Tuesday, June 10, 2008

Air Force Admits to GAO that the KC-30 Costs More

Now that the GAO has wrapped up its tanker contract hearings and is currently determining its decision, some redacted documents are now being released. One document that has been released in part are Boeing's comments on the Agency Report (USAF's response to the Boeing's protest).

At Tanker War Blog we were not able to obtain the full version of the comments, which we are told total over 400 pages, but one of our members on the Hill did get a very interesting section on Most Probably Life Cycle Cost(MPLLCC) calculations. These comments are heavily redacted, but from them it seems that the Air Force in its Agency Report has apparently now conceded that the KC-30's MPLCC is higher than Boeing's. This of course is the exact opposite of what the Air Force had briefed Boeing and publicly stated as a reason for selecting the KC-30. Page 103 of the comments has the following:
III. THE AGENCY REPORT CONFIRMS THAT THE AIR FORCE'S COST/PRICE EVALUATION WAS IMPROPER AND UNREASONABLE.

With respect to the Cost/Price evaluation, as an initial matter, the Air Force now concedes that Boeing's most probable life cycle cost (MPLCC) is lower than NG/EADS'. See MOL, AR Tab 001 at 201-02. This renders even more troubling the SSA's initial public assertions that NGIEADS "offered great advantage to the Government in cost price." See Protest, AR Tab 003(a) at 94. The Air Force's concession, however, addresses only a miniscule fraction of the errors in the Cost/Price evaluation confirmed in the Agency Report.
On page 107 it seems that a small part of this error was even caused by someone in Air Force procurement not properly using an Excel spreadsheet:
In particular, in its Third Supplemental Protest, Boeing demonstrated that the Air Force underestimated [redacted]costs by $ [redacted] as a result of an erroneous spreadsheet cell reference.
Now, the Air Force likely responded in the hearings that the error in their calculations was minor and irrelevant to the overall outcome. But, we expect this error will have considerable impact on the GAO in terms of their assessment of the thoroughness and credibility of the evaluation.

As more of the documents are released we will attempt to post them. Given that the Boeing documents are by their nature one-sided, we will generally refrain from commenting except when new information is brought to light, or we see items where the Air Force seems to concede it made errors.

7 comments:

cdh said...

Lookit....the lead contractor for the KC-45 is Northrop Grumman. An American Company. EADS (and a host of other companies) are subcontractors for this project. And EADS has major operations based right here in the United States. The Air Force awarded this project to Northrop Grumman using a bid process that even Boeing praised. It seems to me that Boeing has a serious case of sour grapes. This project is going to provide thousands of jobs throughout the U.S. (regardless whether Boeing or N-G). It's just a matter of where those jobs end up.

Also note that Boeing's had some troubles of their own producing quality aircraft for the military....see the story on their Philadelphia operations recently.

amw said...

What is wrong with people that think it's OK to outsource the tanker to another country. Why would anyone want to send jobs out of this country not to mention the outsourcing of sensitive equipment.
Although 4000 jobs could be produced for South Carolina it takes about 40,000 jobs away from other states. This at a time when so many other jobs are being outsourced to other countries.

Anonymous said...

yea CDH. we all know where those jobs will end up. in europe, all of the job prospects that they give are all inflated they give estimates that are so far fetchted you would have to be well you know. to believe that, they have never held up there end yet what makes you believe it will happen this time? protection for European jobs is a priority for them Make no mistake about that..

cdh said...

if boeing's such a Great American (tm) company, how come most of their dreamliner is built overseas?

see here:
http://www.businessweek.com/bwdaily/dnflash/content/mar2008/db2008039_257094.htm?chan=top+news_top+news+index_top+story

Anonymous said...

For one If you give countries a piece of the pie they will by your products now how big of a pie does airbus have it does not they like to keep the jobs at home period it is called protecionism or social welfare. then take a look at our trade deficit enough is enough .

Anonymous said...

WHY IS THERE NO COMMON SENSE IN AMERICA? DOES ANYONE ACTUALLY THINK?

Anonymous said...

Boeing is spending millions of dollars for full page ads to rip Northrop Grumman. Boeing needs to wake up and smell the coffee, or J-P4, in this case, cause there is no way in hell this decision is reversed....it has never happenned before and believe me Boooeeiing! aint got a leg errrrr wing to stand on....you heard it hear first

Northrop Grumman won fair and square....Boeing deal with it