Boeing Formally Protests US Air Force Tanker Contract Award

Boeing KC-767 Tanker Adds Up to Best Value for Warfighter, Taxpayers

ST. LOUIS, April 15, 2008 -- The Boeing [NYSE: BA] KC-767 Advanced
Tanker would save billions of dollars over the anticipated lifetime of
the aircraft compared with the larger Airbus-based KC-30. Nonetheless,
the U.S. government selected the larger air tanker from the team of
Northrop Grumman and the European Aeronautic Defence and Space Company
(EADS).

Due to irregularities in the competition, such as the cost comparison,
Boeing has protested the decision and asked the Government
Accountability Office (GAO) to determine if the tanker acquisition
process, including the cost analysis, was unfair and flawed. As the
GAO reviews the decision, Boeing is also calling on policymakers to
question why the comparison of full costs of the new tanker fleet
failed to reflect that the Airbus KC-30 tanker is larger, heavier,
less fuel-efficient and -- according to the Northrop/EADS team itself
-- more costly to operate.

"As Americans pay their taxes this week, it's essential that they
consider how effectively those dollars will be spent to equip U.S.
warfighters," said Sen. Sam Brownback of Kansas. "It's especially
important to think about the total cost of developing, producing,
operating and maintaining vital defense assets that must be ready to
fly at least two generations of American military men and women."

In evaluating the two tanker offerings, the U.S. government determined
that the Boeing KC-767 and the Northrop/EADS KC-30 were nearly equal
at a cost of $108 billion to buy and operate 179 tankers over 25
years. Boeing contends that a realistic comparison of life-cycle costs
-- what the Air Force calls Most Probable Life-Cycle Costs (MPLCC) --
should have resulted in a significantly higher price tag for the
Airbus KC-30 when considering the biggest cost drivers: fuel,
maintenance costs and infrastructure.

* Fuel: Using commercial aviation data, a Conklin & deDecker
Aviation Information fuel study funded by Boeing indicated that with
the price of oil between $100-125 per barrel, the larger, heavier and
less fuel-efficient KC-30 would cost $30 billion more in fuel costs
than the Boeing KC-767 over an anticipated 40-year service life.
* Maintenance: Based on the requirements for a smaller aircraft,
the KC-767 would be approximately 22 percent less costly than the
KC-30.

* Military Construction: The larger KC-30 would require
approximately $2 billion to build or upgrade hangars, ramps, access
roads and other facilities at tanker bases, while existing facilities
that are sized for the current fleet of KC-135 tankers will be able to
accommodate the smaller KC-767 with substantially less costly
improvements required.
* Additional Infrastructure Costs: To accommodate Air National
Guard and Air Force Reserve units -- which operate primarily from
civilian airfields and have 60 percent of the Air Force tanker fleet
--
further costly investment would be required to upgrade facilities
where KC-30s would be based.

On 2008-03-12 07:12:17 -0700, AJ said:

Boeing Formally Protests US Air Force Tanker Contract Award
Says KC-X RFP Differs From Criteria Cited In Going with KC-45A

Boeing's plane actually met the requirements of the request for
proposal. Airbus offered a more expensive plane that offered a cargo
capability and other features that Boeing was not allowed to offer.
Boeing could have offered a 747 tanker with the same capability, but
was discouraged from doing so. Then they selected the EADS design on
the basis of the cargo capability. Somebody had already decided from
the very beginning that the Airbus design would be selected and simply
rigged the bidding process to make sure Airbus won.

No doubt this was partially in revenge for the way Boeing was awarded
the original contract.

--
Waddling Eagle
World Famous Flight Instructor

Now the real fun begins:

The Boeing Company
http://www.boeing.com/news/releases/index.html
Boeing Statement on Tanker Protest Ruling

ST. LOUIS, June 18, 2008 -- Boeing [NYSE: BA] was informed today
that the Government Accountability Office (GAO) found in Boeing's
favor on a number of issues related to its protest of the U.S. Air
Force's award of a $35 billion contract to supply the service with
its next-generation aerial refueling aircraft -- or KC-X tankers
-- to begin replacing the current fleet of KC-135 tankers.

In response to the ruling, Boeing released the following statement
from Mark McGraw, vice president, Tanker Programs:

"We welcome and support today's ruling by the GAO fully supporting
the grounds of our protest.

"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 next steps in this critical
procurement for our warfighters."




On Wed, 12 Mar 2008 07:12:17 -0700 (PDT), AJ
wrote in
:

Boeing Formally Protests US Air Force Tanker Contract Award
Says KC-X RFP Differs From Criteria Cited In Going with KC-45A

(From: Aero-News.net)

It's official. Citing irregularities with the process of the
competition and the evaluation of the competitors' bids, on Tuesday
Boeing filed a formal protest with the Government Accountability
Office (GAO), asking the agency to review the decision by the US Air
Force to award a contract to a team of Northrop Grumman and European
Aeronautic Defense and Space Company (EADS) to replace the aging fleet
of KC-135 aerial refueling tankers.

"Our analysis of the data presented by the Air Force shows that this
competition was seriously flawed and resulted in the selection of the
wrong airplane for the war fighter," said Mark McGraw, vice president
and program manager, Boeing Tanker Programs. "We have fundamental
concerns with the Air Force's evaluation, and we are exercising
our right under the process for a GAO review of the decision to ensure
that the process by which America's next refueling tanker is selected
is fair and results in the best choice for the U.S. war fighters and
taxpayers."

Following an internal analysis of data presented at a March 7
debriefing on the decision, Boeing concluded what began as an effort
by the Air Force to run a fair, open and transparent competition
evolved into a process replete with irregularities. These
irregularities placed Boeing at a competitive disadvantage throughout
this competition, the American plane maker asserts, and even penalized
Boeing for offering a commercial-derivative airplane with lower costs
and risks and greater protection for troops.

"It is clear that the original mission for these tankers -- that is, a
medium-sized tanker where cargo and passenger transport was a
secondary consideration -- became lost in the process, and the Air
Force ended up with an oversized tanker," McGraw said. "As the
requirements were changed to accommodate the bigger, less capable
Airbus plane, evaluators arbitrarily discounted the significant
strengths of the KC-767, compromising on operational capabilities,
including the ability to refuel a more versatile array of aircraft
such as the V-22 and even the survivability of the tanker during the
most dangerous missions it will encounter."

Boeing is asking the GAO to examine several factors in the
competition, that it states were fundamentally flawed: The contract
award and subsequent reports ignore the fact that in reality Boeing
and the Northrop/EADS team were assigned identical ratings across all
five evaluation factors: 1) Mission Capability, 2) Risk, 3) Past
Performance, 4) Cost/Price and 5) Integrated Fleet Aerial Refueling
Assessment. Indeed, an objective review of the data as measured
against the Request for Proposal shows that Boeing had the better
offering in terms of Most Probable Life Cycle Costs, lower risk and
better capability.

Flaws in this procurement process resulted in a significant gap
between the aircraft the Air Force originally set out to procure -- a
medium-sized tanker to replace the KC-135, as stated in the RFP -- and
the much larger Airbus A330-based tanker it ultimately selected. It is
clear that frequent and often unstated changes during the course of
the competition -- including manipulation of evaluation criteria and
application of unstated and unsupported priorities among the key
system requirements -- resulted in selection of an aircraft that was
radically different from that sought by the Air Force and inferior to
the Boeing 767 tanker offering.

Because of the way the Air Force treated Boeing's cost/price data, the
company was effectively denied its right to compete with a commercial-
derivative product, contrary not only to the RFP but also to federal
statute and regulation. The Air Force refused to accept Boeing's
Federal Acquisition Regulation-compliant cost/price information,
developed over 50 years of building commercial aircraft, and instead
treated the company's airframe cost/price information as if it were a
military-defense product. Not only did this flawed
decision deny the government the manufacturing benefits of Boeing's
unique in-line production capability, subjecting the Air Force to
higher risk, but it also resulted in a distortion of the price at
which Boeing actually offered to produce tankers.

In evaluating Past Performance, Boeing claims the Air Force ignored
the fact that Boeing -- with 75 years of success in producing tankers
-- is the only company in the world that has produced a commercial-
derivative tanker equipped with an operational aerial-refueling boom.
Rather than consider recent performance assessments that should have
enhanced Boeing's position, the Air Force focused on relatively
insignificant details on "somewhat relevant" Northrop/EADS programs to
the disadvantage of Boeing's experience.

"Boeing offered an aircraft that provided the best value and
performance for the stated mission at the lowest risk and lowest life
cycle cost," said McGraw. "We did bring our A-game to this
competition. Regrettably, irregularities in the process resulted in an
inconsistent and prejudicial application of procurement practices and
the selection of a higher-risk, higher-cost airplane that's less
suitable for the mission as defined by the Air Force's own Request For
Proposal. We are only asking that the rules of fair competition be
followed."

For better or for worse, they're gonna do it. Boeing announced early
Tuesday it will file a formal protest later today, asking the
Government Accountability Office (GAO) to review the decision by the
US Air Force to award a contract to a team of Northrop Grumman and
European Aeronautic Defense and Space Company (EADS) to replace aerial
refueling tankers.

"Our team has taken a very close look at the tanker decision and found
serious flaws in the process that we believe warrant appeal," said Jim
McNerney, Boeing chairman, president and chief executive officer.
"This is an extraordinary step rarely taken by our company, and one we
take very seriously."

Following a debriefing on the decision by the Air Force on March 7,
Boeing officials spent three days reviewing the Air Force case for its
tanker award. Boeing states a "rigorous" analysis of the Air Force
evaluation that resulted in the Northrop/EADS contract led the
American plane maker to the conclusion that a protest was necessary.

"Based upon what we have seen, we continue to believe we submitted the
most capable, lowest risk, lowest Most Probable Life Cycle Cost
airplane as measured against the Air Force's Request for Proposal,"
McNerney said. "We look forward to the GAO's review of the decision."

Boeing said it would provide additional details of its case in
conjunction with the protest filing on Tuesday. Stay tuned.

FMI: www.boeing.com, www.globaltanker.com

In article ,
Larry Dighera wrote:

Now the real fun begins:

The Boeing Company
http://www.boeing.com/news/releases/index.html
Boeing Statement on Tanker Protest Ruling

ST. LOUIS, June 18, 2008 -- Boeing [NYSE: BA] was informed today
that the Government Accountability Office (GAO) found in Boeing's
favor on a number of issues related to its protest of the U.S. Air
Force's award of a $35 billion contract to supply the service with
its next-generation aerial refueling aircraft -- or KC-X tankers
-- to begin replacing the current fleet of KC-135 tankers.

In response to the ruling, Boeing released the following statement
from Mark McGraw, vice president, Tanker Programs:

"We welcome and support today's ruling by the GAO fully supporting
the grounds of our protest.

"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 next steps in this critical
procurement for our warfighters."



http://www.gao.gov/press/press-boeing2008jun18_3.pdf

Of particular note (to this non-lawyer) is:

"The GAO recommended that the Air Force reopen discussions with the
offerors, obtain revised proposals, re-evaluate the revised proposals,
and make a new source selection decision, consistent with the GAO¹s
decision. The agency also made a number of other recommendations
including that, if the Air Force believed that the solicitation, as reasonably
interpreted, does not adequately state its needs, the Air Force should amend
the solicitation prior to conducting further discussions with the offerors; that
if Boeing¹s proposal is ultimately selected for award, the Air Force should
terminate the contract awarded to Northrop Grumman; and that the Air Force
reimburse Boeing the costs of filing and pursuing the protest, including
reasonable attorneys¹ fees. By statute, the Air Force is given 60 days to
inform the GAO of the Air Force¹s actions in response to GAO¹s recommendations."

--
Bob Noel
(goodness, please trim replies!!!)

On Wed, 18 Jun 2008 18:37:56 -0400, Bob Noel
wrote in
:


http://www.gao.gov/press/press-boeing2008jun18_3.pdf

Of particular note (to this non-lawyer) is:

"The GAO recommended that the Air Force reopen discussions with the
offerors, obtain revised proposals, re-evaluate the revised proposals,
and make a new source selection decision, consistent with the GAO¹s
decision. The agency also made a number of other recommendations
including that, if the Air Force believed that the solicitation, as reasonably
interpreted, does not adequately state its needs, the Air Force should amend
the solicitation prior to conducting further discussions with the offerors; that
if Boeing¹s proposal is ultimately selected for award, the Air Force should
terminate the contract awarded to Northrop Grumman; and that the Air Force
reimburse Boeing the costs of filing and pursuing the protest, including
reasonable attorneys¹ fees. By statute, the Air Force is given 60 days to
inform the GAO of the Air Force¹s actions in response to GAO¹s recommendations."

Thanks for that information.

This looks like an opportunity for the USAF to perhaps end up with a
price reduction on the contract.

Here's an excerpt from Northrop Grumman's last press release before
the GAO ruling:

http://www.irconnect.com/noc/press/p....html?d=144827
In addition, more delay makes it more likely that money currently
set aside for the tanker program could be diverted to other
service or U.S. Department of Defense programs. The loss of these
funds would require drawing on monies set aside for the KC-X
program in 2009, which in turn would cause rippling delays to the
entire effort and ultimately increase the overall cost of the new
tankers.

"While Boeing was within its rights to protest, it has knocked the
program three months off schedule," Belote added. "Further delay
will achieve nothing but an increase in cost and risk." GAO
affirmation of the Air Force selection will be the second win in a
row for Northrop Grumman and the KC-45.