Ahead of the afternoon (EDT) press conference by the Department of Defense, Tanker War Blog is reporting that it appears DOD is going to have “an expedited” recompete.
Live Internet streaming coverage of the DOD press conference at 1pm EDT will be available on this Mobile TV station.
The Mobile Press Register has this blog item.
Breaking News, 845 AM PDT: We’re told that there will be a quick evaluation of the GAO concerns and that an award will be made by January.
Additional, 855 AM PDT: John Young at DOD replaces USAF’s Sue Payton as the Source Selection Authority.
Update, 1000 AM PDT: The press conference is about to begin. As we wait, here are a couple of take-aways from what we know at this time:
Robert Gates, Secretary of Defense, says that DOD will review all eight of the GAO protest items. John Young, as we reported earlier, becomes the new Source Selection Authority. A new advisory committee will be appointed to oversee the new process, and completion of the process will be by year-end.
The new Air Force chief noted that there is a need to rebuild confidence in the procurement process. He noted that the USAF successfully defended itself in more than 100 protest items, and therefore he does not conclude that the underlying procurement process is fatally flawed. However, with eight protest items being sustained, it is essential for the USAF to maintain confidence in the process.
Sue Payton and her team have been directed to be sure the USAF understands the GAO’s actions to position the Air Force for future competitions.
The rebid will not take into account the “industrial base” (jobs) or the WTO subsidy dispute between Airbus, Boeing, the US and the European Union.
Gates notes that this is the third time “we’ve gone at this.” He expressed confidence in the acquisitions team.
The press conference now takes a side trip to today’s Iranian missile test.
Back to the tanker:
Undersecretary John Young, who now will oversee the recompete, said the objective is to expedite the review. There will be a new draft Request for Proposals limited to the GAO points, and Boeing and Northrop will have the opportunity to submit requests for changes before a final RFP is issued.
Northrop’s contract is withdrawn for now, Young says.
Young says the oversight team that monitored the source selection was added during the process and did find things that were addressed during the competition, inferring that some issues arose before the oversight team was in place.
Young generally favors fly-offs, but in this case is not requiring it.
Young added that the December timeframe is a goal–meaning that, given the history of this procurement–the schedule may slip into next year. “We would seek to change the minimum number of requirements” in the new RFP, with the GAO findings and taxpayer costs paramount. Contractors may bring up other issues that could affect timing.
Young, significantly, clarified that Boeing may elect to offer a tanker based on the 777.
Government procurement mechanisms and laws don’t allow DOD to consider the WTO dispute.
Young hopes to issue to issue the draft RFP in late July or early August and make selection by end of year. Working against having two prototypes in a fly-off in this case isn’t required because these are derivatives of commercial airliners, and the best use of taxpayers’ money is to proceed along the route of an RFP in this case. Also, doing a fly-off would require reducing the budget and acquisition from 12-18 tankers a year to as few as six.
Looking long-term, Young says that he wants competition for the KC-Y follow-on program with “aggressive pricing.” He also said that in this rebid on the KC-X, perhaps Northrop and Boeing will sharpen their pricing even further.
We think it unlikely Boeing will offer only the 777, but it would be interesting to offer a mix of the KC-767 and KC-777. At the same time, since the USAF previously was clear that it wants to have only one airplane type for the KC-X competition, we believe that in the end Boeing will stick with the KC-767. That’s where all the money has been invested and all the effort and analysis made. Furthermore, Boeing has spent years saying the KC-767 is “right sized,” fits on the tarmac, is better for runway weights and so on. To change now would undermine everything that it has said up to this point.
It’s worth remembering that the USAF wants a “medium” tanker. According to the Rand Corp. Analysis of Alternatives, the KC-767 and KC-30 are medium tankers; the 777 is a “large” tanker.
But the rebid doesn’t mean that Boeing has any particular advantage. This is going to be a tough competition and, unfortunately, we expect more of the public and political campaigns (which we largely considered unseemly) to resurface. It would be nice if both sides would reign it in and just work with the USAF quietly.
Update, 300 PM PDT: Boeing had this to say about the DOD action:
“We welcome the decision by Defense Secretary Robert Gates not to proceed with the contract award to Northrop Grumman/EADS and to reopen the KC-X tanker competition. However, we remain concerned that a renewed Request for Proposals (RFP) may include changes that significantly alter the selection criteria as set forth in the original solicitation. As the Government Accountability Office reported in upholding our protest, we submitted the only proposal that fully met the mandatory criteria of the original RFP.
“We look forward to working with the new acquisition team as it reopens the competition, but we will also take time to understand the updated solicitation to determine the right path forward for the company.
“It’s encouraging that the Defense Department intends to take steps to ensure a fair and open competition that, among other things, fully accounts for life-cycle costs, such as fuel, to provide the most capable tanker at the best value for the American taxpayer.”
Northrop was more subdued:
“Northrop Grumman Corporation applauds Defense Secretary Gates and Under Secretary Young for recognizing that the acquisition of replacement refueling tankers for the Air Force should be put on a path toward quick closure. We are reviewing the decision to ensure the re-competition will provide both companies a fair opportunity to present the strengths of their proposals.
The United States Air Force has already picked the best tanker, and we are confident that it will do so again. Our men and women in uniform deserve nothing less.
The Northrop Grumman KC-45 tanker is needed now and is ready now.”