Press Release Source: Boeing

Boeing Protests U.S. Air Force Tanker Contract Award
Tuesday March 11, 2:39 pm ET

Citing irregularities with the process of the competition and the evaluation of the competitors' bids, The Boeing Company (NYSE: BA - News) has filed a formal protest with the Government Accountability Office (GAO), asking the agency to review the decision by the U.S. Air Force to award a contract to a team of Northrop Grumman and European Aeronautic Defence and Space Company (EADS) to replace 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 warfighter," 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. warfighters and taxpayers."

Following a thorough analysis of data presented at a March 7 debriefing on the decision, Boeing concluded that 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 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 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 evaluations 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 Proposals 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-size tanker to replace the KC-135, as stated in the request for
proposal -- and the much larger Airbus A330-based tanker they
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 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, 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."

A unit of The Boeing Company, Boeing Integrated Defense Systems is one of the world's largest space and defense businesses specializing in innovative and capabilities-driven customer solutions. Headquartered in St. Louis, Boeing Integrated Defense Systems is a $32.1 billion business with 71,000 employees worldwide.

I am not surprised at all with this turn-out. Boeing is going to try and stymie the whole process in litigation. The point is the USAF needs a new tanker sooner than later. I would like to see the Boeing product win, but they did not Airbus did... Move on...

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troy :
Didn't the British build the Nimrod when the AWACS E-3 Sentry would have been cheaper and amore capable plane? There are other examples also of one country protecting their economy instead of buying a foreign plane. The Tornado for example. Trot

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Nimrod AEW - just don't go there!!! That project was a hideous embarrassment. IIRC one reason for going ahead with it was to maintain a regional economy which largely relied upon aircraft manufacturing. Had the money spent on the project been divided up between every aerospace worker who would have been involved *each one* would have become a 'Sterling' millionaire

In fact the Royal Air Force has a good record of purchasing the best aircraft for the job - or at least when politicians allow it to - and this has included the Phantom and the C-130 Hercules. We even ordered the F-111 with two alomost completed before the order was cancelled.

The Tornado ADV (or F.3 as now known) was developed exclusively for the RAF as a long-range interceptor capable of dealing with large formations of Soviet bombers in the dark or poor weather. As such the F-14 Tomcat was a serious contender but the engines and radar were considered an earlier generation of technology (they were developed for the F-111B) whilst the F-15 had a single pilot and the cockpit workload would have been too great (this was recognised in the later F-15E). The F-16 and the F-20 were not seriously considered. Interestingly several countries chose the F/A-18 Hornet for this role but the Hornet's well documented lack of range would have made interception at over 500 nm perhaps problematic.

It is going to be interesting to see how the 767 / A330 tanker issue ends up.

Michael

That is a fact and I agree with Recco.And i think that too much noise was made for this subject