GAO takes Boeing's side in Tanker dispute

[MKSheppard]

GAO upholds Boeing tanker protest
New Mexico Business Weekly
Wednesday, June 18, 2008 - 1:19 PM MDT

The Government Accountability Office (GAO) has upheld Boeing Co.'s protest of the U.S. Air Force's decision to award a tanker contract to a rival.

In February, the Air Force awarded the contract to a consortium including Northrop Grumman Systems Corp. (NYSE: NOC) and Airbus. Two weeks later, Boeing filed a protest with the GAO office, which determined Wednesday 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."

Boeing (NYSE: BA) planned to build its air tanker on the 767 platform in Everett, Wash.

The GAO ruling doesn't hand the tanker deal to Boeing. Rather, the GAO recommends that the Air Force reopen discussions with the companies. GAO also recommends that the Air Force reimburse Boeing's costs in pursuing the protest, including attorney fees.

Washington state lawmakers were pleased with the GAO decision.

"The Air Force's decision in February ignored serious implications for the national security and readiness of our country ... I'm pleased that the GAO recognized the importance of protecting our nation's warfighter and industrial base," said Democratic U.S. Sen. Maria Cantwell of Washington, in a statement.

And Republican Congressman Dave Reichert said in a statement, "It has been clear all along that the process was flawed, as evidenced by the clear recommendations made by the GAO. This is a great victory for Boeing, Washington state and every American who values our nation's economic and homeland security."

Boeing issued its own statement from Mark McGraw, vice president, tanker programs: "We appreciate the professionalism and diligence the GAO showed in its review of the KC-X acquisition process. We look forward to working with the Air Force on the next steps in this critical procurement for our warfighters."

Both Boeing and Northrop Grumman have business operations in New Mexico.

I think at this point, the USAF should simply ignore the GAO -- they've become the modern-day equivalent of McNamara's Morons -- I mean "Whiz Kids".

[cosmicalstorm]

The protestors main argument seems to be that they are somehow entitled to American taxmoney.

[Admiral Valdemar]

Which isn't unprecedented. The iron triangle of Congress, US defence contractors and the Pentagon is quite well established and leads to all kinds of pork. If Boeing has the better deal, then they deserve the contract. If Airbus has it, then it goes to non-American employees.

If you sacrifice technical excellence on the basis of the lesser product boosting a local economy that can affect your votes, then you get the army you have, not the one you want.

[The Duchess of Zeon]

I'm sure the ultimate result will be to order both aircraft, driving up production costs substantially and resulting in fewer being produced, hampering our air-to-air refueling capabilities.

[Big Phil]

The protestors main argument seems to be that they are somehow entitled to American taxmoney.

Their main argument, which the GAO agrees with, is that the Air Force played fast and loose with the rules of the competition, essentially ensuring that the Airbus entry would win. If the competition had been fair and unbiased, all the "national security" crap wouldn't have gained any traction.

[Big Phil]

A GAO summary of its ruling outlined seven major mistakes in the Air Force procurement process that detracted from "full and open competition and fairness."

The GAO said the Air Force

• didn't assess the relative merits of the two contending airplanes in accordance with its stated criteria.

• gave Northrop extra credit for exceeding certain performance parameters, when this was expressly not allowed.

• failed to show that the A330 could refuel all of the Air Force aircraft it needs to service.

• misled Boeing about its failure to meet certain performance parameters, while giving fuller information to Northrop.

• dismissed a Northrop failure to agree to an aircraft maintenance plan as only "an administrative oversight" when it was a material requirement.

• made unreasonable estimates of the cost of constructing runways, ramps and hangars needed for the larger Airbus jet, which led to the conclusion that Northrop offered lower total program costs — when in fact Boeing's overall cost was lower.

• inappropriately rejected Boeing's estimate of its non-recurring cost to develop the program, using an "unreasonable" model to increase that cost estimate.

http://seattletimes.nwsource.com/html/b ... ing18.html




Here's the GAO report if you want to read through it and make your own decision.

http://seattlepi.nwsource.com/dayart/PD ... kerGAO.pdf

[CmdrWilkens]

The protestors main argument seems to be that they are somehow entitled to American taxmoney.

Alternatively it could be that they met more of the program goals than their rival and had a lower life-cycle cost yet somehow they didn't get the contract.

That is, of course, aside from the fact that there is a great deal of logic to the idea that the majority of US military supplies should be produced by US companies, paticularly mission-critical aircraft.

[Sidewinder]

Considering what Boeing went through with CSAR-X, it seems hypocritical of it to use the same fucking strategy against its competitor(s).

By the way, when I read about Boeing's whining regarding the KC-X competition, I keep getting the feeling that the USAF is still angry at Boeing for the tanker leasing scandal. Comments from people with more info in the military-industrial complex?

I think at this point, the USAF should simply ignore the GAO -- they've become the modern-day equivalent of McNamara's Morons -- I mean "Whiz Kids".

I second that. The GAO seems to have NO concept of the words "metal fatigue" and "service life," and are blind to the fact that the Air Force's aircraft are LITERALLY falling apart.

[MKSheppard]

I second that. The GAO seems to have NO concept of the words "metal fatigue" and "service life," and are blind to the fact that the Air Force's aircraft are LITERALLY falling apart.

Also the GAO has no clue:

• failed to show that the A330 could refuel all of the Air Force aircraft it needs to service.

Someone raised a good point -- there is a STANDARD refuelling receptacle installed on every USAF aircraft; the only difference is the flow rate; which I think has to be set for each aircraft; e.g. if you tried to use the flow rate setting to tank up a B-52 with a F-15, you'd blow every seal and flood the wings from all the fuel pressure..

[Kanastrous]

There's more to air-to-air refuelling, than matching the receptacle size and flow rate.

Different aircraft perform differently in the wake turbulence coming off the tanker aircraft. Unless you test the receiving aircraft in the inventory, you don't know that a smooth, trouble-free ride for an F-16 might not be a bouncy nightmare for an F-15 or F/A-18 operator...

[weemadando]

I wouldn't trust Boeing to deliver a military bus at the moment.

Australia's Wedgetail program is now going for 3 years behind schedule and 3 billion over budget (that's the latest figures I heard). Oh yeah, and the first few airframes, finally to be delivered in 2009, are lacking in one small component. The fucking Electronic Warfare suites. Useful that. Apparently they'll be delivered a year later. Meanwhile others in the region are getting all of their AEWC aircraft delivered, from the AEWC Gulfstream variants to the Mainstays...

[cosmicalstorm]

The protestors main argument seems to be that they are somehow entitled to American taxmoney.

Alternatively it could be that they met more of the program goals than their rival and had a lower life-cycle cost yet somehow they didn't get the contract.

That is, of course, aside from the fact that there is a great deal of logic to the idea that the majority of US military supplies should be produced by US companies, paticularly mission-critical aircraft.

Yeah you and the other guy are right, I was annoyed and tired when I wrote that post.

[CmdrWilkens]

I think at this point, the USAF should simply ignore the GAO -- they've become the modern-day equivalent of McNamara's Morons -- I mean "Whiz Kids".

I second that. The GAO seems to have NO concept of the words "metal fatigue" and "service life," and are blind to the fact that the Air Force's aircraft are LITERALLY falling apart.

Or you could read the damn report issued where they make absolutely NO COMMENT on the relative value of moving forward on the contract with either party. They have a statutory obligaiton to investigate the complaint to see if the contract was awarded appropriately (and not in regards to technical details). They pointed out that Boing had legitimate complaints about how the award process proceeded...that's it. The Air Force doesn't even have to do anything because this is an advisory opinion only and not a binding requirement to re-negotiate.

[Vympel]

All the same, it will create political pressure on the AF from Boeing's lackeys in Congress to award the contract to Boeing after a new competition.

[Big Phil]

All the same, it will create political pressure on the AF from Boeing's lackeys in Congress to award the contract to Boeing after a new competition.

Shouldn't it? Considering how corrupt the Bush Administration has been with government contracts, isn't it a good thing that someone is fighting back (and winning)?

[Vympel]

Shouldn't it? Considering how corrupt the Bush Administration has been with government contracts, isn't it a good thing that someone is fighting back (and winning)?

The USAF doesn't really equal the Bush administration - they've been at loggerheads for some time over the issue of F-22 procurement, among other things. It's not like the Bush administration has had a hand in the contract being awarded to Northrop.

Besides, Boeing is hardly a crusader against corruption. Their proposed tanker lease deal of a few years ago was a travesty of corruption that saw Boeing employees go to jail.

In any event, if the USAF is going to award the contract to Boeing, it should do so for reasons of performance, and not because certain legislators want pork for Boeing. That's the only thing those in Congress give a shit about, they couldn't care less about requirements.

[Big Phil]

Shouldn't it? Considering how corrupt the Bush Administration has been with government contracts, isn't it a good thing that someone is fighting back (and winning)?

The USAF doesn't really equal the Bush administration - they've been at loggerheads for some time over the issue of F-22 procurement, among other things. It's not like the Bush administration has had a hand in the contract being awarded to Northrop.

Besides, Boeing is hardly a crusader against corruption. Their proposed tanker lease deal of a few years ago was a travesty of corruption that saw Boeing employees go to jail.

In any event, if the USAF is going to award the contract to Boeing, it should do so for reasons of performance, and not because certain legislators want pork for Boeing. That's the only thing those in Congress give a shit about, they could care less about requirements.

Way back when this decision was originally made, somebody (might have been Stuart, or maybe Lonestar, I don't recall) said that this was all about politics. In other words a payoff to the Republicans in Alabama where the Airbus planes are to be built. Considering how the Air Force behaved, changing the rules and treating Airbus and Boeing differently, I find it hard to believe that the Air Force wasn't playing politics.

No argument that the original tanker deal was bullshit, especially with the bribery and the like that went on. That doesn't mean that the second time around it's okay to screw over Boeing. The second time should be fair, not just unfair to the other side.