Wednesday, July 16, 2008

The Executive Shuffle

As it prepares for a next round of bidding in the Air Force tanker competition, Boeing is shuffling key members of its executive team.

Aviation Week reports that Dave Bowman, who’s been running the company’s C-17 unit, will now take charge of a restructured tanker division. As part of widely-anticipated management shake-up, Mr. Bowman will lead the tanker enterprise as an “entirely new and separate business unit,” reporting to the President and Chief Operation Officer of Boeing’s Integrated Defense Systems.

With the USAF expected to solicit new tanker bids in the coming weeks, this may seem like a strange time for a changing-of-the-guard in Boeing's executive suite. But according to Aviation Week’s Amy Butler, there are solid reasons for the company's move:

Bowman is well respected in the Air Force; he spearheaded efforts to keep the C-17 production line open with congressional support and with a small boost of international sales after the service discontinued funding for it. One of his tasks in the forthcoming tanker competition will be to congeal the relations between Boeing’s defense and commercial airplanes businesses. Boeing Commercial Airplanes was criticized by Air Force officials for not cooperating with the government’s desire to have full insight into the company’s pricing for the 767 platform.


The change will also allow Mr. Bowman to “bypass the typical leadership chain of command in IDS’s Global Mobility Systems divisions and deal directly with the defense sector’s leadership for the forthcoming tanker campaign.” Bowman will run the operation from Boeing’s offices in Washington state, with a smaller staff in Wichita, Kansas, where military modifications for the aircraft would be added.

Boeing apparently believes that Bowman’s military ties will serve the company well in the next round of the tanker competition. Various defense officials—including former Air Force Secretary Michael Wynne—slammed the defense contractor for its “lack of transparency” in the previous round of tanker bidding. That competition ended with the service awarding the contract to rival Northrop-Grumman, but that deal was tossed out, after the Government Accountability Office discovered flaws in the bidding process. By putting Bowman in charge, Boeing hopes to avoid similar problems in the next round of the competition.

While Mr. Bowman is well-respected in aerospace circles, he faces a tall order in the coming weeks. Along with organizing the new division, Bowman must also lead the effort to prepare Boeing’s new bid for the tanker contract. However, the defense contractor clearly believes that momentum has swung in its favor, with the GAO sustaining its protest of the last tanker contract, and a legion of lawmakers lining up in support of Boeing.

Still, Northrop-Grumman and its European partner, EADS, won’t give up without a fight. The next round of tanker bidding will be even more intense, and the stakes have never been higher. For the winner, there’s a $35 billion contract, and the promise of more work down the line, as the Air Force eventually retires other, older aircraft, also built on the venerable 707 airframe.

On the other hand, the loser in the tanker competition faces uncertainty in the defense market. As Aviation Week observes, Boeing has been on a losing streak in the military aircraft business. In recent years, the firm has lost the Joint Strike Fighter contract to rival Lockheed-Martin and is facing the end of C-17 production and a decline in orders for the F/A-18 Hornet. And, with the airliner business slowing because of skyrocketing fuel prices, Boeing could certainly use the tanker contract. Bringing it home will be Mr. Bowman’s job.

By comparison, Northrop-Grumman appears to be standing pat with leadership of its tanker team. The Air Force hopes to announce a final “winner” of the tanker competition in December. By that time, we’ll know which aerospace firm made the right managerial moves.


Old Curmudgeon said...

moxie7259Correct me if I'm wrong, Spook, but isn't a tanker just a cargo plane configured to carry a particular cargo? And aren't the specs of these planes in their cargo versions well known? It seems to me it ought to take a few weeks to prepare the bids, and one person armed with the bids, the RFB, the spec sheets, and a calculator ought to take about one afternoon to figure out what is the best buy. Why all the Sturm und Drang? Why has it taken 10 years to get this done? Why has it cost millions in legal fees, lobbyist fees, audit fees, and now, a new chief executive of the tanker division? They're not building a 5th generation fighter from scratch here, for Pete's sake! Or am I just hopelessly naive?

owr084 said...

"For the winner, there’s a $35 billion contract, and the promise of more work down the line, as the Air Force eventually retires other, older aircraft, also built on the venerable 707 airframe."

NO. The KC-135 was NOT built on a 707 frame. Both the KC-135/C-135 and the 707 were both based on the Model 367-80. The Air Force was accepting deliveries of the KC-135A six months before the first flight of the 707.