Four Facts About Today’s Tanker Award

The defense department has done a masterful job of keeping its tanker deliberations under wraps, so nobody should assume they know what will be announced today at 5:00. EADS expects to win and Boeing does not, but their expectations were confounded the last time such an award was made, and the same thing could happen again. I expect Airbus to prevail by offering a concessionary price that Boeing cannot match, since that is the European company’s typical approach in commercial-transport competitions and has been the core of their tanker strategy since 2006. Whatever happens today, four basic facts are worth bearing in mind.

1. Both of the planes being offered are much bigger than the Eisenhower-era tankers that the Air Force is seeking to replace, and each would provide a more efficient aerial refueling capability. The Airbus A330 can carry more fuel and fly farther than the Boeing 767, while the Boeing 767 costs less to operate and can land more places than the A330.

2. The outcome of the tanker competition probably will not be determined by capabilities. Each of the planes being offered had to satisfy 372 mandatory performance requirements before final bids could be submitted. Since bids were accepted from both teams, the obvious inference was that both planes complied with all requirements.

3. The warfighting effectiveness of the Airbus tanker was rated higher than the Boeing plane using a model called the Integrated Fleet Aerial Refueling Assessment (IFARA). However, the model had to be adjusted so Airbus tankers could accomplish wartime missions, and as a result the Airbus planes were allowed to use bases Boeing was not.

4. Because both planes satisfied mandatory performance requirements and their warfighting effectiveness ratings were not that far apart, cost probably was the key factor determining which team won. That means post-mortems of the tanker outcome will focus closely on how each team’s prices were calculated and compared.

The latter issue will undoubtedly be the centerpiece of any political debate if the Boeing tanker loses. The Airbus A330 is much bigger than the Boeing 767 — 28 percent heavier, with 40 feet more wingspan — so questions will arise as to how the European company could price its plane competitively with the smaller Boeing offering. Boeing proponents will ask not only how Airbus was able to push the cost of producing each plane so low, but also how the Air Force estimated the life-cycle costs of operating a plane that burns over a ton more fuel per flight hour than the Boeing offering (the price comparisons are supposed to include all costs the government would incur from picking one plane or the other). This will inevitably lead to a discussion of recent rulings by the World Trade Organization that Airbus has used illegal trade subsidies to market it planes at prices far below what a commercial company like Boeing could be expected to offer.