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.
My post (106) is not spam, it’s a Boeing website, please read it. Your excessive number of posts are spam, 1 or 2 would get the point across.
You harping now with your two posts about my ~six posts that document jobs, is spam.
Please don't post to me about it again.
So that's what they do in that building ... I used to work right across the street from there.
I think "jobs lost in Kansas" is probably accurate.
There are a lot of people in Wichita working on building KC-767s for Italy and Japan. Their long-term employment prospects just dropped considerably.
Yeah, I’m sure Ohio has offices for every aerospace-related company under the sun, including BAE, Airbus, SAAB... If we treat the USAF as an employment program and a bureaucracy for delivering subsidies, we’ll have a very expensive, crappy air force and deficits until the end of time.
And we send enough of our tax dollars overseas as is already, we don't need to be giving Billion dollar defense contracts to foreign countries, especially France.
I would also point out that not all Ohio voters or American voters work in defense/aerospace. While making that small segment of the population happy is not a bad political strategy in itself, alienating the voters who are far more concerned about domestic issues and who don’t work in that industry is politically stupid and plays into the hands of the opposition.
I've been documenting some of the Northrop Grumman jobs and some of the EADS, U.S. part supplier jobs.
You should document your point if you wish to make one.
Why would voters who don't work in the industry be alienated, if voters who are in the industry aren't alienated?
Perhaps at the time, one would have thought this to be true. Who would have believed that the GOP would settle for one dinky plant in Alabama? Of course we don’t know what other ‘perks’ they received. These are old articles read the new ones now that the contract has been awarded.
I'm sorry. I think that you don't know what you are talking about.
The articles stand -- you counter with...nothing.
Reagan’s words again ring true:
“If it’s successful, tax it. If it survives, regulate it. If it starts to fail, subsidize it.”
No. The U.S. media report the facts incorrectly and you believe them.
Well the USAF contracting office sure worked hard enough with Boeing the first time around on this jet. That is why Darlene Druyan and some Boeing big shots went to jail.
All the jobs in various states this contract will create has been posted several times on this thread. Are you one of those, "don't confuse me with facts, my mind is made up" type of person? There is more than "one dinky little plant" in Alabama. Boeing cheated the first time on this airplane. Maybe that had something to do with the award.
Northrop Grumman employees are just as American as Boeing’s And they are NON UNION! GE in Ohio will be building the engines for this program, the refueling system is buil here also.
Singapore Airlines grounds A380 due to fuel pump defect
http://www.iii.co.uk/news/?type=afxnews&articleid=6556041&subject=companies&action=article
Singapore Airlines (SIA) said Tuesday it had cancelled an EADS Airbus A380 flight to Sydney because of a fuel pump defect.
snip- Passengers were transferred to a Boeing 747-400 but not all of them could be accommodated.
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