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Tanker Deal - Competition in Contracting


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With the recent announcements that Boeing may be the only bidder for a lucrative aerial refueling tanker contract; what are the Government's options? What do you think will happen? I'm guessing the Government will revisit, and subsequently revise, the requirements to open the playing field enough to invite others into the competition. Is Northrop playing poker and counting on that to happen? I think so.

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I don't think that will happen. To me, it's just a matter of Northrop seeing that the requirements are geared towards a smaller aircraft. If they thought they could influence the requirements so they stood a chance, they would.

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Guest Vern Edwards

I'm sure that Northrop would come back if the Air Force changed the specification in its favor. But here's a thought: Northrup would assemble its aircraft in Alabama. Boeing would assemble its aircraft in Washington. Both Alabama senators are Republican and most of the representatives are Republican. Both Washington senators are Democrats and most of its representatives are Democrats. There are a lot more voters in Washington. The House and Senate armed services committees are chaired by Democrats and the committee majorities are democrats.

What do you think? Will the Air Force change the spec to woo Northrop back?

We'll see.

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I'm sure that Northrop would come back if the Air Force changed the specification in its favor. But here's a thought: Northrup would assemble its aircraft in Alabama. Boeing would assemble its aircraft in Washington. Both Alabama senators are Republican and most of the representatives are Republican. Both Washington senators are Democrats and most of its representatives are Democrats. There are a lot more voters in Washington. The House and Senate armed services committees are chaired by Democrats and the committee majorities are democrats.

What do you think? Will the Air Force change the spec to woo Northrop back?

We'll see.

I think that the Air Force's apparent decision to stress price and meeting the requirements will probably backfire if Boeing ends up being the only proposer.

Boeing also had the benefit of knowing N-G/Eads' pricing during the previous Protest. N-G/E recently requested that the Air Force release Boeing's pricing from the last round, too to help even the playing field. But the AF declined.

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Guest Vern Edwards
I think that the Air Force's apparent decision to stress price and meeting the requirements will probably backfire if Boeing ends up being the only proposer.

Boeing also had the benefit of knowing N-G/Eads' pricing during the previous Protest. N-G/E recently requested that the Air Force release Boeing's pricing from the last round, too to help even the playing field. But the AF declined.

If Boeing is the only firm to respond, then the rules of source selection are out the window. The parties will simply negotiate one-on-one. That wouldn't be so bad. Competitive pricing of such programs has never worked out well.

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If Boeing is the only firm to respond, then the rules of source selection are out the window. The parties will simply negotiate one-on-one. That wouldn't be so bad. Competitive pricing of such programs has never worked out well.

Well, it didn't work the first time they negotiated sole source with Boeing for Tanker leases. Both parties have to agree to the prices. One party owns a whole lot of 50 year old tankers ... The law of supply and demand will be evident. I doubt if it will be be "simple".

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Guest Vern Edwards
Well, it didn't work the first time they negotiated sole source with Boeing for Tanker leases. Both parties have to agree to the prices. One party owns a whole lot of 50 year old tankers ... The law of supply and demand will be evident. I doubt if it will be be "simple".

Boeing messed around with the lease deal because they had support from Air Force insiders, including one who went to jail. The thing will be too visible for that kind of conduct now. They'll reach an agreement on price. Might take a while, but Boeing won't push it too far. Especially since there is a real chance that the Democrats might lose one of the houses of Congress in November. I would think everyone would like to put the deal to bed before election day.

But what do I know? I'm speculating just like everybody else.

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Boeing messed around with the lease deal because they had support from Air Force insiders, including one who went to jail. The thing will be too visible for that kind of conduct now. They'll reach an agreement on price. Might take a while, but Boeing won't push it too far. Especially since there is a real chance that the Democrats might lose one of the houses of Congress in November. I would think everyone would like to put the deal to bed before election day.

But what do I know? I'm speculating just like everybody else.

I hope so, too. To be quite frank, I believe that Boeing REALLY doesn't want EADS to get a foothold in the US. EADS had already announced that, if it gets the Tanker contract, the plant will also be used to assemble commercial A330 aircraft in Mobile, AL., with much associated supplier and fabrication in surrounding SE states. I think that has been more important to Boeing than the tanker contract, itself. Of course, I'm speculating but that is the Scuttlebutt around town. I suppose that EADS would like to at least partially amortize the cost of building the plant and assembly line through the Tanker contract.

Boeing has heavily criticized how EADS would build its planes with much outsourcing. However, Boeing's skilled labor force went out on strike the year before last because Boeing planned to do the same (or similar) assembly process with its new Dreamliner. Hmmm... The 767 series is assembled using Legacy assembly construction processes that Boeing can't ditch due to labor agreements and the need to completely retool to change the way they build the 767's (tankers included).

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Guest Vern Edwards

Boeing doesn't want EADS to get a foothold in the U.S.? You think so? Really? That's the scuttlebutt around town? Wow. Who knew? I'm shocked.

I wonder how long before Senator Shelby releases his new list of administration appointees that he's blocking.

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Boeing doesn't want EADS to get a foothold in the U.S.? You think so? Really? That's the scuttlebutt around town? Wow. Who knew? I'm shocked.

I wonder how long before Senator Shelby releases his new list of administration appointees that he's blocking.

I think he dropped his "hold" a couple of weeks ago.

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It doesn't look like Congress will get into the act according to this GovExec article"

http://www.govexec.com/story_page.cfm?arti...oref=todaysnews

From the story:

Senate Armed Services ranking member John McCain, R-Ariz., said Tuesday he will closely monitor what appears will be a sole-source contract award to Boeing Co. to build 179 aerial refueling tankers for the Air Force, but he does not expect Congress to intervene with legislation requiring some degree of competition for the job.

Speaking one day after Northrop Grumman Corp. bowed out of the tanker competition, McCain said he has not found any flaws in the Air Force's acquisition process.

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  • 2 weeks later...
This literally is shocking news from the Washingtom Post:

http://www.washingtonpost.com/wp-dyn/conte...0031904582.html

A Russian company, which is a holding company for several Russian aerospace firms, is expecetd to team with a US company and participate along with EADS.

Perhaps I misread, but I was under the impression that the Russians would be submitting a separate bid, making three offerors in total.

What makes the whole situation ironic is that, while the A330 is heavier than the 767 and thus more expensive, the Il-98 would be roughly half the price of a 767, according to Wikipedia. If the Air Force wants the cheapest solution to its mission needs, they may be getting it from an unexpected source...

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Perhaps I misread, but I was under the impression that the Russians would be submitting a separate bid, making three offerors in total.

You're correct. Three potential bids. It's funny because two weeks ago it looked like might be just one.

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You're correct. Three potential bids. It's funny because two weeks ago it looked like might be just one.

Obviously, something FUNNY (comical) is going on here.

According to today's Mobile (AL) Press Register, the Los Angeles based US attorney for the Russian State owned - yep you read that right - United Aircraft Corp, Jon Kirkland, indicated that UAC had planned to bid on the Tanker contract. But, coincidentally a week after our Secretay of State visited Moscow, Vladimir Putin and the Company now deny any knowledge of the project, which had allegedly been in the works for at least 6 months.

Having the Russian Government build and PROVIDE PARTS for a USAF Tanker is an even scarier thought than the US providing F-14's to Iran then cutting off all spare parts supply since 1979!!!!!

But it is also funny that a certain firm with tremendous insider support in the US government managed to influence (manipulate?) the selection criteria to LPTA. Then appears a plane that might meet the "published" technical criteria at about 1/2 the price of "America's Team" LOL LOL LOL.

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Guest Vern Edwards

Were Russia to bid--which would be a hoot and so I hope they do it--they will either be found technically unacceptable on some basis or nonresponsible. There is 0 chance that they could win the contract. Absolutely 0.

Anyway, the Wall Street Journal now says that the Russians deny any intention of submitting a proposal.

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Were Russia to bid--which would be a hoot and so I hope they do it--they will either be found technically unacceptable on some basis or nonresponsible. There is 0 chance that they could win the contract. Absolutely 0.

Anyway, the Wall Street Journal now says that the Russians deny any intention of submitting a proposal.

But Vern - the Russians were our Ally in helping defeat our (now an Ally) Germany! We supplied them planes, tanks, ships...

Well, I guess if we can rig the criteria so that planes partially built by our Allies can't win, we can find a way to non-qualify the source of much of the reason we've had to have a Strategic Air Force the past 70 years. LOL

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But Vern - the Russians were our Ally in helping defeat our (now an Ally) Germany! We supplied them planes, tanks, ships...

Well, I guess if we can rig the criteria so that planes partially built by our Allies can't win, we can find a way to non-qualify the source of much of the reason we've had to have a Strategic Air Force the past 70 years. LOL

I agree with Vern that there is zero chance the Russian firm could win the contract. But if they submit a proposal at least we still have the illusion of competition. At this stage, we just need to get a contract awarded. The existing tankers are on their last leg and replacements are past due.

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It's sad to me that we are using phrases such as "rig the criteria" and "illusion of competition" and nobody is voicing outrage.

Has it always been this way? Was Druyun just an extreme example of what happens all the time?

Have we all become so cynical?

I can't find a sad emoticon, so here's a frowny face.

:)

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Guest Vern Edwards

We'd already have a tanker contract if the folks at the USAF Aeronautical Systems Center could remember how to conduct a source selection properly. Marge, you should send the USAF CO a copy of your book: Understanding Government Source Selection (Management Concepts, Inc., 2010). I have stopped teaching source selection. It's too disheartening for me. A person can only bang his head against the wall for so long. When it comes to source selection, I think government agencies are unteachable. But you teach it, and the Air Force could use some help.

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It's sad to me that we are using phrases such as "rig the criteria" and "illusion of competition" and nobody is voicing outrage.

Has it always been this way? Was Druyun just an extreme example of what happens all the time?

Have we all become so cynical?

I can't find a sad emoticon, so here's a frowny face.

:)

Sorry if my words upset you. But this "competition" illustrates the importance of getting back to basics in source selection such as conducting market research and writing evaluation criteria. When we have only one viable contender in the game it's not full and open competition by any stretch of the imagination. Thus, my phrase "illusion of competition."

No, it has not always been this way. There has been a significant erosion of skilled and qualified professionals capable of conducting major source selections since the acquisition streamiling reforms of the 1990s. Workforce issues and training have been discussed in this forum, so that's not just my opinion. It simply becomes more visible with larger, highly publicized acquisitions.

No, Druyon is decidely NOT what happens all the time. But we still need a high caliber workforce to make this system effective.

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We'd already have a tanker contract if the folks at the USAF Aeronautical Systems Center could remember how to conduct a source selection properly. Marge, you should send the USAF CO a copy of your book: Understanding Government Source Selection (Management Concepts, Inc., 2010). I have stopped teaching source selection. It's too disheartening for me. A person can only bang his head against the wall for so long. When it comes to source selection, I think government agencies are unteachable. But you teach it, and the Air Force could use some help.

Vern,

Thanks for you kind words and plug for my book. Now that I'm teaching online for UVA I bang my head against the computer and it doesn't hurt as much as banging it against the wall. :)

Hopefully I haven't become as cynical as the previous poster alleges. I'd like to think that writing a book and teaching puts me in the category of actively trying to make things better. We'll see...

Thanks again,

Marge

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