Wynne Backs Tanker Split-buy

In an interview with Air Force Magazine former Secretary of the Air Force Michael Wynne states his case for awarding contracts for both the KC-767 and KC-30. He believes this may be the only way to resolve the legal impasse surrounding the tanker competition.

A spilt-buy has in the past been regarded impractical due to the increased cost of low rate production of 7.5 aircraft per year:

But Wynne, now out of office, said July 28 there is another way to approach the split buy: have each contractor build at the same annual rate that they would have in the winner-take-all scenario—upwards of 15. Keeping two suppliers would strengthen the industrial base, replace the Eisenhower-era KC-135 tankers “at a faster rate” and maintain competition “well into the future,” not a bad consideration since the Air Force needs to buy about 500 new tankers overall to replace its KC-135s, he said.

As for the higher costs of supporting two tankers lines, Wynne said, when asked, he would support applying some of the $5 billion in added procurement funds that the Air Force will reportedly receive in Fiscal 2010 to cover them.

We at Tanker War Blog think this might be a case of counting your tankers before they are hatched. There are no guarantees on increased funding in 2010. In fact, either candidate for President will probably cut DoD funding when they get into office. Also, if extra funding was available, are extra tankers more important than F-22, C-17, JSF, several space programs, or more ISR?

Wynne may have a point that Under Secretary John Young's solution of an expedited recompete may not get past the draft RFP stage based on the experience with the CSAR procurement:

Wynne said he hopes that the GAO will accept Young’s tack in trying to resolve the KC-X protest. “I worry because it is a very similar tactic to what I tried on the [combat search and rescue replacement vehicle program]—trying to simply address the issues that the GAO has brought forward,” he said.

The GAO did not accept Wynne’s approach to resolving the industry protests on CSAR-X and instead recommended that the Air Force reopen that competition more broadly, which USAF subsequently did.

DoD should issue the new draft tanker RFP this week or next. We will see if Mr. Young can make all sides happy enough to allow for the final RFP to be issued in mid-August without a protest.

We here at Tanker War Blog believe this will an extremely tough order to fill, but Mr. Young has the best chance of anyone in DoD to succeed. If he can't do it, no one can.

Rumors on what DoD will do next

As Congress is out of session, and DoD takes its sweet time deciding what to do next on the tanker issue, we offer our readers the following rumors as to the options now on Under Secretary of Defense for Acquisition, Technology and Logistics, John Young's desk:

A. Request Boeing and NG/EADS submit immediate new best and final offers under the original or only slightly revised RFP.

B. Have the Air Force make significant revisions to the RFP and rebid the contract. (Since this will take at least 1 year lead time to re-open the Joint Joint Capabilities Integration Development System process, this option seems unlikely.)

C. Execute both the Boeing and NG/EADS contract proposals as submitted under a potential "co-production" or "Leader/Follower" production strategy. (The details and the split in this split-buy were not clear.)

D. Fund "competitive prototyping" with each contractor under parallel System Development and Demonstration (SDD) over 18-month period with a winner take all fly-off for production much like the JSF. (This might be problematic if both competitors are funded at the same level since Boeing's proposal probably has higher SDD costs.)

Our sources in the Pentagon have been drastically attrited during the tanker war, but we have reason to believe in those we still have. So, we would ascribe that the above options are at least 80% accurate.

We have taken note that trying to force the current contract through against the GAO recommendation is not rumored to be on the table.

Tanker News 24 June

The following tanker related articles caught our eye:

Forbes: EADS In Lead For Saudi/Iraq Fence
Key passage:

Last week's report by the General Accounting Office, which criticized the process by which the fuel-tanker contract was awarded to EADS and its partner Northrop Grumman, has thrown it into doubt and it's likely that the Air Force will have to ask the companies to resubmit their proposals.

If they do go back to the drawing board there is no chance whatsoever that EADS will get the entire contract: a more likely scenario is that they will get around 25.0% of it according to Doug McVitie of Arran Aerospace.

Mr. McVitie is a former Director of Sales Intelligence for Airbus so he has some G-2 on the situation, but it would be interesting to know how he came up with 25%. Most likely this is the percentage Airbus is willing to settle for and needs to be able to set up the assembly facility in Mobile.

Politico: Air Force considers Northrop, Boeing fly-off
Key passage:

The fly-off option, which departing Air Force Secretary Michael Wynne discussed with the Reuters news service at his retirement ceremony, and the split buy are costly prospects. The fly-off would require the two companies to build planes through the prototype stage, and under the split buy, the Defense Department would have to fund two production lines...

Supporters of Northrop are pushing for a speedy reconsideration by the Air Force — and trying to ensure that members of Congress don’t step in to steer the process toward Boeing.

The company is stressing that it hasn’t lost anything yet.

Split buy, fly-off, or rebid there is no easy way out of this tanker war. We are beginning to see the KC-30 team stress that the GAO decision does not mean that their tanker should not have won, only the way the Air Force went about it was flawed. This is rather convoluted logic, but without the full GOA decision it is hard to definitely refute at this time. Also, if one believes possession is 9/10 th's of the law, an argument could be made that until the Air Force completes the rebid, the KC-30 team still has the contract.

Human Events: How to Buy the Tanker
Key Passage:

The government is supposed to buy what it needs, not what it wants. And – in the case of combat systems, among which the tanker is certainly counted – the needs have to be defined by the warfighters. The government’s request for contractor proposals is supposed to define those needs in terms specific enough to enable the contractors to compete by offering the aircraft that best meets the precise need. But the Air Force -- bowing to political pressure -- crafted a specification so vague that two vastly different aircraft could arguably qualify under it.

Listing this article at the end is in keeping with the spirit of saving the best for last. Once again Mr. Babin offers great insight and expertise in dissecting the Air Force tanker contract decision

Thompson: GAO will Find Fault with Tanker Contract

On Saturday the Mobile Register reported highly influential defense analyst Loren Thompson of the Lexington Institute predicting that the KC-30 team will be disappointed by the Government Accountability Office's ruling on the U.S. Air Force tanker contract:

"GAO almost certainly will find problems" with the Air Force's selection process, said Loren Thompson of the Lexington Institute in Arlington, Va. "The only question is how significant those problems will be. But I think the likelihood is that they will favor Boeing, and that would not be good news for Mobile."

Dr. Thompson is later quoted as saying:

"If you're one of Boeing's supporters, there's no such thing as a minor problem," Thompson said. "GAO has to show that they're giving serious consideration to Boeing's protest, and for that reason I think they uphold at least some of their complaints. And then the catch for Northrop and the Air Force becomes, is an 80 percent confidence level good enough? What about 60 or 70?"

We at Tanker War Blog believe that due to the limited scope of the GAO review, there will probably not be a recommendation to rebid the tanker contract. We also feel though that the certainty level for the Air Force on this contact will eventually be below any percentage mentioned by Dr. Thompson. We can not how see many, if not all, of the issues that have raised previously will not be upheld by the GAO. Issues such as:

1) Changing the criteria for the IFARA model
2) Placing more value on exceeding cargo/pax/fuel load than was stipulated in the final RFP
3) Past performance rating and proposal risk
4) Calculation of life cycle costs to include new construction costs.

In the end we believe Congresses will play a large, if not decisive, part in determine a way out of the botched tanker contract. If Boeing gets even partial victories from the GAO and the WTO we can see no way the KC-30 team gets the tanker contract.

Be prepared to hear much more talk about a split buy.