Now that the DoD KC-X tanker contract recompete press conference is over, it is time to review and analyze yesterday's events. (Note: The briefing transcript is on our documents site so you can do your own analysis. Or, you can view the brief on the right. )
What has changed in the Tanker War:
1) By deciding to recompete the contract, DoD has voided the KC-30 team's contract that was awarded after the first flawed competition. As John Young said," There is no contract award right now. And there won't be a contract award."
2) Sue Payton has been relieved as the Source Selection Authority (SSA) for the tanker contract and that task now falls to John Young. Sec. Gates was asked directly why is Ms. Payton staying on her job in Air Force acquisitions and if he had confidence in her. He answered that , "Yes I have confidence in the acquisitions team." Not a ringing endorsement but it probably means she will not be asked to resign.
3) In addition to a new SSA, a new Source Selection Advisory Committee (SSAC) will be appointed.
4) A new contract decision timeline has been established. Sec Gates believes that DoD can, "award a contract by December." But, Mr Young was more cautious stating that the timeline could slip and, "That is the best case to make the source selection decision by the end of the year."
What stays the same in the Tanker War:
1) The competition is not being completely reopend. The current RFP will be used as the starting point and amended as needed. Young stated, "We have a valid requirements document that has not been called into question."
2) There will be no new provisions for the WTO dispute or for industrial base implications.
Statements that give us cause for concern:
1) Acting Sec. of the Air Force Mike Donley's statement that "...the Air Force successfully defended itself against over a hundred protest allegation, some of which were overlapping. And based on this overall performance and my understanding of the transparent and collaborative way in which this process was conducted, I would not conclude that the underlying Air Force acquisition system is somehow fatally flawed."
Mr. Donley is taking false comfort in a GAO report that was scathing in its criticism of Air Force procurement. Also, how was it "transparent and collaborative" if the GAO said the Air Force "conducted misleading and unequal discussions with Boeing…."
2) Acting Sec. Donley's statement that, "GAO's conclusions show that even in a large, complex procurement with considerable staff resources and oversight, work accomplished by our contracting personnel, our warfighters and our engineers is not always adequately prepared to withstand the detailed audits and the legal challenges that we can now expect."
Gee, we though the GAO conclusions showed that, “[The Air Force’s] selection of Northrop Grumman’s proposal as reflecting the best value to the government was undermined by a number of prejudicial errors..." And, that the GAO found, "a number of significant errors in the Air Force’s evaluation under the key system requirements and product support subfactors of the mission capability evaluation factor and in its cost evaluation..."
But now, thanks to Mr. Donley we see that SSAC and SSA were not screwed up at all; they were only not adequately prepared to withstand such a mean legal challenge. We have a feeling a couple of Senators may have to talk some sense into him during his confirmation hearing.
3) Mr. Young's statement that "... we have some confidence in what the bidders propose for the cost to develop and build the aircraft. Many of our systems, from fighter aircraft to ships to weapons, are over their 15-, 20-, 25-year life used in ways we didn't anticipate. We still have to consider life cycle costs in developing a weapons system, because that is roughly a third of the Defense budget. But we don't want to overweigh -- you know, we want to balance the known cost to develop and build the tanker with the estimated life cycle cost, and we will do our very best in that to estimate that life cycle cost and include the realistic price of fuel, although it's very difficult to understand, you know, how fuel may vary from here going forward."
This only confirms our suspicions that, even though prohibited by the RFP to base selection decisions on costs other than most probable life cycle costs (MPLCC), DoD and the Air Force are heavily biased toward a tanker with low SDD costs. This favors the subsidised A330 based tanker with its lower SDD costs. Mr. Young's statement also seems like a cop out. He almost appears to be saying that determining MPLCC is just too hard; its not like its only been around in one form or another since the late 18th Century.
Tanker War Blog's Final Analysis:
As Rep. Norm Dicks has stated, the expedited rebid is, "...better than a split buy or other options, but the devil will be in the details." Right now not enough details are known on how the grading criteria or the RFP will be changed. Also, it seems as though no one in DoD other than Sec. Gates really understands the ramifications of the GAO findings other than it made Congress angry.
Will this expedited recompete be an honest attempt to get the right tanker for the mission, or simply a method to revalidate a decision and process DoD has not truly accepted as significantly flawed? It is too early to tell.