Since the U.S. Air Force tanker award announcement a few weeks ago, various Boeing leaders have spoken out on the company’s decision to file a protest against giving the contract to Northrop Grumman/EADS.
One of the many reasons we’re protesting the award is because we believe the Air Force failed to properly consider the 767 cost data provided by Boeing Commercial Airplanes. We were in fact very surprised by the evaluation of the Air Force of our commercial data and the associated increased risk and cost that they added to our proposal as a result. This issue alone made the Boeing offer appear to be billions more than the price we offered the Air Force.
The Air Force requested a tanker built upon a “commercial baseline aircraft” consistent with Federal Acquisition Regulations (FARs). We responded with a fixed price contract for both the non-recurring and recurring portions of the contract. Price reasonableness and on-going assurances of competitive pricing were key Air Force concerns. We understood that and so we went well beyond what is required by the FARs by providing sensitive commercial price and cost data to address their concerns and demonstrate the highly competitive nature of our offer. We agreed to allow the Air Force ongoing review rights of our cost data to ensure that as we went beyond the competitive portions of the program the Air Force would continue to have the visibility needed to ensure the price was fair and reasonable.
By the time we submitted our final proposal, we believed we had fully complied with the Air Force’s requests to submit pricing data to support the KC-767 proposal. In an October 2007 meeting, the Air Force commended Boeing for the “unprecedented” levels of data it had supplied. And, in a meeting held just before Boeing submitted its offer, the Air Force told Boeing it was satisfied with the commercial cost data it had provided. The Boeing offer included far more data and visibility than we have provided on other, successful bids.
At the debriefing however, Boeing was told that the data was insufficient and that our evaluated price had been increased by billions of dollars as a result. We were told that the data needed to be consistent with that provided by IDS. As a commercial company our accounting system does not track costs a level necessary to meet Cost Accounting Standards defined in FAR. Our commercial accounting system is designed to provide information required to make high level cost decisions.
In order for the US government to take advantage of the lower overhead costs available in a commercial environment, we all need to understand what information is available, needed and useful to the government and not have US commercial contractors be penalized for not providing data that is not available and not required by law! Most of all we want to understand, so that we can better serve the Air Force and the other services in their procurement needs. We look forward to their response to our concerns.
Beverly Wyse Vice President 767 Airplane Programs
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Comments (8)
Why don't you compose an email to be sent to the members of the Armed Forces committees of the Senate and the House.
It would be very helpful if you provided the appropiate email addresses, and include the email address for the Senators, for each state, the same information for each member of the House of Representatives, and President Bush and Vice President Cheney.
This contract should have been sent all the way up to President Bush before being awarded.
It should have been awarded to the company who would employ the most Americans, and provide the most total payroll to Americans, not people in other countries.
Sincerely,
Maurice Trimm
Posted on March 26, 2008 10:16
Your protest missed two most important facts:
First, if airplane size is the (new) requirement, why not have 777 as an alternate choice, or even a split order with 767.
Second, as outsourcing is a major problem facing us today, why give away our number one export item to some country we have a dispute on unfair competition.
Seems to me there must be other hidden reasons for Boeing to lose out on this selection. Contract of this size is a national concern and often decided politically. Let's push Congress to reopen bidding.
Posted on March 26, 2008 18:33
Does Boeing or NG/Eads have any great financial accountability for their estimated tanker price? Do they have to pay for cost overruns? If this is a cost plus bid, seems like more of a leap of faith to go with one company or the other.
Posted on March 26, 2008 22:34
I saw your one page advertising in the LA Times newspaper but found it hard to follow because of the comparisions of unrelated items. Do you have a list of what the differences between what the RFI called for and what it finally came to be?
It is one thing to have the rules changed on you but thejn being caught asleep at the switch is another. Just a curious citizen that doesn't work for either side!
Posted on March 27, 2008 00:26
I believe Maurice Trimm's has a very good idea, a link to a website where we can sign a letter and send it along to our elected officials including the White House.
Paul
Posted on March 27, 2008 07:43
The model of the 767 offered for this competition (the LRF) has never been sold commercially and never been offered for sale commercially.
As such, I am dubious that commercial pricing data would be sufficient.
Posted on March 27, 2008 07:57
"As such, I am dubious that commercial pricing data would be sufficient."
bingo, Boeings record on the Italian and Japanese KC767s has not been stellar - Italys planes 4 years late, and that was with a minimum change airframe, and a totally different boom than that offered to the USAF. The Australians chose the A330 because they saw Boeings risk with the hose pods as being far too high and that has been in fact one reason for the major Italian delays.
Posted on March 29, 2008 10:05
If boeing did things that were on the up and up, with all of the lobbying in goverment contracts, how come you didn't win. and if your getting materials from the global market what the difference between both compainies. with larger payload and a boom that is already devoloped against one that isn't. Aren't overruns and devolopment time an issue.
Posted on April 1, 2008 20:24
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