Time to Move On

October 30, 2009 by Boeing United States Tanker · Comment
Filed under: Boeing, KC-X, KC-X Tanker News, Syndicated Industry News 

Boeing's emphasis since Day One of the renewed KC-X competition has been on clarity -- in the process as well as in Boeing's approach to the bid process.  That brings us to this question of pricing data from the last campaign.  Perhaps we can put this distracting side issue to rest and get on with the process of arriving at the final requirements and evaluation criteria that will enable the Air Force to flawlessly choose the right tanker at the best value.

It's been said that our competitor has been disadvantaged due to the release of their pricing data from the last competition.  The fact is, during that previous acquisition effort the U.S. Government followed the Federal Acquisition Regulation (FAR) and released limited price information from the successful offerer. More specifically, the FAR mandates that the price of the awarded contract be made publicly available upon request.  This is how the system works to protect the American taxpayer and keep the award of billions of defense dollars honest.

Simply put, when you win a contract you expect details to become public along with details of the decision that are shared with the team that was not awarded the contract. And there's no requirement for the government to share the losing bidder's proprietary pricing information with the winner or the public.  Indeed, when Boeing won the competition to build the new U.S. Air Force combat search-and-rescue helicopter the post-award process followed this same regulatory requirement.

What you may be unaware of is that on August 20, 2008, to ensure that every effort was made to "level the playing field" in a new competition, the government released consistent KC-X pricing information to both sides.  In other words, the Department of Defense has already handed over a comparative amount of Boeing's pricing data from the previous KC-X competition.

The Air Force has said repeatedly that this old data is no longer relevant for either side in the renewed competition.  Meanwhile, others continue to contend that their ability to win is dependent on this rather than on simply offering the best proposal that meets the Air Force's new requirements.  We are confident that at the end of this process next summer the contract award will be based on that rather than on any special treatment given to one competitor over another.

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Selling Overseas To Make Up For Coming U.S. Defense Cuts

September 14, 2009 by Matthew Potter · Comment
Filed under: Arizona, Bell, Brazil, Business Line, Companies, Congress, Countries, Department of Defense, Events, Federal Budget Process, India, Qatar, Raytheon, Restructuring, Services, States, UAE, development program, logistics, missile defense, production program 

Arizona is a top beneficiary of defense dollars. This is primarily due to Raytheon and Bell activities in the state. Raytheon makes missile defense systems and Bell helicopters. Now with the possibility that Obama’s cuts to the defense budgets starting in 2010 and out the companies there are looking overseas for work.

Unfortunately this will be the business plan for all defense contractors if their is a significant contraction in U.S. defense spending. The focus will be on selling systems and support to Asian, South American and Middle Eastern companies. India, Brazil, the U.A.E. and Qatar have already made major investments in U.S. and European equipment and there are several major contracts coming. In 2008 the U.S. already captured two-thirds of the market but overall purchases were the lowest they had been since 2005. If this trend continues due to the global downturn in the economy there may be less opportunity for these sort of sales.

These trends may lead to further consolidation of the defense industry in the U.S. and abroad as domestic and foriegn markets may not be able to support the amount of business built up since 2001 primarily by the United States. This will be the most important factor facing the industry which has not seen this situation since the early Nineties and the end of the Reagan arms build-up.

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Michingan Economy Losing Defense Dollars As Well

June 22, 2009 by Matthew Potter · Comment
Filed under: Business Line, Congress, Contract Awards, Department of Defense, Events, Michigan, Restructuring, Services, States, logistics, production program 

Michigan is seeing its car based economy erode quickly with the bankruptcies of Chrysler and General Motors and now word is that the defense dollars flowing to the state are down as well. Crain’s Detroit Business is reporting that defense contracts fell by almost a third compared to the same period last year. One of the problems faced seems to be that the U.S. Defense Department is putting work out to bid but then not awarding the contracts. This may be due to a reassessment of needs by the new Administration, or just changing the timing of the work.

Michigan has one of the highest unemployment rates in the country with no real changes on the horizon that will turn that around. Defense dollars were offsetting some of the losses in civil industry and the state has aggressively gone after them. It is expected that in the next few years to be some major cuts to defense spending and this may exacerbate the problems the state is experiencing.

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Raytheon spreads the wealth around

July 17, 2008 by Matthew Potter · Comment
Filed under: Contract Awards, MDA, Raytheon, Sonju Industrial, development program, missile defense, production program 

Raytheon subcontracted with the small business Sonju Industrial to build missile components. See an article here. Sonju Industrial is a small business and will partner with Raytheon through the Missile Defense Agency (MDA) mentor-protege program. The contract will allow significant growth of Sonju Industrial. This is another example of how defense dollars flow to every part of the US and their significance to the nation’s economy.

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