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Saturday, February 26, 2011

Boeing The Clear Winner Of KC-X: Pentagon

Additional capabilities beyond the mandatory requirements were not a factor in the U.S. Air Force’s selection of Boeing’s 767-based tanker, now designated the KC-46A, as the service’s KC-X replacement aerial refueler, Pentagon officials said late Feb. 24.
EADS North America’s larger Airbus A330-based KC-45A, winner of the previous KC-X competition, was the losing bidder. Officials announced the Boeing award shortly after 5 p.m. EST in Washington.
Additional “non-mandatory” requirements were only to be considered if the evaluated prices of the two proposals were within 1% of each other. “Both offerors met the mandatory requirements, and there was a greater than 1% difference in total price, so non-mandatory capabilities were evaluated, but not used in the source-selection,” Air Force Secretary Michael Donley says.
“Boeing was the clear winner,” says Deputy Defense Secretary William Lynn. Under the revised source-selection criteria for the restaged KC-X competition, the price proposed by each bidder was adjusted by the Pentagon based on assessments of fleet mission effectiveness and lifecycle cost. Boeing argued its smaller 767-based tanker would consume substantially less fuel.
Boeing has been awarded a $3.5 billion fixed-price incentive contract for engineering and manufacturing development and delivery of the first 18 aircraft by 2017. When Northrop Grumman/EADS North America won an earlier KC-X competition in February 2008 it was awarded a $1.5 billion development contract, including four aircraft. “This was a completely different competition,” Donley says.
The Air Force restarted the KC-X competition in July 2010, issuing a new request for proposals (RFP) that simplified the requirements, clarified the selection criteria and reduced the financial risks to the winner. The changes were made in a bid to prevent the protests that derailed the first competition.
Boeing revised its approach after losing the first competition, dropping plans to develop an aircraft combining elements of several different 767 models and basing its “NewGen” tanker bid on a 767-200 equipped with an upgraded KC-10 refueling boom and 787 cockpit displays. The company said its price would be lower the second time around.
EADS North America stayed with its winning KC-45 design, but entered the new competition as prime contractor after Northrop withdrew from the role in March 2010, arguing the revised RFP “clearly favored a smaller tanker.” EADS’ decision to lead the bid itself likely allowed the company to reduce its proposal price.
Following the protests that dogged previous attempts to buy new tankers, as well as major criticism of the Air Force’s acquisition process, Donley says the seven-month source-selection has generated an “extensive official record” of the procedures followed. The bidders had a good understanding how the evaluation was conducted, he says, clearly anxious to avoid a protest or congressional challenge this time around.
Still, the latest competition was already marred by an embarrassing data-swap mishap last fall. In the Nov. 1, 2010, data release, Air Force officials sent files containing interim Integrated Fleet Aerial Refueling Assessment (Ifara) information to the wrong industry teams. However, in an effort to level the playing field, USAF then released to both contractors the cover sheets outlining each bidder’s performance in the Ifara model so both sides now officially have the same information (Aerospace DAILY, Feb. 11).
Senate Armed Services ranking Republican John McCain (Ariz.) let it be known right after the new award was announced that he awaits the Air Force’s award explanation. “I look forward to the Air Force demonstrating over the next few weeks how today’s decision was made fairly, openly and transparently,” says the senator, who helped derail Boeing’s last tanker award by exposing Air Force and Boeing malfeasance. “Only such a process will ensure that we obtain the most capable aerial refueling tanker at the most reasonable cost.”

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