Feedback of US Tanker bid – « THE » Boeing’s Challenge

(This is a re-publication of an article dated 8th March 2011)

Feedback of US Tanker bid :

After that @Boeing won the bid, most analysts have come to the same conclusions that I was supporting.

Here’s the full shot of my conclusions on this contract :

KC-46

  • #Boeing had no choice except to win this contract.
  • Otherwise, this would have greatly jeopardized its position towards the Pentagon :

    • Lost of credibility
    • Open-equal with competitors
  • Concequently, its aggressive bid is a real challenge :
    • Risk of overcost : high
    • Risk of delay : average
    • Risk of loss / in-question of the contract (including options): low
    • Commercial image : Large increase
  • If successful :
    • Credibility (towards the Pentagon) : average/low gain
    • International credibility : Large increase (success) / Medium increase (semi-successfully)
  • In case of failure or partial failure :
    • Credibility (towards the Pentagon) : significant decline
    • International Credibility : mid / low fall
    • Commercial image : low fall
  • In case of failure (or partial failure) while EADS NA wins the AAS helicopters contract :
  • This is where EADS has all his playing card. Under the combination of these two conditions, EADS could become the Pentagon’s preference…

    • Credibility of Boeing (towards the Pentagon) : significant decline
    • Credibility of #EADS (towards the Pentagon) : Large increase
    • Commercial image of EADS : average increase
  • … become the Pentagon’s preference, yes, but why?
  • In particular the market for tactical transports aircrafts (cargo aircrafts). Today, the USAF received its last C-17. After the year 2013 it did not order more.
    Due to that, it is reasonable to think that the USAF will launch a proposal bid for a new generation airlifter with first deliveries in 2018…
    At this time, the A400M (note: smaller than the C17) will be reliable and operational in several NATO countries.

  • … A government / military program, why?
  • Actually, the direct impact on the commercial image is less than the business marketing itself.
    However, there are at least 3 reasons for the interest of these companies with military and government contracts:

    • The credibility towards the civilian market (commercial market) is still increasing (this because of the reliance by an authoritative body) and can make a difference.
    • This ensures a long-term book. And multiplication of these contracts provide a « comfortable mattress » in the long term.
    • This helps to develop new technologies and / or acquire full mastery of these technologies.

    (The development of such technology has the advantage of being insured by the government book, larger and safer than a sum of commercial contracts).

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