Feature Story
The Mobile community was elated when the Air Force announced that the Northrop Grumman/European Aeronautic Defence and Space (EADS) team won the new airborne tanker bid. This was a major milestone in the city leaders’ campaign to bring high technology industry to lower Alabama. But this elation was short lived. Boeing, the loser, protested the award, freezing all action until resolved by the Governmental Accountability Office (GAO). A challenge to an award is something that contractors undertake with great caution because they are infrequently successful and filing one risks poisoning the relationship with the government customer.
So why did the company take this risk by calling foul? In the absence of being in the executive offices when the decision was made, one can only speculate, but it appears that there is a sincere belief throughout the company that it was a wrong choice, a bad decision for the security of the U.S. and an economic disaster for our nation.
From the workers in the massive production facilities in Seattle to the executives at the corporate offices in Chicago, there is the well-supported view that Boeing builds the finest aircraft in the world. Its founder, William Boeing built his first airplane in 1916 and the company is the oldest aircraft manufacturer in the country with such milestone products as the B-17, the B-29 (used after WWII as the platform for the first aerial refueling tanker), and the B-52 (still in use by the Air Force over a half-century after entering service).
On the commercial side Boeing produced the 707 (first U.S. commercial jet and platform for the KC-135 tanker in current use) and followed with the 727, 737, 747 (first jumbo jet), 757, 767 (the platform for the current tanker), 777 and finally the 787 Dreamliner (due in service shortly). The company is a source of national pride – an internationally recognized icon with its enormous foreign sales positively affecting the balance of trade. Losing meant that the deck was stacked in favor of their foreign competitor.
This conjecture is supported by key points and language of the protest Boeing filed on March 11, 2008, with the GAO. In the following paragraphs the quoted materials, unless otherwise noted, are all from the publicly released, “redacted,” (edited) version of the protest. As is apparent in the following paragraphs, their points are clearly stated, appear to be factual and are emotionally appealing.
Starting on page 1: “The record shows that the KC-X (Generic designation for the new tanker) acquisition process did not produce a fair and open competition.” ”...the Air Force changed its direction, skewed the competition against Boeing and in favor of Northrop Grumman/EADS, and awarded a contract for a plane that did not satisfy its own bid requirements.” If correct, this is clear grounds for setting aside the award. The paragraph ends with an emotional theme that runs throughout the protest: “The result was a contract award that is fundamentally unfair not only to Boeing, but to the warfighter and the American people.”
Since relevant experience affects all aspects of a program, Boeing sharply contrasts their “75 years of unparalleled success in producing tankers for the U.S. Government,” to a competitor “that has never delivered a tanker equipped with an operationally fielded aerial refueling boom.” (An aside: Boeing’s own history, “Pedigree of Champions,” describes the “advent of aerial refueling” as a post-WWII innovation, so let’s say 60 years).
Boeing continues with the AF’s errors and faulty judgment, noting that the selected aerial tanker will be “built by a company with an incomplete and unstable intercontinental production plan.” A few paragraphs later, the protest observes that unlike Boeing’s operational production facility in the Seattle area, EADS “will hopscotch through Europe to produce some planes; send others to Florida for production and ultimately posits that planes will be produced in Mobile, Alabama, at facilities that do not yet exist.”
Next, the errors in evaluation of cost and pricing data by the Air Force – perhaps the most important part of the assessment of any proposal, Boeing contends that the evaluation was “fundamentally improper and inadequate.” Since the Air Force requested a “commercial baseline aircraft” (Boeing offered a tanker based on the 767 while NG/EADS offered one based on the A330) both competitors were permitted to withhold commercial pricing data. They were required to provide sufficient information to allow the evaluation of the “reasonableness” of the price offered. Boeing stated that the pricing evaluator “drastically increased Boeing’s estimated costs…to the tune of $5.2 billion overall, and assigned… increased development and design risk…” The NG/EADS pricing was accepted without upward adjustment according to Boeing.
The emotional reaction to the loss and its harm to the company’s reputation as well as a strongly held belief that the company had been unfairly treated are all communicated in the last introductory paragraph: “Furthermore the Air Force’s actions show that it altogether failed to comprehend the inherent manufacturing genius of the 767 bid. It gave Boeing no credit for offering exactly what the U.S. Government acquisition strategy seeks…By contrast the Air Force apparently accepted the NG/EADS proposal at face value assessing no additional risk for its convoluted development and production plan..”
The protest concludes with, ”...the Air Force’s disparate treatment of Boeing’s proposal and its award to NG/EADS is indefensible, and demonstrably contrary to the best interests of the warfighter and the American taxpayer. It cannot stand.”
From what has been made available to the public, Boeing’s case to set aside the award looks like a strong one. But the GAO has information we’ve not seen – and 100 days to make its recommendation on the merits of the protest.
The author is a former Boeing marketing director; however, except for quoted material, this does not represent the position of The Boeing Company.
Contact Pete Gleszer at jubilee@lagniappemobile.com.
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