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.
I tend to agree. And this is a major plus for California. So....
Last time I checked, Northrup is an American company. Read the fine article. America works because of competition. If Boeing and people like yourself can’t accept that, you deserve what you get.
Specifically, a California based company.
25 more states to go.
Never mind the facts, just use emotion and empty rhetoric!
24 more states to document.
Please don't spam the thread.
How stupid is this? If the Republicans had any shred of possibility for winning in November, the Air Force idiots just blew it away. As a result, the Dems will come in and cancel the contract and refuse to build any more planes or spend another dime on the military.
A
Makes me wonder how safe we are with idiots like this running the Air Force. Obama has decreed that he won’t even spend a cent on military research much less equipment and supplies. Aren’t they listening? Is anyone?
Cover your ears. Hillary is going to be all over this like a rash. And McCain can’t defend it.
I would go further and say that if you think McCain and the Republican’s platform in Ohio could be summarized as “we want to make Boeing be the next GM and the state of Ohio the next Detroit”, then they certainly wouldn’t get my vote.
Things have progressed some now. We routinely run simulators of automated equipment with a snooper that looks for unused lines of code. We run the unit through all of the parameters and errors and then look for stuff that was never used. Cuts way down on the search.
Georgia Northrop Grumman's KC-30 Tanker Team Will Support 4,200 Jobs in Georgia and Generate Economic Activity Statewide Aug 22, 2007—Northrop Grumman's KC-30 Tanker team will support more than 4,200 direct and indirect jobs throughout Georgia if the KC-30 Tanker aircraft is selected by the U.S. Air Force. The KC-30 program will generate an additional $11 million annually in economic growth in Georgia, bringing the team's total direct and indirect economic impact to $440 million annually. Link
Illinois Northrop Grumman's KC-30 Tanker Team Will Support 4,300 Additional Jobs Throughout Illinois and Generate Economic Activity Approaching $2 Billion Aug 30, 2007—Northrop Grumman's KC-30 Tanker team will create and sustain more than 4,300 jobs throughout Illinois if the KC-30 Tanker aircraft is selected by the U.S. Air Force. Additionally, Northrop Grumman and the KC-30 Tanker supply base will generate economic activity in Illinois approaching $2 billion annually. Link
Indiana Northrop Grumman's KC-30 Tanker Team Will Create Jobs and Generate Economic Activity Approaching $40 Million Annually in Indiana Dec 4, 2007—Northrop Grumman's KC-30 Tanker team will generate economic activity approaching $40 million annually and create more than 570 direct and indirect jobs in Indiana if the KC-30 Tanker aircraft is selected by the U.S. Air Force. Northrop Grumman and the KC-30 supply chain in Indiana currently support more than 4,600 jobs statewide and generate a combined economic activity exceeding $370 million annually. Link
Louisiana Northrop Grumman's KC-30 Tanker Will Create Aerospace Jobs and Generate Economic Activity in Louisiana Aug 23, 2007—Northrop Grumman's KC-30 Tanker team will generate economic activity and support aerospace jobs in Louisiana if the KC-30 Tanker aircraft is selected by the U.S. Air Force. Northrop Grumman and KC-30 teammate EADS generate a combined direct and indirect economic activity of $600 million annually. Northrop Grumman and the KC-30 industry team support more than 5,500 jobs throughout the state and inject $265 million in employee salaries into the economy each year.Link
Maryland Northrop Grumman's KC-30 Tanker Team Will Support 2,800 Jobs and Generate Economic Activity Approaching $225 Million Annually in Maryland Dec 6, 2007—Northrop Grumman's KC-30 Tanker team will generate economic activity exceeding $225 million annually and support more than 2,800 direct and indirect jobs in Maryland if the KC-30 Tanker aircraft is selected by the U.S. Air Force. Northrop Grumman and the KC-30 supply chain in Maryland currently support more than 18,500 jobs statewide and generate a combined economic activity exceeding $1.3 billion annually.Link
Michigan Northrop Grumman's KC-30 Tanker Team Will Create Aerospace Jobs and Generate Economic Activity Approaching $200 Million Annually in Michigan Nov 28, 2007—Northrop Grumman's KC-30 Tanker team will generate economic activity approaching $200 million annually and create or support more than 2,700 direct and indirect jobs in Michigan if the KC-30 Tanker aircraft is selected by the U.S. Air Force. Northrop Grumman and the KC-30 supply chain in Michigan currently support nearly 14,000 jobs statewide and generate a combined economic activity exceeding $1.1 billion annually.Link
Mississippi Northrop Grumman's KC-30 Tanker Will Bolster Economic Growth and Create Aerospace Jobs in Mississippi Aug 15, 2007—Northrop Grumman's KC-30 Tanker program will contribute nearly $12 million annually to Mississippi's economy if the KC-30 Tanker aircraft is selected by the U.S. Air Force. Northrop Grumman and principal KC-30 teammate EADS currently employ 11,000 Mississippians, support more than 34,000 jobs statewide and bring a combined economic impact of $2 billion annually to Mississippi. Northrop Grumman injects an employee payroll of $574 million into the state's economy each year. Link
We are only up to the "M's", I could go on.
“Linking the fate of the Republican party to that of a defense contractor is a dubious form of patriotism.”
That’s corporatethink. Republicans ought to try some Humanspeak, like “We’re keeping thousands of jobs here in the USA.” That’s what wins elections.
The USAF contracting office did not work hard enough with Boeing to negotiate the best plane at the best price. Government agencies are notoriously bad at negotiating.
The cost changes that will be added through the change order process will equalize any of the concerns you note.
Your post is spam. My posts document jobs created. You have a problem with that?
You won’t vote for a Republican, you can’t vote for a Dem (I assume) and Bloomberg announced last week that he won’t get in. I was hoping he would, as he has the brains to get the USA back on the right financial track, if anyone does.
Come to think of it, perhaps he thinks the economy is unfixable.
last I heard, the only thing keeping C-17 alive was Boeing internal funding and lame hopes for foreign sales. AF was showing little willingness to go beyond the 220+ already on order...onsies and twosies (spec ops etc) but about 230 AC total. Editorializing about some "historical partnership" is stretching the point as far as Long Beach is concerned.
Boeing has been happily dismantling the old MDC facility here and developing the real estate. Commercial facilities are gone and only C-17 and some support services remain for the most part. (They did leave the "Home of the Douglas Jets" sign either as a gift or a poke in the eye)
I think the C-17 tooling all belongs to Boeing and once it starts coming down the cost of starting over would buy you a medium sized country.
Profit in large AC is in their sustainment...decades worth of parts for these planes will have to come from Europe. Put another way - building them is the cheap part, sustaining them in service is where the real money is and that money will be going to the existing European suppliers and not to Alabama. Remember that these are based on existing (euro) aircraft and economy does not come from replacing current parts with American substitutes,also, support (actually hanging parts on the AC) will probably take place at AF depots. (Nowhere in the news releases have I seen the phrase "lifetime cost" and that's usually a gov. mantra)
I've read that the RFP drove Boeing to the smaller AC but it's also true that they wanted a new role for 737 specifically and the AF had wanted that plane before. Never saw the spec so that's rumor.
Some of the posts here claim the EADS AC has more capabilities. They both meet the specification but Airbus does it on a bigger platform. Not more capabilities but higher capacity (we are told).
Did you say Ohio?
GE; Cincinnati - will provide the CF6 engines Goodrich; Troy, Ohio - nose wheel assemblies
RTI International; Niles, Ohio - will provide titanium
Barnes Aerospace; West Chester, Ohio - CF6 engine sub-assemblies
Byron Products; Fairfield, Ohio - CF6 engine sub-assemblies
Cincinnati Thermal Spray; Cincinnati - CF6 engine sub-assemblies
Ferco Tech; Franklin, Ohio - CF6 engine sub-assemblies
GE Shop - Frames & Shafts; Evendale, Ohio - CF6 engine sub-assemblies
GE Shop - Tubes; Xenia, Ohio - CF6 engine sub-assemblies
Graphel Corporation; West Chester, Ohio - CF6 engine sub-assemblies
Metal Improvement Co.; Blue Ash, Ohio - CF6 engine sub-assemblies
Ohio Gasket & Shim; Akron, Ohio - CF6 engine sub-assemblies
Parker Aerospace; Forest, Ohio - CF6 engine sub-assemblies
PCC - Airfoils Co.; Wickliffe, Ohio - CF6 engine sub-assemblies
QC Labs; Woodlawn, Ohio - CF6 engine sub-assemblies Tool Sales & Service; Cincinnati - CF6 engine sub-assemblies
TW Metals; Cincinnati - CF6 engine sub-assemblies
U.S. Aeroteam; Dayton, Ohio - CF6 engine sub-assemblies
U.S. Chrome Corp.; Dayton, Ohio - CF6 engine sub-assemblies
Honeywell; Urbana, Ohio - pilot director and marker lights
Northrop Grumman; Fairborn, Ohio - will provide the training system
What irritates me the most is so-called “Conservatives” harping on how winning government contracts creates jobs or how creating special incentives will attract this company into some region and create umpity-ump jobs when the effect overall is more than often irrelevant to the local economy or even worse for the country. What they’re really doing is screwing up the market and the taxpayers... something that Ted Kennedy Democrats are for.
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