Boeing not chosen for tanker contract with US Air Force

[mikoyan29]

What was lost in this whole conversation is that a big part of this was because of the shenanigans with the lease deal from a few years ago.

[bdk]

A willing buyer and a willing seller came to an agreement in the first lease deal. Profitable airlines lease aircraft because their up-front costs are reduced. That is what Boeing offered. Of course leasing is more expensive than buying, you are using the value of someone else's money. Nothing was wrong with the lease deal, John McCain just didn't like it because he felt that the USAF should not acquire aircraft without his committee approving the purchase. Now he is out to get Boeing on a personal vendetta. Either that or there is more to this than meets the eye, certainly the $14K he got from special interests at EADS wasn't enough to buy his complicity.

[muddyboots]

Ensuring competition among two sellers means giving both leverage over the buyer, because if one exits the process, competition is lost. What the press has not pointed out is that McCain’s insistence on competition gave Airbus the power to force changes in the Air Force’s criteria.

http://www.cato-at-liberty.org/2008/03/13/airbus-alabama-boeing-and-mccain

Always nice to explain where your sources political standings lie...

The Cato Institute was founded in 1977 by Edward H. Crane. It is a non-profit public policy research foundation headquartered in Washington, D.C. The Institute is named for Cato's Letters, a series of libertarian pamphlets that helped lay the philosophical foundation for the American Revolution.

[bdk]

Always nice to explain where your sources political standings lie...

So that therefore makes the opinion invalid? Good attempt at deflecting the argument while truly offering nothing of value. Why can't you read it and conclude for yourself whether or not you agree rather than automatically discounting the piece due to the source? I mean even the Democrats can be right on occasion- in fact I happen to agree with many of them on this particular subject.

The argument offered in the quote seems quite logical to me. Do you disagree?

[bdk]

Oops!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

Last edited by bdk on Tue Mar 18, 2008 9:37 pm, edited 1 time in total.

[mikoyan29]

If there was nothing wrong with the deal, why did folks go to prison?

[CAPFlyer]

The folks that went to prison did so after the first RFP competition, not the lease deal.

[k5083]

Always nice to explain where your sources political standings lie...

So that therefore makes the opinion invalid? Good attempt at deflecting the argument while truly offering nothing of value. Why can't you read it and conclude for yourself whether or not you agree rather than automatically discounting the piece due to the source? I mean even the Democrats can be right on occasion- in fact I happen to agree with many of them on this particular subject.

The argument offered in the quote seems quite logical to me. Do you disagree?

Actually, the argument makes no sense at all. A single seller has a lot more leverage over the buyer than two competing sellers. And no seller can "force" changes in a customer's criteria. The buyer is in charge. You can try to persuade it to change its specs, but it doesn't have to listen.

Two further points about Boeing's "moving target" beef:

1. Do I need to list for you all of the great and famous military aircraft we worship every day on this forum that were procured only because a supplier convinced a government to change its requirements, often writing a spec tailored to a proffered aircraft? No, I thought not. Think of all the great warplanes, including several Boeings, that would not have existed if disappointed competitors had been allowed to insist on reverting to the original, usually overly conservative, requirements for the sake of "fairness".

2. At a former job I chased a promotion for about three years. I came close a few times, but the requirements kept changing. Should I have started a blog whining about moving targets and unfairness, or was I right to do what I did -- accept that in the real world, targets do move, requirements change, and it is "fair" to expect people to cope with that?

August

[bdk]

2. At a former job I chased a promotion for about three years. I came close a few times, but the requirements kept changing. Should I have started a blog whining about moving targets and unfairness, or was I right to do what I did -- accept that in the real world, targets do move, requirements change, and it is "fair" to expect people to cope with that?

The rules and expectations are quite different between a private company and a private company doing government contracting. The government imposes numerous requirements upon a contractor in the name of "fairness," including race and gender based quotas and ethical standards and oversight quite different from those used in commercial industries. It is illegal for instance for me to take my customer to lunch, or for them to buy me lunch because of the appearance of impropriety that may result. In the commercial world that is a normal way of doing business and is in fact expected.

I agree that if this was Boeing vs. American Airlines, a moving goalpost is acceptable as the stockholders of American expect decisions to be made in the best interest of the company, based upon the market forces of the moment. The government on the other hand has the authority to fine their suppliers tens of millions of dollars for not following government contracting rules which are quite different from commercial codes. On the flipside, this also requires the government to follow very specific processes to ensure fairness on their part. That is what is being contested in this situation.

Tanker VP: Protest an ‘uphill battle,’ but winnable

Mark McGraw, vice president, Boeing Tanker Programs, Tuesday shared new details about the ongoing protest of the U.S Air Force’s KC-X aerial refueling contract with business and defense reporters, drawing upon documents released publicly this week.

During the media call, McGraw reviewed Boeing’s protest filing executive summary and discussed in detail the basis for the company’s protest, stating the Air Force "repeatedly made fundamental but often unstated changes to the bid requirements and evaluation process” to ensure Northrop Grumman/EADS remained in the competition.

These moves, he explained, created an uneven playing field for the competitors, changed the intent of the original Request for Proposals and skewed rating criteria away from Boeing’s right-sized KC-767 toward the larger A330 platform. The result, he added, “was a contract award that is fundamentally unfair not only to Boeing, but to the warfighter and the American people.”

Citing nearly identical ratings for the five evaluation criteria – mission capability, risk, past performance, cost/price and integrated fleet aerial refueling assessment – McGraw expressed confidence that Boeing offered the right aircraft with the right capabilities at the right cost.

“Boeing offered a proposal based upon its 75 years of unparalleled success producing tankers for the U.S. government,” the executive summary reads. “But the Air Force bypassed Boeing’s offer, which provided the best value and performance to the mission at the lowest risk, for a plane that offered an illusory cost benefit fueled by EADS’ reliance upon illegal foreign subsidies.”

Despite what likely will be an “uphill battle,” McGraw remains upbeat about Boeing’s chances of getting another shot at the program.

“It's not like we had to search for reasons to protest,” he explained to reporters. “There were lot of flaws in the process, and I think we'll end up winning the day in terms of the protest.”

[muddyboots]

Always nice to explain where your sources political standings lie...

So that therefore makes the opinion invalid? Good attempt at deflecting the argument while truly offering nothing of value. Why can't you read it and conclude for yourself whether or not you agree rather than automatically discounting the piece due to the source? I mean even the Democrats can be right on occasion- in fact I happen to agree with many of them on this particular subject.

The argument offered in the quote seems quite logical to me. Do you disagree?

I did read it and I do agree with a lot of it. I was just pointing out that it was a third party publication. Sheesh I have you all paranoid and stuff lol! McCain is a nonce, and I am perfectly willing to lt him take a couple of gut punches for doing this kind of thing, if he deserves it. But I also happen to think Boing needs to get its act together.
I am willing to bet that airbus will win again, if the vetting process is fair. If we base it on sheer ability, the airbus is better (according to the AF). As I have said, I would rather have a good bird than more jobs for Boing. They haven't been doing well lately because they are used to being the insiders. Well, now they aren't the insiders. Let them suffer, and let 35k people find other jobs for a little while. In the meantime we'll have proper air assets, and they'll manage to live until Boing gets its act together in order to produce something the Air Force wants to buy. IMHO of course.

[JDK]

The government imposes numerous requirements upon a contractor in the name of "fairness,"

The critical bit being 'in the name of...'

If government (insert country / party etc here) actually stuck to its own rules, then we'd not have the regular scandals, investigations and issues.

The underlying impression I have is that Boeing's beef makes sense if you are explaining it to a five year old along the lines of 'always trust the policeman', and 'follow the rules'. But this deal is in the real world and it's just as 'fair' as all the other deals I've ever seen in the war industry. Boeing are sore, as Muddy's said, but tough. They lost. Pointing out it wasn't fair (so f. what) is only going to add an additional financial burden to the US and delay a final decision, as well as wasting a lot of time and resource in both companies and elsewhere. Who even needs enemies with process like that?

[muddyboots]

notice the guy for boing said he thought they would win the PRTEST? nothing at all about the actual competition...I guess he figures they'll have time to swing some new deals behind closed doors, cause they sure won't throw any new concepts or abilities onto a bird taht's older than most of the posters in here...

[CAPFlyer]

Here's what I call the "BS Test" in Defense Contracting for whether an appeal has a chance in hell of being upheld:

Swap the roles.

First, let's say that the whole Boeing/USAF lease deal never happened and Airbus didn't have a situation like that happen to them instead.

Let's say that EADS/NG offered the A310 MRTT (which would have been a "right sized" aircraft for the original specs) and Boeing went and convinced the USAF to allow them to offer a KC-777. The USAF chooses the KC-777 because it exceeds all of the requirements (and ignoring that it does so by exceeding the critical requirements of replacing the KC-135 and being able to operate into all the same airports as a KC-135 which the 777 can't do).

Would EADS/NG appeal this decision on the basis that the USAF conducted an unfair competition by giving "points" to Boeing for proposing an aircraft that not only replaced the KC-135 but could replace the KC-10 and then some as well, something not asked for by the RFP?

My answer to this question is an unequivocal yes. As such, I think that this isn't a matter of being a sore looser, I think this is an issue of the DoD sitting there and violating their own acquisition rules (again) and the looser finally getting fed up with it happening on a regular basis and fighting it.

As has been said before, the precept of government contracting is that the requirements must be laid out for all to see and all must be given a sufficient opprotunity to fulfill those requirements. If the requirements are changed, they must be done in writing and those changes must be given to all parties in the competition and time allowed for the proposals to be adjusted to meet the new requirements. In this case, it looks like the USAF changed the requirements without putting it in writing thus failing to give Boeing the opprotunity to prepare and/or submit a revised proposal for consideration.

I know the A330 MRTT is a much more capable aircraft than the KC-767 as a split-mission Cargo/Tanker aircraft, and I don't disagree that it would be nice for the USAF to have, but if the USAF wants the A330, then they need to have a competition for a KC-10 replacement which is a split-mission Cargo/Tanker and not claim to be wanting to replace the KC-135 (a Tanker with a secondary cargo capability). I go back to the CSAR-X competition. The USAF claimed to be wanting to replace the HH-60G but was really conducting a competition to replace the MH-53P as is evidenced by the fact they selected the HH-47 as the winner and are in the process of retiring the MH-53s and yet keeping all of the HH-60s until well after the HH-47 production is slated to be finished.

[muddyboots]

my head hurts but I got through it! What causes this phenominon?

[bdk]

<EDIT>Dead link, sorry about that!</EDIT>

Last edited by bdk on Thu Mar 20, 2008 11:43 pm, edited 3 times in total.