Writings and observations

Boeing rebound

The General Accounting Office decision today recommending a revistation of the Air Force decision not to buy its fleet of air tankers from Boeing (but from Northrop Grumman instead) doesn’t end the battle; the tenor of initial coverage suggests that it does, but it doesn’t.

But it is enough, and more than enough, to change the political tenor of the situation. And not in a direction that will help Arizona Senator John McCain – a backer of the Northrop decision – nor those candidates running under his banner.

From the GAO:

The GAO decision should not be read to reflect a view as to the merits of the firms’ respective aircraft. Judgments about which offeror will most successfully meet governmental needs are largely reserved for the procuring agencies, subject only to such statutory and regulatory requirements as full and open competition and fairness to potential offerors. The GAO bid protest process examines whether procuring agencies have complied with those requirements.

Specifically, GAO sustained the protest for the following reasons:

1. The Air Force, in making the award decision, did not assess the relative merits of the proposals in accordance with the evaluation criteria identified in the solicitation, which provided for a relative order of importance for the various technical requirements. The agency also did not take into account the fact that Boeing offered to satisfy more non-mandatory technical “requirements” than Northrop Grumman, even though the solicitation expressly requested offerors to satisfy as many of these technical “requirements” as possible.

2. The Air Force’s use as a key discriminator that Northrop Grumman proposed to exceed a key performance parameter objective relating to aerial refueling to a greater degree than Boeing violated the solicitation’s evaluation provision that “no consideration will be provided for exceeding [key performance parameter]

3. The protest record did not demonstrate the reasonableness of the Air Force’s determination that Northrop Grumman’s proposed aerial refueling tanker could
refuel all current Air Force fixed-wing tanker-compatible receiver aircraft in
accordance with current Air Force procedures, as required by the solicitation.

4. The Air Force conducted misleading and unequal discussions with Boeing, by
informing Boeing that it had fully satisfied a key performance parameter objective relating to operational utility, but later determined that Boeing had only partially met this objective, without advising Boeing of this change in the agency’s assessment and while continuing to conduct discussions with Northrop Grumman relating to its satisfaction of the same key performance parameter objective.

5. The Air Force unreasonably determined that Northrop Grumman’s refusal to
agree to a specific solicitation requirement that it plan and support the agency to
achieve initial organic depot-level maintenance within two years after delivery of the first full-rate production aircraft was an “administrative oversight,” and improperly made award, despite this clear exception to a material solicitation requirement.

6. The Air Force’s evaluation of military construction costs in calculating the
offerors’ most probable life cycle costs for their proposed aircraft was unreasonable, where the agency during the protest conceded that it made a number of errors in evaluation that, when corrected, result in Boeing displacing Northrop Grumman as the offeror with the lowest most probable life cycle cost; where the evaluation did not account for the offerors’ specific proposals; and where the calculation of military construction costs based on a notional (hypothetical) plan was not reasonably supported.

As noted, the GAO isn’t specifically recommending that Boeing get the award, and it can’t even force the Air Force to rerun the process. But it stands as an important statement that something went seriously wrong in the original Air Force selection process.

You can get the sense of where some of this is headed by checking out Washington Senator Patty Murray‘s statement today. In part: “It is Congress’ job to determine whether major defense purchases meet the needs of our warfighter and deserve taxpayer funding. The Pentagon must both justify its decision and address the flawed process that led to today’s ruling. We need answers before handing billions of American defense dollars to a subsidized, foreign company focused on dismantling the American aerospace industry.”

Expect revisitation of the statements by Boeing partisans about how McCain was directly involved in the decision, aftermath from his efforts against a 2004 Boeing contract and change in defense rules on bidding that were also opposed by Northrop.

McCain had helped block a contract with Boeing in 2004 and pressed the Pentagon in 2006 to change bidding rules opposed by Northrop Grumman and Airbus.

Of course, McCain was almost sure to lose Washington state (and Oregon) anyway. But this could have larger effects. Could it cause him serious trouble as well even in Kansas, where Boeing has mass operations at Wichita?

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