Boeing Fights Back: How It Plans To Prevail

Issue Brief

When Boeing executives heard last week that they had failed to beat Northrop Grumman in any of the five selection criteria for the Air Force’s future aerial-refueling tanker, they were incredulous. Their reaction turned to anger when they were debriefed on the decision by Air Force officials. Although the debrief confirmed that they were beaten on four of five measures (and tied on the fifth), the company detected numerous errors in the process.

Boeing has now embarked on a two-part strategy to overturn the decision. First, it will file a formal protest with the Government Accountability Office alleging procedural and analytical errors in the awarding of the contract. However, since any GAO determination in its favor would be advisory rather than binding — the Air Force can ignore the finding — Boeing will not oppose legislative efforts by its backers in Congress to nullify the Northrop win. Here is Boeing’s internal assessment of Air Force mistakes made on each of the five selection criteria…

1. Mission capability measured the performance features, support capabilities and technological maturity of the competing proposals. Boeing says it satisfied all stated requirements, tying or surpassing Northrop Grumman in most (for example, it was rated higher on survivability). Northrop won overall due to greater fuel and cargo carrying capacity, but Boeing says that deviated from Air Force assertions that the service was seeking a medium-sized tanker.

2. Proposal risk assessed the degree of danger that the two teams would fail to execute as promised. They tied on that measure after Boeing lengthened its original development schedule. However, Boeing argues the Air Force failed to accurately assess the risk of Northrop’s plan, which involves building major assemblies in several countries and then integrating them in a new facility in Alabama.

3. Past performance compared the success of the two teams on programs similar to the future tanker. The Northrop Grumman team was rated higher, but Boeing says their competitor has faltered on programs such as a new Australian tanker and the A-400M cargo plane. This measure was originally scored by Air Force evaluators as a tie and then adjusted to favor Northrop for reasons Boeing finds questionable.

4. Cost/Price is the area where Boeing always expected the Northrop team to fare best, because European partner EADS is not subject to the same profit pressures as Boeing. But the key pricing metric was “most probable life-cycle cost,” and Boeing executives are certain their smaller plane costs less to fuel and operate. They also contend the multi-site, multi-country assembly plan for the Northrop plane is intrinsically more expensive.

5. Integrated Assessment rated the competing planes in a warfighting scenario using a complex analytic model. Boeing believes Northrop won this measure because the model was originally developed by Northrop, and was not an accurate reflection of real-world conditions. It also contends changes were made in the model to permit Northrop’s participation in the competition, but that little effort was made to look at actual operational experience in assessing the planes.