Is failure an option in KC-X competition?

With Sen. Carl Levin (D-MI) set to hold the tanker hearing on Thursday (Jan. 27), it is clear the USAF continues to drag on its decision in the KC-X competition, which was expected this month. It now looks like March.

We’re going to ask a question that may be considered by some to be ridiculous on its face (and we’re not entirely sure it isn’t) but which, given all the twists and turns, starts-and-stops, hissy fits and more that’s happened in the painful saga of USAF tankers, we might ask, Why not ask this question?

Is failure an option?

There are any number of ways to define “failure” in this context:

  1. The USAF can’t reach a decision. This is the most ridiculous of the scenarios.
  2. The USAF reaches the “wrong” decision. This will depend on your point of view, won’t it? The supporters of one tanker or the other will believe the USAF is “wrong” if the tanker they support isn’t selected.
  3. The USAF, in a surprise move, awards contracts to both companies. This may be the only politically acceptable decision (though we can think of sound strategic reasons to do so), but if this happens, is it a “failure” on the part of DOD to make the “best” decision?
  4. The USAF concludes that one airplane failed the pass-fail tests of 372 criteria, ruling out procurement of the airplane. This is what we think of when we ask, Is failure an option? Readers will recall that when the RFP was presented by USAF and DOD for the 2010 competition, officials said any offeror had to submit an airplane that must pass all 372 mandatory requirements to make it to the final price-shootout that would determine the winner (subject to the so-called 1% rule in the RFP [see below]*). If any airplane offered failed any one of the mandatory requirements, USAF said, that was it–the airplane was ruled out.

So consider this: if the EADS KC-45 fails just one of the mandatory criteria, it automatically is eliminated from consideration. Same goes for Boeing’s KC-767.

Boeing has, from time-to-time, asserted that the KC-330 built for the Australian Air Force doesn’t meet one-quarter of the mandatory requirements. This is relevant because EADS has touted its KC-45 offering as being based on the KC-330, which EADS claims is 90% compliant with the requirements.

And the separation last week of the refueling boom from the KC-30A destined for the Australian Air Force has become additional fodder for anti-KC-45 partisans on the pass-fail assessment.

EADS has, from time-to-time, asserted that the Italian tanker on which the KC-767 Boeing is offering the USAF is based, also fails to meet requirements. Both companies acknowledged additional work is required to meet the 372 criteria, and obviously both companies are striving to do so. EADS also notes, and there is no getting around it, that the KC-767 Next Gen offered to the Air Force, is a conceptual airplane, and it still hasn’t been delivered to Italy and within the circle we check in with, it is still said the wing pods don’t work as intended. Boeing and Italian sources are closed-mouth.

What if the USAF concludes that one company or the other (or, Heaven forbid, both) failed to meet all 372 requirements? This could be the “out” the USAF needs to support its decision on the contract award, rather than basing the decision on pricing, over which the whole WTO and illegal subsidy thing comes into play.

Suppose USAF says the KC-45 failed to pass 10 mandatory requirements (a number we’re making up for illustration and nothing remotely based on any insight), particularly if any one of these are critical to the combat or mission requirements (as opposed to, for example, flushing the toilet [which falls within the mandatory criteria pass-fail requirement])? It would be hard, but not impossible, to protest that the plane isn’t combat ready, day-one.

Suppose USAF says the KC-767 failed to pass 10 mandatory requirements, as described in the preceding paragraph? It would be hard, but not impossible, to protest this.

This scenario is a product of our own imagination and not something that’s been suggested to us by anyone. Failing one plane or the other would likely be more palatable to Congress than winning on price alone. If the plane fails, then {shrug} what can you do? If the price is close, and should the winner be EADS, then it’s that {@$#%&} illegal subsidy.

Is failure an option? Maybe it is.

*The 1% solution is the provision that if the low price bidder is more than 1% lower than the competition, this bidder wins. If the offered prices are within 1% of each other, there are an additional 92 optional criteria that will be evaluated, and this is where the so-called “extra credit” of having greater capabilities than meeting the minimum requirements gets valued, along with a bunch of other stuff. Whichever airplane is rated best on this additional criteria then wins.

17 Comments on “Is failure an option in KC-X competition?

  1. At this point, the split buy ie failure #3 looks like win-win situation.
    Anything else will turn into a nightmare.

    • I’d actually agree on this one. Otherwise, we’ll go through the same round of protests, new tenders, etc. again. Both sides could probably find enough valid reasons to protest.
      Then again – if the order is split, who’s to say, that one of the two sides isn’t going to protest that, as well?

  2. Sounds more and more about a battle between competing lemonade stands and Girl scout cookie sales. .

    • One core deciding factor will be :

      Is Boeing
      A: more interested in/driven by winning this contest or in
      B: denying EADS/Airbus access to an US manufacturing site.

      If A a split buy might find aceptance politically ( after Boeing nodding )
      If B KC-X will be assigned to Boeing or go down in flames.

      • Answer to A = yes
        Answer to B = yes

        Of course if Airbus agrees to hire McNearney and half the Board of Directionless as consultants, then maybe a bi-partisan deal could be arranged ;-PPP

        • That has a bit of Bismark’s commentary on Wilhelm’s selection decission.
          Your Majesty had two options available.
          Your Majesty selected the third 😉

          I have to insist on this being an either A or B decission!

          Extending the “imature materials” argument given recently by Mr. Albaugh
          I would guess that Airbus has no interest in hiring “imature management”.
          They’ve about got rid of theirs and would like to stay away from any rebound.
          ( Hartmut Mehdorn has recently been exposed to have deeply ruining Deutsche Bahn too )

  3. split buy would probably actually make operational sense as well, although -as much as I hate to say it- I get the sneaking feeling the 330 is the better plane.

  4. This is very interesting. If neither proposal can comply with all 372 RFP/SRD requirements that are spelled out, clearly, then the USAF must stand on their public announcements given before the final RFP/SRD was released. Those statements that the cheaper airplane (beyond a 1% difference in price and all 372 requirements are met) is the automatic winner. If neither offer can do that, then the USAF cannot award a contract to the company that complies with, say 370 requirements over the one that meets 369 requirements.

    The USAF has essentially said this is an “all or none” compitition, period. If they do anything else, the GAO will be taking them to the wood shed, again.

    Option #3 is no decision at all, nor is it really an option. Does any one really think the DOD can buy one tanker at, say $150M each, and one at, say $160M each? I don’t think the Congress would fund both airplanes. Option #2 is to politically hot for the USAF to go with, as a varying number of Congressmen/women and Senators can block funding, depending on who they support.

    The only viable options are #1 and #4. For option #1, the USAF can come out and say “in our opinion both offers did not clearly show complience with all 372 requirements”. The OEMs won’t like that, but their explation of complying with each requirement to the USAF does not count, only the USAF opinion counts. For option #4, the USAF can come out and say your airplane did not comply with all 372 requirements because we doubt the toilet flush flow rate can be achieved, so your airplane did not qualify.

  5. Why not a split buy with a light relaxation of the requirements, so Boeing and EADS can effectively use their already developed aircraft. EADS will be happy to build the US final assembly, and Boeing does also have its final assembly. If the USAF plays smart, they can basically buy “off the shelf”. The B767 a better one-on-one replacement for the KC-135, the A330 is a valid replacement for the KC-10.
    In the end, a useful deal for all.

    • In almost any military and/or government procurement, FACTS,DATA, LOGIC, and COMMON SENSE are rarely part of any competition. Even though I have been saying for years that a split buy – 60 40 or 40 60 depending on view would be a logical and practical solution as it would generate even more ‘ jobs” etc, that solution is about as likely as hell freezing over within 50 years.

  6. In my mind there is no failure option, there cannot be, the USAF has to move forward with a new tanker.

    It wouldn’t surprise me if it awards contracts to both companies to build 80 planes each, this would then lay the ground work for the next contract for the reminder of the fleet. The 2 “real” planes out in the field competing in the real world environment of transportation and aerial refuelling for the USAF. Have a delivery time-frame, OIC time, training & operations, should one of the manufactures fail then the other wins.

    Should the both deliver a winning product then the USAF and the tax payers win and it’s a mixed fleet.

    Simple really.

  7. I personally like the dual buy, with about 30 planes each in the original allotment. Decision on which contractor gets the follow on lots will come based on actual performance. After all we do really need 2 sizes of tankers, but if there are tech problems or the Contractor is playing the change order game, the guy that has the better plane gets to build hundreds, the other guy just the 30.

  8. Re: Fail one or both offerings on technical grounds.
    My guess is that this will not be taken kindly by that side 😉

    .. And will be “worked on” using the political toolbox.

  9. if #1 then default to #4, both companies fail on the pass-fail gate. easy to defend, neither company will complain much because they wanna stay friends for the next round.

    #2 is almost a given. whatever they do decide, it’ll be wrong to more than half of us pundits.

    #3 is not actually possible within the limits of the current competition, so #4 would need to be invoked first. Then, in a round #3 could become possible.

    #4 with only one company failing is practically impossible. not only would the USAF need to defend their fail evaluation of the one, they would also need to defend their pass evaluation of the other.
    The last round shows what the legal teams of these industrial behemoths can do. what was it? 90 complaints were logged with the GAO of which “only” 8 were upheld. That’s a success rate of 10%. The lose would only have to find a single error in the pass/fail decision to (again) blow this requirement out of the sky.

    Dual buy of the 767/330 would IMHO be a failure – it fails to acknowledge the great potential of the 777 as a large (KC-10 replacement) tanker. Show of hands of people that expect to see the USAF operate three new tanker types to replace the -135 and -10 within 4 decades?

  10. Dual buy of the 767/330 would IMHO be a failure ? Really why not – if the 777 has such great potential why wasn’t it offered?

    Is Boeing too busy selling it to its commercial customer first or doesn’t it have enough engineering personnel to go around to turn it into a aerial refuelling winner, just remember how late the 787 is and the 747-8I isn’t selling all that well either.

    Point is the new Airbus plane is about to start flying for Australia and the UK with 19 between them, Saudi Arabia & United Arab Emirates between them have 9 on order and Brazil & India may be ordering in the next 90 days, so that is 28 + planes.

    Boeing has the KC767 with two customers, Italian air force has four aircraft ordered which have not yet been delivered with ongoing problems with their in flight refuelling equipment (mainly wings flutter) and The Japan Self-Defense Forces ordered four aircraft of which three have reached initial operational capability status with the JASDF in May 2009 and the fourth tanker was delivered in January 2010.

    And people mention the 777 – I can’t wait till someone brings up the 787, then I’ll know I’m in a dream.

    • it wasn’t offered (IMO) because the KC-X (and KC-Y) were intended to replace the KC-135 fleet, KC-Z would follow to address KC-10 replacement.
      The 777 shines at the KC-10 end of the scale, not as an KC-135 replacement. There is such a thing as to big (for more information on that, read the TopBoom posts on earlier KC-X articles)

      28 vs 7 hardly matters when we’re talking a first trench of 179 for the USAF alone.

      I heartily agree, the 787 is a dream (all possible interpretation intended) of an airplane (thanks for bringing it up ;-)). KC-135 flew before the 707 – the largest commercial prototype was used to develop the 707 (or the other way around, I care not) – Why wouldn’t the 787 work as an tanker?

  11. ikkeman :
    it wasn’t offered (IMO) because the KC-X (and KC-Y) were intended to replace the KC-135 fleet, KC-Z would follow to address KC-10 replacement.
    The 777 shines at the KC-10 end of the scale, not as an KC-135 replacement. There is such a thing as to big (for more information on that, read the TopBoom posts on earlier KC-X articles)
    28 vs 7 hardly matters when we’re talking a first trench of 179 for the USAF alone.
    I heartily agree, the 787 is a dream (all possible interpretation intended) of an airplane (thanks for bringing it up ). KC-135 flew before the 707 – the largest commercial prototype was used to develop the 707 (or the other way around, I care not) – Why wouldn’t the 787 work as an tanker?

    The 777 was not offered as it has a much higher purchase and operational cost, as well as having 4-6 years of development work required to turn it into a tanker.

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