GAO Finds ‘Significant’ Errors in U.S. Air Force Tanker Math
Mobile’s hopes for an aircraft assembly plant just took a serious hit. As shown in the latest edition of Lagniappe, Boeing claimed the Air Force made math errors in their evaluation of the proposals. CNBC is reporting the U.S. General Accounting Office has also found that to be the case and called them “significant errors.”
Boeing (NYSE:BA) is trading sharply higher on the news, while Northrop Grumman (NYSE:NOC) has taken a slight hit. Although the Air Force doesn’t have to abide by the GAO’s ruling, the likely outcome is for another round of bidding for the tanker contract experts say.
In February, the Air Force awarded a $35 billion contract for refueling tankers to a partnership of EADS and Northrop Grumman. The GAO is claiming the U.S. Air Force misled Boeing and is recommending the U.S. Air Force re-open discussions and re-evaluate bid proposals.
[Click Here for GAO statement] (h/t Chip Drago at MobileBayTimes.com)
Tags: Boeing, northropgrumman, tanker
June 18th, 2008 at 12:02 pm
Wonder if there will still be a parade.
June 18th, 2008 at 6:31 pm
I have looked over the skinny version of the GAO decision - note,
we the public will not be allowed to see the full decision because it
contains “secret” information. They’ll produce
public consumption version soon.
The number one reason GAO provides for a rebidding the contact:
“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.”
Are we really that concerned about “non-mandatory” requirements?
Was the award heavy on that non-requirement? Doubtful.
The number two reason GAO gave was that the Air Force gave consideration
to the fact that NG could exceed requirements in aerial refueling, and
that, GAO says, is not allowed. So if we listen to GAO whatever you do,
don’t exceed what’s being asked for. Just provide what the contract
requires. We don’t need the best, only what’s required.
In their number 3 reason GAO takes on the role of refueling experts and
says the NG bid did not demonstrate that it could refuel properly
to the Air Force requirements. Who knows that better, white-collars in
GAO or the Air Force?
Reason 4 is the worst. The Air Force thought Boeing had satisfied a key
performance requirement and supposedly indicated that to Boeing and later
determined Boeing did not meet that requirement. Supposedly Boeing was
not told later they did not meet the requirement . . meanwhile Northrop
Grumman was sailing along on that same requirement and the Air Force
let them know they were. So NG looked at the bid requirements and met
the one in question and Boeing looked at the very same bid but had to
ask the Air Force whether they met the requirement? That’s scary.
Number 5: The Air Force read as admin oversight in bid that NG did
not check off on a two year warranty maintenance on the tankers, but GAO
doesn’t believe the Air Force. Are we really to believe NG would not
warrant the tankers and help maintain them for two years after
construction? That’s what GAO wants us to believe. GAO actually gave
this as a major reason for recommending a rebid.
Number 6 is the math errors we’ve all heard about. This is where NG
was able to show the life cycle of their product would exceed the life
cycle of any competitors. But GAO said that was a “notion” that was
“hypothetical” and not “reasonably supported.”
Finally, number 7, GAO says Air Force improperly increased Boeing’s
non-recurring engineering costs because Boeing couldn’t explain
the costs. Apparently Boeing bid unbelievably low on this element
and the Air Force probably thought, yes, we’ve heard and been through
this before. What do aeronautical engineers get paid these days,
about $5,000 a year???
And GAO didn’t like the Air Force’s simulation model used to
determine Boeing’s non-recurring engineering costs, didn’t think it was
a reliable indicator of the costs.
Could it be the Air Force just didn’t buy Boeing’s bid, that they
knew their shoulder would be cried upon by Boeing in a few years
that they needed more money to complete the contract because of
“extenuating” circumstances?
What a sheepish, “hypothetical” decision by GAO. It’s got the legs
of a new born goat. I urge the Air Force to publicly thank GOA
for their four month long pouring over decision and their
seven “shocking” key point decision, but our original decision
to award NG remains intact.
Don’t wait 60 days either, do it
tomorrow.
Is that all GAO’s got, those seven points? I sure hope the Air Force
are as strong as I think they are and move forward with this award
to Northrup Grumman.
a year?