Boeing Wins Protest of Northrop Aerial-Tanker Award

[TinWing]

http://www.bloomberg.com/apps/news?pid=20601087&sid=a83gJ6Kzgr2c&refer=home

Boeing Wins Protest of Northrop Aerial-Tanker Award (Update2)

By Edmond Lococo and Gopal Ratnam
More Photos/Details

June 18 (Bloomberg) -- Boeing Co. deserves another chance to bid on the $35 billion U.S. Air Force aerial-tanker contract won by rival Northrop Grumman Corp., a government agency said.

``Our review of the record led us to conclude that the Air Force had made a number of significant errors that could have affected the outcome of what was a close competition between Boeing and Northrop Grumman,'' the U.S. Government Accountability Office announced today in Washington. ``We therefore sustained Boeing's protest.''

Boeing appealed to the GAO after Northrop and partner European Aeronautic, Defence & Space Co. won the contract Feb. 29, snaring a program that had been Boeing's for more than half a century. Boeing claimed changes the Air Force made during the competition favored Northrop. The selection of Northrop was undermined June 12 when both companies confirmed the Air Force miscalculated operating costs of the competing aircraft.

``While the variance in costs is trivial, it points to a broader erosion in the government's rationale for picking the Northrop-EADS plane,'' Loren Thompson, an analyst at Lexington Institute, an Arlington, Virginia-based public policy research group, said in an e-mail before the announcement. ``The outcome of the competition was fairly close, as Boeing has argued in its filings, rather than a decisive win for the Northrop-EADS team as the Air Force asserts.''

Boeing shares have declined 11 percent since the decision, compared with a 12 percent drop in Northrop. Boeing rose $1.08 to $75.46 at 1:22 p.m. in New York Stock Exchange trading, while Northrop fell 33 cents to $70.76.

 

[Deino]

Ohhh no !! Not again a delay and especially rising costs !!

How long untill then a final decission ??

Deino

 

[flateric]

 

[Skybolt]

mmmm, maybe this time Boeing will decide to bid a modified 777 ?

 

[doggedman]

This was a major setback and is indicative of how much the Government procurement system is in disarray. Given the number of contract awards that have been successfully overturned on protest, you can bet that protesting will be standard operating procedure for defense procurement awards going forward. Using the CSAR-X competition as a model, this could take 12+ months to decide unless all parties agree to a split buy.

 

[Skybolt]

Problem is that there are not so many big contracts anymore, and the pressure to "stick to a decision" for decades to come (for good reason, like lowering recurring costs) effectively blocks any possibility to re-enter the fray once you are out. In the good old days, the military could tweak the specification on the stride w/o so much protests because everyone knew that they would have another chance in a few years (actually, they thought they had). So, either the military starts to do a very strict specification and stays there for all the duration of the competition, with a rigorous and transparent process, or protestations would be inescapable: it's survival. Since requirements often change, the way forward would be probably a return to the little-batch (relatively) policy of the 50s or a re-do of split production contracts. Costs would rise, but probably if you add up the cost of the delays, you'll probably go even.

 

[F-14D]

This was a major setback and is indicative of how much the Government procurement system is in disarray. Given the number of contract awards that have been successfully overturned on protest, you can bet that protesting will be standard operating procedure for defense procurement awards going forward. Using the CSAR-X competition as a model, this could take 12+ months to decide unless all parties agree to a split buy.

It's important to note that GAO did not take any position regarding the two aircraft. What GAO basically said was that AF did not follow its own rules or specifications in making its selection, improperly evaluated the two aircraft's life cycle costs to determine that NG had the lowest life cycle costs (Life cycle costs, though, was not the only factor in the decision to go with Airbus) when in fact Boeing did. AF has admitted this, BTW. Didn't keep Boeing informed during the analysis, ignored the fact that one of the bidders could not meet an essential requirement necessary for the award, etc.

What GAO told USAF to do was to go back and decide if their original solicitation meets their need. If so, USAF should go back and follow their own rules and evaluate proposals in the manner and how they said they would in the solicitation. If the original solicitation does not meet USAF needs, then issue a new solicitation that states what they really want. I suspect that if the latter course is taken, Boeing would bid a KC-777.


It's unlikely either party would agree to a split buy without a new competition (for one thing their costs would change), nor should they have to. This would also be a disastrous and expensive course for USAF that would take longer. In addition, a split buy without a new solicitation would not address the reasons why GAO overturned the award.

 

[F-14D]

URL for GAO's complete (redacted) report.

http://www.gao.gov/decisions/bidpro/311344.pdf

Looks like there were more errors by USAF. For one, it seems the A330 is limited by flight-control software to a maximum speed of 610 km/h, less than the minimum speed specified by USAF for an "overrun" maneuver (whatever that means). Airbus/NG's first response was to tell the Air Force, "Well then, lower the requirement!", which didn't go over well. says GAO . But USAF then accepted the argument that the A330 would achieve the required speeds in a dive (I guess they'd stop measuring after it hits the ground).

As far as the KC-45 not demonstrating that all AF fixed wing a/c could be refueled by it, one of the a/c in question may be the V-22. It uses probe and drogue refueling unlike other AF fixed wings and there is apparently some interference issues with the A330's wake. In normal service a KC-130 would be used, but if the specification required that bidders be able to refuel all AF fixed wings, then the bidder has to meet the requirement. Note that the V-22 can be refueled by the KC-135, I don't know about the KC-10 offhand

 

[Michel Van]

Hot New
PENTAGON CHANCELD THE DEAL

Wat to hell ?

http://news.yahoo.com/s/nm/20080709/bs_nm/usa_airforce_tanker_decision_dc;_ylt=AhVmnq1NTBPKrzjhPMjxysh34T0D

http://www.spiegel.de/wirtschaft/0,1518,564930,00.html

 

[F-14D]

Hot New
PENTAGON CHANCELD THE DEAL

Wat to hell ?

http://news.yahoo.com/s/nm/20080709/bs_nm/usa_airforce_tanker_decision_dc;_ylt=AhVmnq1NTBPKrzjhPMjxysh34T0D

http://www.spiegel.de/wirtschaft/0,1518,564930,00.html

The selection process and award was so flawed there was no way they could save it. This is probably the best solution for everyone.

 

[Skybolt]

KC-X competition cancelled for now

Kudos to those members that stroke the third choice in the poll.. ;D

http://www.reuters.com/article/newsOne/idUSN1039700220080910

 

[hambone]

Northrop-Grumman must be really pissed...Boeing just couldn't suck up the loss.People in Mobile must be really upset to.

 

[KJ_Lesnick]

I just hope that this time much more thought is taken into ensuring the contract and requirements are structured such so that only Boeing could possibly win.

KJ Lesnick

 

[GTX]

I just hope that this time much more thought is taken into ensuring the contract and requirements are structured such so that only Boeing could possibly win.

KJ Lesnick

So are you proposing the specs should be written to ensure Boeing wins? Ridiculous! What about the best capability being selected?

Regards,

Greg

 

[KJ_Lesnick]

GTX,

So are you proposing the specs should be written to ensure Boeing wins?

Exactly

What about the best capability being selected?

Well, that would be nice too.


KJ Lesnick

 

[GTX]

Please explain why that is a good thing? If they can't provide the best capability fairly, they don't deserve to win!

 

[Retrofit]

So are you proposing the specs should be written to ensure Boeing wins?

Exactly

In that case, it is not necessary to re-issue an RFP...............
but the USAF will only get what Boeing is willing/able to propose/produce.

 

[Stargazer2006]

I just hope that this time much more thought is taken into ensuring the contract and requirements are structured such so that only Boeing could possibly win.

KJ Lesnick

If only ALL other countries would do the same and exclusively favor national products, that would be great. No doubt...