Boeing has won the KC-X competition and been awarded a $3.5 billion contract for Engineering and Manufacturing Development (EMD) of the 767 NextGen Tanker, including four aircraft. Follow-on contracts to procure 175 production aircraft in 18 lots will be worth at least $30 billion. The new tanker will be designated KC-46A and the first 18 are planned to be in service by 2017. Boeing said “the Air Force has chosen an American-built tanker...that meets all the requirements at the lowest risk...and the best value.” EADS North America expressed “disappointment and concern” over the decision, but did not immediately commit to a formal protest, pending a debrief by the Pentagon.

Deputy Defense Secretary William Lynn said both contenders met the mandatory 372 requirements, but Boeing was “the clear winner.” Under the competition rules, a further 93 nonmandatory requirements were therefore not taken into account. These were expected to favor the larger EADS/Airbus KC-45A (A330MRTT). But so were two of the three mandatory adjustments to the bid prices (fuel burn and the IFARA operational scenario). AIN therefore concludes that, to ensure ultimate victory, Boeing’s unit price offer for the smaller 767 was sufficiently lower than that of the A330MRTT. The latest KC-X competition was much more price-driven than the previous contest, which was won by the A330MRTT, but overturned by a Boeing protest to the Government Accountability Office (GAO). Also, it seems, size did not matter so much this time.

Boeing must now move efficiently to integrate the new cockpit design and refueling system to the 767, since the contract will be fixed-price incentive. This was another change from the previous competition–and one that is thought to have led to Northrop Grumman’s decision not to front the EADS/Airbus bid for KC-X Round Three.