The U.S. government piled on $5.2 billion in added costs to our KC-X tanker proposal but only boosted the Northrop-Airbus proposal $772 million, a recent Reuters article points out. This example of disparate treatment is about as good as any to explain why we’re protesting the $35 billion air tanker contract.
Members of the media are starting to take note. In a straightforward account, Reuters reporter Andrea Shalal-Esa recently fleshed out the whopping differences between the two competing proposals. As Shalal-Esa observed: “The Air Force’s evaluation and adjustments to the two bids…are at the heart of Boeing’s contract protest filed March 11 with the nonpartisan Government Accountability Office.’’ The GAO is set to rule by June 19.
In protest documents we have filed with the GAO, we have said the government unfairly increased the cost of our 767-based tanker. The government cited higher risk associated with the development and production of our tanker, as well as a disagreement about anticipated repair costs, which all led to evaluators unfairly assigning us a much higher cost than we could ever have imagined.
The same evaluators, on the other hand actually lowered Northrop-Airbus estimated operation and support costs by $1.4 billion. They lowered the operational costs of an airplane that is larger than our 767, burns 24% more fuel, requires more support and parking space and proposes a high-risk, itinerant and intercontinental production plan. In total: the Northrop-Airbus tanker life-cycle costs will cost the U.S. government $49 billion more than our more efficient tanker over 40 years. Go figure.
We believe, as we have testified in our protest, that the evaluation clearly favored Northrop and was “plagued by unreasonable cost assessments, disparate treatment, misleading discussions, and a fundamental failure to follow the evaluation criteria.”
According to Shalal-Esa, among costs added to the Northrop bid included $333 million to beef up defensive equipment and the projected life cycle cost of Northrop’s proposal to $108.01 billion. That figure includes $68.3 billion to operate and support the new flying fuel stations over the next few decades. But it keeps the “most probable life-cycle cost” for Northrop’s bid ever so slightly below our $108.04 billion bid.
As we continue to insist: It doesn’t add up. Even key defense experts are beginning to question the math, and the logic. The Reuters article quotes Loren Thompson, a defense analyst at the Lexington Institute, saying our protest made clear the process was not as transparent as the Air Force had hoped.
Observed Thompson: “It appears that the Air Force’s pricing methodology was stacked fairly heavily against Boeing’s bid.’’

Comments (5)
"Q And just to follow, did size matter in this issue? I mean, the KC-30 is twice as large as the 767. Did that play into cost savings, and was that an issue in this decision?
GEN. LICHTE: Well, I -- from a warfighter's perspective, and I know the team looked at a whole number of things, but from my perspective, I can sum it up in one word: more.
More passengers, more cargo, more fuel to offload, more patients that we can carry, more availability, more flexibility and more dependability. And so from my aspect, the team did tremendous work and now we will take that and put it into the fight. (From Officials announce tanker contract award, www.af.mil/news/ dated 3/4/2008)"
More, more, more. As I read the transcript on the day of the announcement, this jumped out as the most important part. It revealed, I think unwittingly, what the Air Force couldn't say no to: More. So in the evaluation they made the Mission capability a major discriminator for NG/EADS, even though no credit was supposed to be given for exceeding the KPP objectives, which both planes did. Then to solidify their decision, they twisted themselves into pretzels making the more massive plane the more cost effective alternative. People make emotional decisions and then try to justify them logically. I wonder if there was any way for Boeing to win this, aside from a 777 tanker variant.
Posted on April 19, 2008 17:28
As a more seasoned engineer (yes, you can translate that as an "old sliderule guy"), I am more inclined than many of my younger counterparts to question computer results that just don't make sense. My experience has taught me that even minor deviations in algorithm or parameters can significantly skew the results.
That said, has anyone compared the results of the NG maintained and operated software with equivalent manual calculations to see if you get at least the same orders of magnitude?
Posted on April 21, 2008 22:10
It just occurred to me that the Euro was worth less than the dollar when that bid took place, now the roles are reversed, how will the government make up the difference? There's lots more, I hope to get a letter off to Aviation Week, but, quickly, the size thing. Do the math, if fewer KC-X's can get in the same space as 767s, did anyone ever think that that would meanless booms in the air? And for the price we pay for fighters now, we don't need less booms, unless they wanted to convert a 380 into a tanker. Then therewould only be one.
Posted on April 28, 2008 01:53
It's unbelievable how Boeing is treating the whole situation: is this what the Americans understand under a fair competition?
The studies published by Boeing were made by a one of their funded companies. I doubt that this enterprise has then any interest to say something not in Boeing's interests.
Comparing both A/C just by their size and then zeroing the following arguments down to fuel consumption is completely ridiculous!!!
Boeing's 767 is a much older design.
Come on Boeing, you can do better than that!
Best regards from Germany
Posted on May 2, 2008 10:31
good blog
Posted on June 1, 2008 18:40
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