Boeing’s Albaugh: We don’t understand why we lost tanker bid
Boeing defense chief Jim Albaugh this morning told industry analysts that the company is still perplexed about why it lost the coveted aerial refueling tanker contract the Air Force awarded Friday to a team of Northrop Grumman and EADS.
At a Citigroup conference of defense analysts in New York Wednesday morning, Albaugh said he had thought Boeing was giving the Air Force what it wanted by proposing a variant of its 767 for the refueling tanker. But the Air Force chose the bigger A330 variant proposed by Northrop and EADS and has suggested that it did so because that plane could carry more fuel, more cargo and more people than Boeing’s.
Yet that bigger capacity is not what the Air Force initially said it wanted, Albaugh told the analysts. So Boeing offered a smaller plane that it said was more flexible.
“In our reading of the (Air Force’s request), it wasn’t about the biggest airplane,” Albaugh said. “If they wanted a big airplane, we could have offered the (Boeing 777). We were discouraged from doing that.”
Albaugh said Boeing is looking forward to being debriefed by the Air Force on its decision-making process. That is expected to happen Thursday or Friday.
“We need to understand why our view is different than our customer’s,” he said.
After the debriefing, Boeing would have 10 days to file a protest with the Government Accountability Office, a possibility Albaugh left open. Such protests are increasingly common on big defense contracts, but Boeing has not typically filed them in the past.
“We will only protest in the event we think there is an irregularity in the proposal phase,” he said.
An imminent Defense Analyst - Decribes Rationale - in Detail - on Selection of Northrup/Eads over Boeing - most concise reportage I have found on this topic. Dr. Thompson - great job of word-smithing!!
“TANKER COMPETITION: NORTHROP WON BY A WIDE MARGIN
Loren B. Thompson, Ph.D.
Issue Brief
Mar 3, 2008
Last week Northrop Grumman and European partner EADS confounded expectations by beating incumbent Boeing for the contract to build the Air Force’s next-generation aerial refueling tanker. The initial contract will be for 179 modified wide-body jets, but eventually the entire fleet of 600 cold-war tankers will need to be replaced, making this one of the biggest marketing coups in defense-industry history. However, that is just the beginning of what Northrop Grumman has achieved, because Boeing didn’t manage to beat Northrop in a single measure of merit. Here’s how they were evaluated…
1. Mission capability. Arguably the most important factor, this metric compared the teams on performance requirements, system integration & software, product support, program management and technology maturity. The teams tied in most measures, but the Northrop offering was deemed to offer superior refueling and airlift capacity at 1,000 nm. range and substantially superior refueling and airlift capability at 2,000 nm. range. The superior airlift capacity of Northrop’s plane was deemed a “compelling” consideration in giving Northrop the edge for this factor.
2. Proposal risk. This is the sole factor in which Boeing managed to match the appeal of the Northrop proposal, but it did so only after being pressed to accept a longer development schedule for its tanker. The Boeing proposal was initially rated as high-risk because reviewers felt the company was offering a plane that in many regards had never been built before, and yet claiming it could be built fast at relatively low cost. The company was forced to stretch out its aggressive schedule, adding cost.
3. Past performance. The Northrop Grumman team received higher ratings in past performance due to satisfactory execution of half a dozen programs deemed relevant to the tanker competition. Air Force reviewers had less confidence in Boeing’s past performance due to poor execution in three relevant programs. In addition, Northrop’s subcontractors were rated more highly on past performance than Boeing’s.
4. Cost/price. This was the factor in which many observers expected the Northrop-EADS team to shine, because EADS subsidiary Airbus usually underbids Boeing in commercial competitions. But Boeing compounded its difficulties in the eyes of reviewers by failing to adequately explain its assumptions in calculating the cost of developing a tanker. The resulting low confidence in Boeing cost projections undercut its claims of lower life-cycle costs. Northrop was rated higher.
5. Integrated assessment. The “integrated fleet aerial refueling assessment” was designed to compare how the competing planes would fare in an operational setting using a realistic wartime scenario. The review found that the Northrop Grumman proposal could accomplish specified missions with nearly two dozen fewer planes than the Boeing proposal, a big advantage.
So Northrop Grumman’s victory was not a close outcome. Although both proposals satisfied all performance requirements, the reviewers concluded that if they funded the Northrop Grumman proposal they could have 49 superior tankers operating by 2013, whereas if they funded the Boeing proposal, they would have only 19 considerably less capable planes in that year. The Northrop-EADS offering was deemed much better in virtually all regards.”
The bottom line is this: responsibility lies with Albaugh for losing the deal. If he and his “leadership team” can’t communicate clearly with USAF, then he needs to go. What are we going to do, wait until another multi-billion dollar contract is lost? Then we’ll get more whining about “they didn’t tell us this, they didn’t tell us that”. Put up or shut up JIM….you’re certainly not putting up.