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June 25, 2008
Norm's Reaction to Release of Full GAO Report
“The release of the full version of the GAO Report was a devastating indictment of the fatally-flawed tanker selection process conducted by the Air Force that resulted in the proposed award of a contract for a plane –the Airbus 330-- that was less capable and far more costly to operate and maintain than the KC-767, manufactured by Boeing workers in Everett, Wash.
“In sustaining Boeing’s protest, the GAO cited numerous substantive errors that were made by the Air Force in the process and it concluded: ‘But for these errors, we believe that Boeing would have had a substantial chance of being selected for award’. Beyond the obvious errors that GAO found in the process, the independent review determined that the Air Force could provide little evidence for its cost comparison of the two aircraft, particularly in its evaluation of the greater amount of fuel consumed by the larger Airbus aircraft. The GAO said that ‘Even a small increase in the amount of fuel that is burned per hour by a particular aircraft would have a dramatic impact on the overall fuel costs.’ This is another aspect of the competition in which the Air Force ignored the facts. The savings on fuel alone for a KC-767 versus an Airbus 330 is conservatively estimated to be $30 to $40 billion over the life of the 179 aircraft – an amount that would pay for the purchase cost of the entire fleet.
“Furthermore it was GAO’s conclusion that the selection process was conducted in an unfair manner. The report stated ‘It is a fundamental principle of competitive procurements that competitors be treated fairly, and fairness in competitions for federal procurements is largely defined by an evaluation that is reasonable and consistent with the terms of the solicitation. For that reason, agencies are required to identify the bases upon which offerors’ proposals will be evaluated and to evaluate offers in accordance with the stated evaluation criteria.… The Air Force did not fulfill this fundamental obligation here.’
“Based on the conclusions of the GAO analysis, the most appropriate action for the Defense Department to take at this time is to terminate the contract with EADS/Northrop Grumman that has effectively been invalidated by the independent review and it should launch a new source selection process with a genuine commitment to fairness and transparency.”
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