in February 2008, but the Pentagon canceled that deal after government auditors upheld a Boeing protest and faulted the Air Force's handling of the contest.

EADS has a separate U.S. unit that can do classified work on the program, but had hoped to find a large U.S. partner with security clearances and certifications for some of the detailed work involved, especially given the tight deadline for submitting its bid, the sources said.

But EADS was forced to rethink its plans when L-3 cooled on the deal, with at least one source suggesting that L-3 had come under political pressure to skip the deal.

Republican Senator Jeff Sessions on Monday accused Norm Dicks, a Democratic congressman from the big Boeing state of Washington, of trying to intimidate EADS' would-be partners.

"I am deeply disappointed that the Chairman of the House Defense Appropriations Subcommittee, Norm Dicks, would publicly engage in political intimidation to restrict competition on any contract," said Sessions, who comes from Alabama, the state where EADS would assemble the tankers if it wins the latest contract.

Dicks last week was reported as saying that he hoped U.S. firms would not team with EADS, although his spokesman said Dicks was merely questioning why other companies would see the business case differently than Northrop had.

Dicks and other Boeing supporters argue that the Pentagon should not extend the bid deadline for tankers given a recent World Trade Organization ruling that Airbus received unfair civil subsidies for its airplanes, including the A330.

Several sources said EADS remains in contact with all potential parties pending a bid.

"I would not rule out that they will get a partner at a later date, but at this point, they really needed to give the Pentagon and the world an indication of what their intentions are," said Scott Hamilton, aerospace analyst with Leeham Co.

The Pentagon has said it will extend the current May 10 deadline until July 9 if EADS agrees to enter the competition.

That gives EADS executives limited time to prepare its proposal, a document that could wind up being 20,000 to 30,000 pages, although Boeing has argued that even a 60-day extension is unnecessary.

Defense consultant Jim McAleese said EADS had little choice but to bid for the work. "The reality is that that there will not be another opportunity of this importance in the lifetimes of that management team," he said. "This is the biggest opportunity they will have."