GAO Upholds Boeing Tanker Protest

UPDATE: Here's the GAO press release on the decision (pdf).

“Our review of the record led us to conclude that the Air Force had made a number of significant errors that could have affected the outcome of what was a close competition between Boeing and Northrop Grumman. We therefore sustained Boeing’s protest,” said Michael R. Golden, the GAO’s managing associate general counsel for procurement law. “We also denied a number of Boeing’s challenges to the award to Northrop Grumman, because we found that the record did not provide us with a basis to conclude that the agency had violated the legal requirements with respect to those challenges.”
...

The GAO decision should not be read to reflect a view as to the merits of the firms’ respective aircraft.

The specific reasons GAO cites for upholding Boeing's protest are here.

Before we got a hold of the GAO release, I wrote: "In a June 18, 2008, decision, the Government Accountability Office’s comptroller general sustains Boeing's protest of an Air Force airborne refueling tanker contract awarded to Northrop Grumman," InsideDefense.com has just reported.

POGO stated earlier this year that "A bid protest has been filed with the Government Accountability Office, and POGO looks forward to the results."  Now we look forward to seeing on what basis the GAO sustained Boeing's protest.  A redacted version of part that protest submission is here (pdf).

As Stephen Trimble of Flight International previously pointed out, Boeing's protest claimed, among other things, that "the US Air Force's actions show that it altogether failed to comprehend the inherent manufacturing genius of the 767 bid." 

Regardless of the merit of that claim, I doubt that's why the reason GAO sustained the protest.  Typically the GAO sustains bid protests on fairly narrow, legalistic grounds.  More specifically, there must have been an inconsistency in how the Air Force claimed it was going to evaluate the bids and how it actually did so -- this  is one of the points Boeing has been making publically in its ad campaign.

Again, here are the specific reasons GAO upheld the protest:

1. The Air Force, in making the award decision, did not assess the relative merits of the proposals in accordance with the evaluation criteria identified in the solicitation, which provided for a relative order of importance for the various technical requirements. The agency also did not take into account the fact that Boeing offered to satisfy more non-mandatory technical “requirements” than Northrop Grumman, even though the solicitation expressly requested offerors to satisfy as many of these technical “requirements” as possible.

2. The Air Force’s use as a key discriminator that Northrop Grumman proposed to exceed a key performance parameter objective relating to aerial refueling to a greater degree than Boeing violated the solicitation’s evaluation provision that “no consideration will be provided for exceeding [key performance parameter] objectives.”

3. The protest record did not demonstrate the reasonableness of the Air Force’s determination that Northrop Grumman’s proposed aerial refueling tanker could refuel all current Air Force fixed-wing tanker-compatible receiver aircraft in accordance with current Air Force procedures, as required by the solicitation.

4. The Air Force conducted misleading and unequal discussions with Boeing, by informing Boeing that it had fully satisfied a key performance parameter objective relating to operational utility, but later determined that Boeing had only partially met this objective, without advising Boeing of this change in the agency’s assessment and while continuing to conduct discussions with Northrop Grumman relating to its satisfaction of the same key performance parameter objective.

5. The Air Force unreasonably determined that Northrop Grumman’s refusal to agree to a specific solicitation requirement that it plan and support the agency to achieve initial organic depot-level maintenance within two years after delivery of the first full-rate production aircraft was an “administrative oversight,” and improperly made award, despite this clear exception to a material solicitation requirement.

6. The Air Force’s evaluation of military construction costs in calculating the offerors’ most probable life cycle costs for their proposed aircraft was unreasonable, where the agency during the protest conceded that it made a number of errors in evaluation that, when corrected, result in Boeing displacing Northrop Grumman as the offeror with the lowest most probable life cycle cost; where the evaluation did not account for the offerors’ specific proposals; and where the calculation of military construction costs based on a notional (hypothetical) plan was not reasonably supported.

7. The Air Force improperly increased Boeing’s estimated non-recurring engineering costs in calculating that firm’s most probable life cycle costs to account for risk associated with Boeing’s failure to satisfactorily explain the basis for how it priced this cost element, where the agency had not found that the proposed costs for that element were unrealistically low. In addition, the Air Force’s use of a simulation model to determine Boeing’s probable non-recurring engineering costs was unreasonable, because the Air Force used as data inputs in the model the percentage of cost growth associated with weapons systems at an overall program level and there was no indication that these inputs would be a reliable predictor of anticipated growth in Boeing’s non-recurring engineering costs.

-- Nick Schwellenbach

Comments

[mrsluck]

Haven't heard anything about this "deal gone awry" in the news lately... aren't we way past the 90 days already? Boy, this sure seems like it was quietly swept under the rug?!?!?!

[LHV]

WHY NOT ... ? Just give the Tanker to EADS ! Let'em build that tanker with US Taxpayer $$$ in France with a Co. using Illegal subsidized funds from Europe. Why not ? Just "Export" all those High Tech Aerospace jobs to Europe at US expense while our country is in a recession. OUI, OUI !

[KSBR machina]

ilsm: last week's protest was about the defective, criminally negligent AF procurement process, not the offers. Their relative merits still need to be argued and scored in a fair, transparent environment.

An obvious really quick fix and morale booser: cashier Ms. Sue Payton, posthaste.

This is going to take forever and get tied up by Boeing, which believes it is, well, entitled to the business. Boeing desperately needs competition, sooo.

Let's go for a split buy and do it quickly. It could be the last (only?) triumph of the Bush Defense Department to get this going.

[ilsm]

A few issues:

The Airbus was not a replacement for the KC 135.

The Airbus entry is the same size or larger than the DC 10, with off load, and cargo capability similar to the the KC-10. There are only 60 KC-10's and they are never used, for a reason. Too big and unsubstantiated needs. There were only to be 40, but Reagna had so much money to toss around.

There is no need for a hydrin tanker/trash hauler. Never was.

More informative, the claim by the Northrop proposal, seemingly endorsed by the Air Force, that an airplane that is 25% heavier, whose parts will be priced in Euros had a competitive life cycle cost to the B 767. The laws of physics and economic say differently.

Last point how could anyone price fabricating an airplane in Toulouse, leasing special ships and assembling the things in hangars with workforce that do not exist?

Pandering to Northrop or afraid to support Boeing the source selection, run by Mrs Druyun's summer help decided to buy a French trash hauler in lieu of a refueler.

[Frank J. Wood]

OK, Boeing's protest has been sustained and the ball game has changed slightly. Now its time to get working on proposal revisions and the new submittals are likely to be better than the previously inputs. Both companies now know what the AF has decided it really wants, and have greater insight into how it will be evaluated. The maximum delay in contract award should be contained to one year - 60 days for the AF to understand what troubled GAO and to restructure their evaluation team; 90 days to get a revised RFP to the contractors and 120 days for them to submit proposal revisions. AF selection should be doable in another 90 days. For Northrop Grumman it should be a relatively easy with most tasks slipping out one year and reworking some areas where they came up short. Their proposal may be more like submitting a BAFO.
Boeing would seem to be at a greater disadvantage since industry suspects they will propose a 777 configuration, but that too is a mature airframe in commercial production for which they would have an extensive data base ... not the least of which is their current proposal to militarize their 767 aircraft. Boeing may even have started on it's 777 proposal effort when they elected to protest the Northrop Grumman selection. This will be Boeing's third shot at a formal KC-135 replacement so there shouldn't be any reason to not put a full court press on both contractors and get the new tanker aircraft under contract. A lot of valuable work has been performed by all parties and the military can't let this procurement get tied up in endless appeals nor in continuous alternative studies of split buys, 747 or 767 remanufacture, et al.