Dual Sourcing Tanker Unfeasible, Wynne Says

Sept. 20, 2007 — -- Air Force Secretary Michael Wynne said Sept. 19 that the service cannot afford to split the acquisition of its next fleet of aerial refueling tankers between Boeing and Northrop Grumman bids because of expected annual orders.

"We still think we can't afford it," Wynne told a briefing organized by the Center for Strategic and Budgetary Assessments on Capitol Hill. "If we have to buy seven-and-a-half [annually] from each company, we're in trouble."

The Air Force plans to spend about $3 billion per year on recapitalizing the aging KC-135 fleet with 12-18 new tankers each year at peak production (See related story, page 2).

Loren Thompson of the Lexington Institute, in a Sept. 18 paper that Wynne acknowledged in his speech, criticized an Alabama delegation's proposal for the Air Force to dual-source the fleet. The lawmakers assert it would offer the Air Force the best features of both planes. "But such 'dual sourcing' is a bad idea that would waste billions of dollars without enhancing the performance of the aerial-refueling fleet," Thompson said.

"Mixing and matching this menagerie to cope with rapidly unfolding contingencies would be a nightmare for war planners and logisticians, potentially leading to a loss of life," Thompson said in a missive purporting dual sourcing would raise purchase and operating costs and lower fleet utilization. "So, Congress should stick with the plan: run a rigorous competition and then buy the best plane, not both of them."

But Jacques Gansler, a former Pentagon acquisition chief and now head of the University of Maryland's Center for Public Policy and Private Enterprise, said in a July presentation that the "ever-present threat of losing business to a competitive producer is a most effective performance inducement."

While the typical belief is dual-sourcing costs more, history refutes this, he contends, and Gansler points to the so-called F-16 engine war and cruise missiles among other examples. Low nonrecurring investment, hot production lines and in-place global logistics infrastructure of both Boeing and Northrop partner Airbus base aircrafts would mean the $100 billion KC-X plan for 179 aircraft could see $17 billion in savings over 20 years versus a $46 billion increase from single sourcing. Dual sourcing also increases the likelihood of congressional support over that time, Gansler said.