What To Look For In The Tanker Solicitation

The Pentagon has begun briefing members of Congress on its plan for re-competing the award of a next-generation aerial refueling tanker, and tomorrow the two teams will receive the draft Request for Proposals (RfP). The companies will have several weeks to comment on the draft before it is finalized, but their reactions to some aspects of the solicitation are already easy to predict. If the RfP defines aircraft performance primarily in terms of fuel offload and range, Boeing will not be happy because the Northrop-Airbus A330 has more of both than the 767 that Boeing will probably bid. On the other hand, if there is any mention of adjusting the Northrop team’s price to compensate for illegal launch subsidies Airbus received on the A330, Northrop backers will be very displeased.

Getting beyond the obvious, the tanker re-competition will be mainly about three things — aircraft performance, contractor past performance and price of ownership. The way the government applies each of these overarching selection criteria will largely determine who wins…

1. With respect to aircraft performance, what are the key performance metrics, and how are they weighted? Will real-world experience be applied to judge how the planes fare in operational scenarios? And will extra credit be awarded if planes exceed required performance thresholds?

2. With respect to contractor past performance, what kinds of programs will be used to measure how well the offerors have fared in the past? Boeing has considerably more experience than the Northrop-Airbus team in the aerial refueling mission, so what standards of relevance will be applied in selecting the programs used to judge past performance?

3. With respect to price of ownership, will that be calculated using just the up-front acquisition cost, the full life-cycle cost over 30 years, or some measure between those two metrics? Airbus almost always under-bids Boeing in commercial competitions, so Boeing will presumably argue that a more inclusive measure of price should be used in comparisons.

One other issue likely to be considered is the degree of risk associated with each offeror’s proposal. In the initial competition, the Northrop team proposed to assemble its tanker at a new plant in Alabama, whereas Boeing proposed to use an existing production line in Washington. On the other hand, Northrop offered a fairly straightforward modification of an existing commercial transport, whereas Boeing pitched a plane incorporating features of three existing 767 variants. The risks associated with these contending approaches will have to be assessed in judging the realism of company bids.