Posted on 03/01/2008 7:42:30 AM PST by jdm
The Air Force snubbed longtime partner Boeing and awarded a lucrative contract to Northrop and EADS, the European maker of the Airbus, to build a fleet of refueling aircraft. The decision stunned Boeing and elected officials in the Northwest, who immediately objected to the decision to reject the all-American option. However, officials claim that Boeing’s submission simply didn’t measure up — literally:
Air Force officials offered few details about why they choose the Northrop-EADS team over Boeing since they have yet to debrief the two companies. But Air Force Gen. Arthur Lichte said the larger size was key. “More passengers, more cargo, more fuel to offload,” he said.
“It will be very hard for Boeing to overturn this decision because the Northrop plane seemed markedly superior” in the eyes of the Air Force, said Loren Thompson, a defense industry analyst with Lexington Institute, a policy think tank. And as the winners of the first award, EADS and Northrop are in a strong position to win two follow-on deals to build hundreds of more planes.
Boeing spokesman Jim Condelles said the company won’t make a decision about appealing the award until it is briefed by Air Force officials. Boeing believes it offered the best value and lowest risk, he said.
Stifel, Nicolaus & Co. analyst Troy Lahr said in a research note it was surprising the Northrop-EADS team won given the estimated $35 million per-plane savings offered by Boeing. Lahr estimated the Boeing aircraft would have cost $125 million apiece. “It appears the (Air Force) chose capabilities over cost,” Lahr said.
In short, Boeing gave a better price, but Northrop/EADS gave more capabilities. It can deliver more fuel or carry more personnel and/or cargo, depending on configuration. That may be a rational trade-off, and the Air Force is the organization best positioned to make that choice. They understand what their missions require and should know which airframe best complements them.
Appeals rarely if ever work, as the GAO assumes the client (Air Force) knows what it’s doing. It will only have a chance of succeeding if Boeing can demonstrate that the Northrop/EADS offering does not meet the specifications demanded in the RFP, or if the competing bid has unfair pricing or other violations of the process. And even then — as I know from personal experience — Boeing is unlikely to succeed, and could damage their chances for future contracts.
In the mid-1980s, the FAA put out an RFP for a system to completely replace the air-traffic control system across the nation. Two companies got selected to compete for the prime contractor position, IBM and Hughes Aircraft. The spec had three bedrock requirements: the system had to use all-new components in the ATC suite, it had to be functional at the time of submission (no mock-ups), and it had to use IBM’s computer as its core. IBM was required to give Hughes its at-cost pricing to ensure fairness.
IBM won that contract, as it bid significantly lower costs than Hughes. After the debriefing, Hughes found that (a) IBM had priced its core higher for us than for them, (b) their model reused existing components in the ATC suite, and (c) they didn’t have a working system. Hughes appealed the decision, which was considered something of a scandal in its own right at the time, but got overruled.
Three years later, IBM gave up on the contract, admitting that it could not produce the system. By that time, Hughes had sold its system to Canada, as well as other nations, while the US remained reliant on ATC computer systems dependent on tubes.
If that deal didn’t cause Congress to demand a redirected result, this one won’t, either. Congress may have the Air Force explain their decision to send some of their procurement budget to Europe rather than employ Americans, but unless someone turns up corruption or compromised safety, the decision will likely stand — and it might just be the best decision in any case, at least in terms of support for the missions the Air Force has to accomplish.
It is always a good time for donations to the GOP-there must have been tones of money and of course a plant to Jeff...lovely.
“Northrop Grumman is a U.S. company.”
REALLY? Gee, you think maybe some of us aren’t quite as stupid as the GOP ruling elites give us credit for?
“You don’t know what you are talking about.”
Yeah, FR, I do know what I’m talking about. I also know what’s going to happen in November.
The contempt the GOP must feel for the average voter’s intelligence is unbelievable. They did this in an election year-no worries. They have national security sown up so, we have to vote for them. Guess again GOP because you just put our security at risk with this deal as you have done every day with open borders.
That is so irrelevant it might have come from Hillary!08
I can't really blame him personally, it's in his DNA.
With Northrop based in California, this means 7,500 jobs for California, which will be producing all the parts for these aircraft.
Thank you, the fact that you insulted me rather then addressing my post indicates that you can not address the issues raised by me and other posters.
Did you watch no news yesterday? The only plant in American involved with manufacturing of this plane is the one in Alabama.
Look, what you are saying is false.
I tell you what. You specifically document the jobs in Europe and I'll specifically document the jobs in the U.S., okay?
Now for the “dirty secret” of Airbus. Their planes get nearly the same or better fuel consumption as their American counterparts. That is only if it’s a long haul. The Airbus 3 series planes get great fuel economy while at cruising altitude but are gas hogs getting to that altitude. They don’t do well with short trips. A NY to Chicago run would put them in a hole money wise. They need at a trip of at least 1000 miles to break even.
It's a California based company, and this will create well over 7,000 jobs for California.
“The contempt the GOP must feel for the average voter’s intelligence is unbelievable.”
Yup, it ranks right up there with the perspicacity of the Clintonistas around Hitlery, which really is no great surprise I suppose.
http://www.kansascity.com/news/nation/story/512158.html
‘But Northrop, a defense contractor perhaps best known for developing the B-2 stealth bomber, said it would assemble and modify the tanker in Mobile, Ala., making it, in its words, an “American-built” plane.’ Any other questions concerning this matter?
Wrong...All the part will be produced in California. This is what was reported on the news here several times the past few days.
They even gave the number of jobs this will create for California, 4,500 in LA County alone 3,000 other jobs in other areas of the state.
What a shame
I never was good at geography.
Er *parts*
What does McCain think about this?
Obama’s made this his issue in the campaign
FreeReign:Northrop Grumman is a U.S. company.
REALLY? Gee, you think maybe some of us aren’t quite as stupid as the GOP ruling elites give us credit for?
Good, then the next time don't say something stupid such as, the AF "gave the bid to foreigners".
Check out the following links...if you have a strong stomach.
http://www.kansascity.com/news/nation/story/512158.html
http://www.reuters.com/article/topNews/idUSL0119076820080301
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