KC-767 Common Widebody Tanker & Transport
In March 2001 The Boeing Company formed a new organization focused on providing air-refueling tanker aircraft to military customers around the world. The 767 Tanker Programs organization is part of the fast-growing Boeing Military Aerospace Support business, which offers comprehensive support products and services, including aircraft modifications.
The Boeing 767 family of aircraft, specifically the –200C/F, 300C/F and –400C/F models, have been proposed by Boeing as a replacement for the KC-135 family of aircraft, and have been vigorously marketed by Boeing. In terms of offload performance, the proposed Boeing KC-767 modestly outperforms the standard KC-135R. Costs for used 767-300ER aircraft vary between $51M and $88M, depending on the age and condition of the aircraft. In terms of speed its Mach 0.8 performance compares to the Mach 0.85 or better performance of the KC-135 aircraft.
The KC-767 will be the world's newest and most advanced tanker. It can offload 20 percent more gas than the KC-135E and unlike the E-model, can itself be refueled in flight. It will also have the capability to refuel Air Force, Navy, Marine and allied aircraft on every mission. At maximum takeoff weight, the KC-767A requires 4,000 feet less runway than the KC-135E. Besides its role as a tanker, the KC-767A will be configured as a convertible freighter and can carry 200 passengers or 19 pallets of cargo.
Equipped with both the proven Boeing-developed boom-and-receptacle and the hose-and-drogue aerial refueling systems, the 767 Tanker/Transport offers maximum operational flexibility along with full European Union and NATO interoperability. The 767 Tanker/Transport is really four aircraft in one. While maintaining its tanker capability, the aircraft's uninterrupted cabin floor can be configured for: Passenger; Freighter; Convertible (passenger or freighter); and Combi (passenger and freighter).
The 767 Tanker/Transport is a low-risk solution that brings to bear the unique capabilities of the world leaders in tanker design and integration: The Boeing Company and Alenia Aerospazio/Aeronavali, which together have almost 2,000 new-production tankers and tanker modifications to their credit. The new aircraft combines the demonstrated performance of the 767 commercial transport with a proven, fully integrated tanker system.
KC-767 Lease Deal
The current tanker fleet averages over 40 years in age, and yet it is the backbone of US ability to project force. The Air Force would need to replace these aircraft eventually, and the FY2002 bill began that process. The FY2002 House Defense Appropriations bill included included $150 million to buy one 767 and modify it as a tanker. The Senate version, focused on leasing to help the Air Force begin acquiring next generation replacements for its tanker fleet. The final version of the fiscal year 2002 Department of Defense appropriations bill, reflecting the Senate approach, would allow the Air Force to eventually lease one hundred 767 aircraft for use as tankers.
On 23 May 2003 Under Secretary of Defense for Acquisition, Technology and Logistics Edward C. "Pete" Aldridge announced the approval of the Air Force KC-767 tanker lease initiative. In the next step, the Secretary of the Air Force will now forward a report to Congressional oversight committees detailing the terms and conditions for review and approval. The agreement provides for leasing 100 KC-767 aircraft from the Boeing Co. for six years starting in 2006, at a cost of $131 million lease price plus an additional $7 million in lease-unique costs per aircraft. The total cost will be less than $16 billion. The initiative also includes a provision to purchase the aircraft for about $4 billion at the end of the lease 2017. The strategy allows the Air Force to begin replacing the KC-135E tanker fleet three years earlier than planned. With an average age of over 43 years, the KC-135E fleet is the oldest combat weapon system in the Air Force inventory.
Boeing proposed that the Air Force lease these aircraft based on the 767 in a commercial type arrangement. The proposal would allow the Air Force to lease 100 tankers, to replace 136 aging Boeing KC-135E aircraft. The E-model economic service life is markedly different from that of other KC-135s because of the difference in age and technology of some of its major components, most notably the engines. The 767 lease initiative would cost of $20 million per plane per year under a 10-year lease arrangement. An unmodified 767 costs between $100 million and $112 million. The cost of a 767 tanker is somewhere between $150 million and $225 million, depending on the number ordered and the nature of the modifications.
This leasing program also will require between $600 million and $1.2 billion in military construction funding to build new hangars, since existing hangars are too small for the new 767 aircraft. The government would also pay another $30 million to $60 million per aircraft on the front end to convert these aircraft from commercial configurations to military; and at the end of the lease, the government will to pay for $30 million more, to convert the aircraft back. All these costs raise the total cost of the Boeing deal to $30 billion over the ten-year lease.
The cost to taxpayers would be more than $2 billion per year, with a total price tag of as much as $30 billion over 10 years. This leasing plan is significantly more expensive to the taxpayer than an outright purchase. CBO and OMB said they would score this lease agreement not as a lease but as a purchase, costing $22 billion. According to a December 2001 Office of Management and Budget (OMB) estimate, the lease plan would cost $26 billion, nearly three times the cost of simply purchasing the planes. The lease plan represents more than 20 percent of the Air Force's annual cost of its top 60 priorities. But critics note that this program is not actually among the Air Force's top 60 priorities, nor do new tankers appear in the 6-year defense procurement plan for the Service.
The Defense Department Inspector General investigated whether former deputy assistant secretary of the Air Force Darleen Druyun gave Boeing pricing data on the rival Airbus bid. Druyun left public service in January 2003 to become a Boeing executive.
Reacting to criticism from leaders of the Senate Armed Services Committee, on 22 September 2003 the Defense Department presented a revised proposal to lease 74 planes and buy the other 26. Deputy Defense Secretary Paul Wolfowitz said buying the 26 tankers early, between 2008 and 2010 before their six-year leases expire, would add $2.4 billion in initial budget costs while lowering total program costs by $1.2 billion to $22.4 billion. Wolfowitz said buying 75 planes upon delivery would cost an extra $4.6 billion up front but would save $3.5 billion in the long run. He also said leasing 25 tankers and buying 75 more under a separate multiyear procurement contract would add $10.5 billion up front, with savings of $2.7 billion longer term.
The fiscal 2004 National Defense Authorization Act, passed by Congress 07 November 2003, forged a compromise on aerial refueling. The Air Force proposed leasing 100 Boeing 767 aircraft as tankers. The compromise called for the service to lease the first 20 aircraft and buy the rest outright. Officials estimate this will save the American taxpayers $4 billion over the life of the aircraft. The compromise allows the Air Force to begin replacing the aging fleet of KC-135 and KC-10 aircraft. The first KC-767s would be delivered in fiscal 2006.
As chairman of Armed Services at the time, Senator Johnn Warner found fault with the proposed lease contract and after consultations with Members -- in particular Senator McCain, who provided valuable oversight of the entire process -- the committee declined to approve the proposal. Additionally, consultations with outside experts had corroborated that procedures and provisions related to the lease contract required further oversight by Congress. Following a full committee hearing on September 4, 2003, Warner directed the Department of Defense, by letter to investigate the Air Force's initial proposal and analyze alternatives that would meet the operational requirement.
Furthermore, in letters to the General Accounting Office, the Congressional Budget Office, and the Office of Management and Budget, among others, Warner directed that these other agencies provide assessments of the proposal. These assessments, as well as further oversight conducted by both the Senate Armed Services and Commerce Committees, led Deputy Secretary of Defense Wolfowitz to order a "pause" in the execution of the proposed lease contract.
On December 2, 2003, Warner sent a letter to the Deputy Secretary to concur with the decision requiring a "pause" in execution, and stated further: "The Department of Defense Inspector General inquiry should pursue the trail of evidence wherever it leads, in accordance with standard IG procedures." By February 2004, Secretary of Defense Rumsfeld put a "halt" to the entire tanker lease process, pending the DOD inspector general report.
Darleen Druyun, who helped negotiate a controversial plan to lease Boeing 767 commercial jets to the Air Force for use as aerial refueling tankers, and Michael Sears, Boeing’s former chief financial officer, were both fired after an internal Boeing investigation found they had violated company policies. Sears had communicated directly and indirectly with Druyun about possible employment with Boeing while she still worked for the Air Force and before she recused herself from official involvement with Boeing contracts. The investigation also uncovered that the two had tried to conceal their misconduct.
On April 20, 2004, Darlene Druyun, Principal Deputy Assistant Secretary of the Air Force, Acquisition and Management entered a guilty plea in Federal court for conspiring with Boeing Corporation's1 (Boeing) chief financial officer to help Boeing win a multi-billion dollar airplane tanker leasing contract. United States of America v. Darleen A. Druyan Criminal Case No. 04-150-A, Supplemental Statement of Facts: “The defendant [Darleen Druyan], since July 28,2004, now acknowledges that she did favor the Boeing Company in certain negotiations as a result of her employment negotiations and other favors provided by Boeing to the defendant.” On 01 October 2005 former Air Force acquisition manager Darlene Druyun Druyun was convicted of conspiring with Boeing’s chief financial officer to help the company win a multi-billion dollar contract. She was sentenced to nine months in prison, $5,000 fine and 150 hours of community service.
On May 25, 2004, the Department of Defense announced that Secretary of Defense Donald H. Rumsfled had deferred a decision on the tanker recapitalization program until additional studies then underway could be completed later that year. The decision was based in part on recommendations made by the Defense Science Board’s Aerial Refueling Task Force.
Michael Sears pleaded guilty in November 2004 to a single count of aiding and abetting illegal employment negotiations. The scandal led to the resignation of Boeing's then-CEO Philip Condit.
On February 14, 2005 Michael W. Wynne, acting under secretary of defense for acquisition, technology and logistics announced that he has asked the DoD Inspector General to review eight contracts which were under the decision-making purview of convicted former Air Force acquisition manager Darlene Druyun. The Defense Contract Management Agency reviewed all the contracts that Ms. Druyan was directly involved with since 1993 at the request of Wynne. They examined more than 8,000 pages of information in 407 contracts and identified these eight contracts that appear to have anomalies in them which warrant further review.
KC-767 and 767 Production
Boeing will assemble the tanker at its facilities in Everett, Wash., using many of the same manufacturing processes that produced almost 1,000 highly reliable and maintainable commercial Boeing 767s. Installation of military refueling systems and flight test activities will take place at the company's finishing center in Wichita, Kan.
In 2003, Boeing stated that if it did not get the tanker deal with the Air Force, it stated that it would be hard pressed to win commercial sales to keep the 767 production line open. Development of the 7E7 will become even more important for Boeing to retain market share for 250-seat airplanes. The 767 probably will be superceded by the the 7E7 if the tanker deal does not materialize.
Boeing expects to decide by mid-2005 whether to close its 767 production line. Boeing says it could easily restart the line if it won a future competition to supply refueling tankers to the US Air Force, although it has declined to give any details on the costs involved in such a move. In February 2006 Boeing said that it planned to terminate the production of the 767 widebody aircraft model, without a contract for air-refuelling tankers, despite recent orders for the 767.
But a surge of orders in late 2006 for the 767 will keep assembly lines going well into the next decade. On 05 February 2007 United Parcel Service announced plans to buy 27 freight versions of the Boeing 767-300ER airliner, the biggest order in years for the twin-engine jet. The 27 aircraft will be delivered between 2009 and 2012. On 02 March 2007 UPS, the last remaining customer for the cargo version of the Airbus A380 superjumbo, said that it was walking away from its order for 10 planes, citing concerns that Airbus would not be able to meet a revised delivery schedule.
