By Sharon Weinberger
PARIS–The head of EADS North America said a potential decision by the Defense Department to award a multibillion dollar contract for aerial refueling tankers based purely on best price would be a “flawed concept.”
EADS North America CEO and Chairman Ralph Crosby’s remarks, made here Saturday at a company-sponsored media seminar, were a preemptive strike against the possibility that the Air Force could go with what is being called the “lowest price technically acceptable” proposal to replace its aging fleet of aerial refueling tankers. Such a process, which would set a minimum threshold for the aircraft’s capabilities, would award the lucrative contract to whichever competitor offered the lowest price while meeting the service’s basic requirements.
Such an approach, if pursued, would presumably favor Boeing‘s [BA] less expensive 767 aircraft over the Airbus 330-based tanker, which is being offered by Northrop Grumman [NOC] and EADS. Crosby insists that even if the unit cost of the Airbus-based tanker were more expensive, it would provide best value because of the A330’s greater range and fuel off-loading capabilities.
Though the request for proposals isn’t expected until later this summer, Crosby told reporters there was “lots of discussion” going on about making a determination based on price alone. “That works for pencils and tables, but I’ll tell you with regard to benefit of the armed forces of the United States, it’s a flawed concept,” he said.
It’s unclear, however, if the low-cost option is being seriously considered. “These are the issues currently being discussed,” Crosby said. “I don’t know how they will come out in the [request for proposals] RFP.”
The Air Force, for its part, denies that it is considering such a move. At a hearing earlier this month, Air Force Secretary Michael Donley said the service was not considering awarding the contract based only on price. “[W]e always, we always, balance capability and cost in our acquisition process,” he told a congressional panel when asked about the issue. “We’ll continue to do that going forward.”