Military Base Realignments and Closures: DOD Needs to Update Savings Estimates and Continue to Address Challenges in Consolidating Supply-Related Functions at Depot Maintenance Locations. GAO-09-703, July 9
July 9, 2009The Government Accountability Office (GAO) today released the following reports, testimony, and correspondence:
LETTER REPORT
Military Base Realignments and Closures: DOD Needs to Update Savings Estimates and Continue to Address Challenges in Consolidating Supply-Related Functions at Depot Maintenance Locations. GAO-09-703, July 9
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GAO (Government Accountability Office), Infrastructure
GAO Report: Overseas Contingency Operations: Reported Obligations for the Department of Defense. GAO-09-791R
July 10, 2009The Government Accountability Office (GAO) today released the following reports, testimony, and correspondence:
CORRESPONDENCE
Overseas Contingency Operations: Reported Obligations for the Department of Defense. GAO-09-791R, July 10
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GAO (Government Accountability Office)
Air Force Plans Quick Turn Around On KC-X Contract
Filed under: Boeing, EADS, GAO, KC-X, KC-X Tanker News, Northrop Grumman Corp., Syndicated Industry News
It is expected that the final RFP for the KC-X New Aerial Tanker program will be released this week. At a recent forum the Secretary of the Air Force, Michael Donley, said that they hope to have the contract awarded by the end of the summer. This means that if you allow a few months for the proposals to be prepared and submitted the source selection will only take ninety days or so. This is an aggressive time line for a contract this large.
It may be that the Air Force is expecting the Boeing (BA) and Northrop Grumman (NOC) proposals to be much like the ones they submitted in 2008. This will make it easier to do an evaluation and award. There is a great deal of historical work to draw upon. Of course that competition ended in a Northrop win, a Boeing protest, and the GAO upholding it. This led to the current attempt at a contract.
Of course if only Boeing submits a bid as might happen it will make the whole selection process easier.
U.S. Department of Defense Still Not Sold on Split Tanker Buy
Filed under: Boeing, Business Line, Companies, Congress, Contract Awards, Department of Defense, EADS, Events, Federal Budget Process, GAO, Proposal, Protest, Services, U.S. Air Force, development program, logistics, production program
Responding to growing pressure from Congress and some in industry to the idea of splitting the KC-X tanker procurement between Boeing and EADS Secretary of Defense Gates said that the idea would be bad policy. The Hill reports that any cost savings from more rapid production would be offset by the increased logistical tail of having two separate systems. In this day and age when the quantities of equipment purchased is minimal the U.S. cannot afford a dual source for one mission. While some have said that this proposal would more rapidly field capability a split fleet would require two supply chains, training networks and support networks. More will be found out when the Obama administration releases its FY10 budget proposal in the near future.
Army Pushes Back on FCS
Filed under: Boeing, Business Line, Companies, Congress, Events, Federal Budget Process, GAO, SAIC, Services, U.S. Army, development program, production program
Due to its complexity, cost and risk the Future Combat System (FCS) program is required to have an annual report to Congress submitted by the GAO. This was done recently. The FCS is the largest and probably most complex program under development right now by the U.S. military. It is being managed and integrated by Boeing and SAIC. The GAO continues its negative view of FCS and the Temple Daily Telegram reports that the Army acquisition folks countered that with calls to reporters. FCS is a system of systems which will used wheeled armored vehicles, unmanned ground and aerial vehicles all linked by a variety of data links and systems. Its goal is to increase the speed, accuracy and response of the Army. Parts of it have been developed and deployed where they can in Afghanistan and Iraq. The current Stryker vehicle units are the interim step from the M1/M2 based units to the FCS. As it is the largest program in the Army consuming a few billion dollars a year and has risk it is obviously the place that Congress and the Obama administration is looking for cuts. Until the FY10 budget is released there will be this back-and-forth between the Army and other parts of the government as that service tries to preserve as much of the program as they can.
Congressman Murtha Makes Inefficient Recommendation for KC-X
Filed under: Alabama, Boeing, Business Line, Companies, Congress, Contract Awards, Department of Defense, EADS, Events, Federal Budget Process, GAO, Military Aviation, Northrop Grumman Corp., Protest, Restructuring, Services, Suspensions, U.S. Air Force, Washington, commercial aviation, development program, logistics, production program
Congressman Murtha, the powerful Democratic head of the House Appropriations Subcommittee for defense, was visiting Mobile, AL and made a rather stupid recommendation for the KC-X program. The Seattle Post-Intelligencer reports that he said the Air Force should split the work between Boeing and the EADS-Northrop Grumman team. Unless the military is going to buy large numbers of a system — and 150 odd tankers does not count — the costs associated with having two training, support and parts systems are unjustifiable. The aircraft would also end up more expensive as there is less economy of scale available with small lot buys. Murtha is just trying to split the knot but the suggestion is not practical.
KC-X Competition to Restart Soon
Filed under: Boeing, Business Line, Congress, Contract Awards, Department of Defense, EADS, Events, Federal Budget Process, GAO, Military Aviation, Northrop Grumman Corp., Proposal, Protest, U.S. Air Force, commercial aviation, development program, logistics, production program
Secretary of Defense Gates testified today to Congress as he continues his role with the new Obama administration. Reuters reports that Gates said the KC-X tanker competition would restart this spring with an expected award date in the first or second quarter of Fiscal Year 2010. If you remember the original contract was awarded to a team of Northrop Grumman and EADS but Boeing protested and the GAO upheld it. The original plan to conduct a recompete in late 2008 was postponed with a decision to wait for a new administration. One key change is that DoD will handle the proposal and source selection instead of the U.S. Air Force.
KC-X Advertisement Makes DoD Unhappy
Filed under: Boeing, Contract Awards, Department of Defense, EADS, Federal Budget Process, GAO, Military Aviation, Northrop Grumman Corp., Proposal, Protest, U.S. Air Force, commercial aviation, logistics, production program
Northrop Grumman took out an ad this week in the Washington Post supporting its proposal for the KC-X mission. The Wall Street Journal reports that the content of the advertisement made folks over at DoD most unhappy. That is because it quotes an unidentified official as saying the A-330 was $3 Billion cheaper then the B-767 overall. Read more
KC-45 fallout continues
Filed under: Boeing, Contract Awards, Department of Defense, EADS, GAO, Military Aviation, Northrop Grumman Corp., Proposal, Protest, U.S. Air Force, commercial aviation, logistics, production program
With the decision to not go ahead with the KC-45 recompete and the cancellation of the planned source selection, the Pentagon has decided that due to the decision to cancel the original contract Northrop Grumman, and EADS, will receive some termination fee. This will pay the company for any work that the did while the contract was active prior to the protest and GAO recommendation to recompete the proposal. Termination fees are common for when the Government cancels the contract for administrative reasons. If ti is canceled due to non-performance then it gets a little more difficult. Due to the high visibility of this decision, I am sure the Congress will take a look at any money payed to Northrop Grumman.
See the Los Angeles Times for more on this.
KC-X haunts CSAR-X
Filed under: Agusta Westland, Boeing, Contract Awards, Department of Defense, GAO, Lockheed Martin, Military Aviation, Proposal, Protest, Sikorsky, U.S. Air Force, commercial aviation, production program
With the decision to punt on the KC-45 recompete by the current administration there are some worries that this might affect the CSAR-X contract as well. Last word was that the announcement of who won the new GAO ordered competition would come sometime this Fall. Now some of the competitors; Sikorsky, Augusta Westland and Boeing; are concerned that perhaps this decision will delay the announcement of the winner. Boeing had won a contract only to have a protest upheld by GAO for the USAF not applying their criteria correctly.
See this short AP article for more.
We’re still in, says EADS
Filed under: Boeing, Contract Awards, Department of Defense, EADS, GAO, Military Aviation, Proposal, Protest, U.S. Air Force, commercial aviation, logistics, production program
Denying a report in a German magazine, reported here, EADS restates that they will remain competitors for the KC-45 contract. Secretary of Defense Gates recommended postponing the reopening of the KC-45 bid process until next year when a new administration will be in power. EADS was reported as not wanting to participate in future contract proposals if the current one was delayed. The company is now saying that that is not the case.
See CNNMoney.com for that story.
Gates gives up
Filed under: Boeing, Contract Awards, Department of Defense, EADS, Federal Budget Process, GAO, Military Aviation, Northrop Grumman Corp., Proposal, Protest, U.S. Air Force, commercial aviation, development program, logistics, production program
The Secretary of Defense today canceled the KC-45 re-proposal. He decided that there was not enough time to do this before the end of President Bush’s second term. The announcement was made via a press release this afternoon. Secretary Gates stated that ““It has now become clear that the solicitation and award process cannot be accomplished by January,” he said. “Thus, I believe that rather than hand the next administration an incomplete and possibly contested process, we should cleanly defer this procurement to the next team.”
This decision ends temporarily a seven year saga that started with Boeing being given a lease for 767 tankers, through a proper competition that was thrown out by the GAO, and what was expected to be a quick recompete starting this month.
See the actual release at DefenseLink.mil.
Boeing workers want strike, union postpones
Filed under: Boeing, Contract Awards, Department of Defense, GAO, Military Aviation, Proposal, Protest, U.S. Air Force, commercial aviation, logistics, production program
Update – The machinists started their strike last night. While some work could be done, no aircraft assembly is possible. This will delay the 787 further, and have a negative impact on their bid for the KC-45.
See a The New York Times story here.
The Boeing machinists voted to strike effective Wednesday night, but the leaders of the Union have given Boeing 48 more hours to come to an agreement. The strike will start tonight if no deal is reached. The leadership decision was controversial and not well received by the members who had voted overwhelmingly to strike. Any extended strike, as Sikorsky illustrated in 2006, will be very disruptive to the delivery schedules for all Boeing problems. It is especially key now as Boeing is expected to turn in their new proposal for the KC-45 soon.
See the St Louis Business Journal for some more information.
Air Mobility Command General pessimistic on tanker
Filed under: Boeing, Contract Awards, Department of Defense, EADS, GAO, Military Aviation, Northrop Grumman Corp., Proposal, Protest, U.S. Air Force, commercial aviation, logistics, production program
Gen Lichte, the commander of AMC, expressed concern with the pace of the KC-45 recompete. He is concerned that not only will there be further delays in the award, but that the loser will then protest the recompete. DoD, taking over the competition from the Air Force, had originally planned for proposal submission in August. At Boeing’s request they have delayed this until 1 October, with a goal of awarding the contract by the end of Calendar Year 2008. Boeing is asking for more time, claiming that the requirements may drive them to bid a different aircraft then the B767 previously proposed. EADS and Northrop Grumman will most likely use a proposal that is mostly like the one that won last time. They even had the first KC-45 under construction.
Business Week has an article here.
Union and Boeing try to agree
Filed under: Boeing, Contract Awards, GAO, Military Aviation, Proposal, Protest, U.S. Air Force, logistics, production program
Boeing is negotiating with the machinists union who make up the core of its workforce on both military and commercial aircraft. Today they sent their best and last offer. This includes the employees who will build the tanker for the US Air Force. So in the middle of trying to write and cost a proposal to the Air Force for a program that is seen as key to the company holding onto a market they are trying to prevent work stoppages. Strikes are the kind of thing that can kill a program’s schedule.
See Excite News for more.
Update: The union leaders have recommended rejection of the Boeing proposal and striking on 4 September. While this will have a large effect on civil aircraft production it won’t help Boeing get ready for the KC-45 if they win again.
See Bloomberg.com for a story on this mess.
Former Undersecretary of Acquisition criticizes Boeing
Filed under: Boeing, Contract Awards, EADS, GAO, Military Aviation, Northrop Grumman Corp., Proposal, Protest, U.S. Air Force, commercial aviation, logistics, production program
For more see The Guardian.
Boeing and KC-45 in turmoil
Filed under: Boeing, Contract Awards, Department of Defense, EADS, GAO, Military Aviation, Northrop Grumman Corp., Proposal, Protest, U.S. Air Force, commercial aviation, logistics, production program
After meeting with DoD and the US Air Force to discuss the new tanker RFP due to the GAO upholding their protest, Boeing is now saying that without significantly more time to prepare a proposal they may have to drop out. The new schedule is for the Boeing and Northrop Grumman teams to submit by the end of October with a decision before the new calendar year. Boeing is saying that they may need to bid a larger aircraft then the KC-767 proposed last time due to the fuel capacity and range requirements. A variant of the 777 would have to be used. Boeing supposedly is asking for a more then 180 day delay in the submissions. EADS and Northrop Grumman will most likely submit a tweaked version of their original winning proposal.
For more see The Wichita Business Journal and WashingtonPost.com.
US Air Force to award CSAR-X recompete soon
Filed under: Agusta Westland, Boeing, Contract Awards, GAO, Military Aviation, Northrop Grumman Corp., Proposal, Protest, Sikorsky, U.S. Air Force, UTC, commercial aviation, development program, production program
In a contract that has fallen to the back burner recently due to KC-45 events, the Air Force announced that they would complete the recompete for the CSAR-X by September. Contract award would be soon after. The CSAR-X contract to replace the HH-60 PaveHawk aircraft was originally awarded to Boeing with a variant of the CH-47. Sikorsky and Lockheed Martin protested and won with the GAO ruling that the Air Force did not apply the selection criteria properly. The whole contract was recompeted with Boeing, Sikorsky and Lockheed resubmitting bids.
For more see this article at www.pressconnects.com for the Binghamton area.
Europeon view of KC-45
Filed under: Boeing, Contract Awards, Department of Defense, EADS, Federal Budget Process, GAO, Military Aviation, Northrop Grumman Corp., Proposal, Protest, U.S. Air Force, commercial aviation, development program, logistics, production program
This article in the Deutsche Welle provides a good round up of the current on goings of the KC-45 recompete. It reiterates that despite rumors on not participating in this round Boeing went ahead and had their meeting with OSD and the Air Force to discuss the RFP. Obviously there is a great deal of interest in Germany, and Europe as a whole, for EADS to win the contract. It would be the largest to date for a primarily European based company.
Boeing moves forward with KC-45
Filed under: Boeing, Contract Awards, Department of Defense, EADS, Federal Budget Process, GAO, Military Aviation, Northrop Grumman Corp., Proposal, Protest, U.S. Air Force, commercial aviation, logistics, production program
Despite reports earlier in the week, it seems that Boeing will pursue the KC-45 re-proposal. See a story here. The two possible contenders met with US Air Force and DoD representatives to talk through the new RFP. The goal of OSD is to award a contract by the end of the year. The tanker replacement process started 7 years ago with the new delays a KC-145 replacement may not be available until 2012-2014.
GAO states the obvious again
Filed under: Congress, Federal Budget Process, GAO, production program
The GAO released a report stating that in their rush to purchase Mine Resistant Ambush Protected (MRAP) vehicles the services may have set themselves up for some long term costs that were avoidable. See the story here. No kidding. The USMC and Army were thrown money and direction by Congress to purchase as many MRAP as possible and rush them into service. Do you think that there were some thought and steps in the contracting process that could have been more thorough? In the long term neither service wants the MRAP, which was a knee jerk reaction to the IED threat anyway. They are not very mobile or tactical and there will be issues in the future trying to transport them to whatever the next battlefield is.
DoD and USAF agree to recompete KC-45 contract
Filed under: Boeing, Department of Defense, EADS, GAO, Military Aviation, Northrop Grumman Corp., Proposal, Protest, U.S. Air Force, development program, logistics, production program
In light of the GAO report the USAF and DoD decided to recompete the new tanker contract. See an article here. This, like the CSAR-X, means that a whole new competition will be held. The Air Force will rewrite the RFP and Boeing and Northrop Grumman will resubmit proposals. Much of the work preparing these will be already done which will speed up the process for the bidders.
KC-45 protest summary report released
Filed under: Boeing, Contract Awards, Department of Defense, EADS, GAO, Northrop Grumman Corp., Protest, U.S. Air Force, commercial aviation, development program, logistics
The GAO released a summary of why they upheld the protest by Boeing over the KC-45 award. See an article here. The chief reason was due to the Air Force’s failure to properly apply the criteria for source selection. Of the several reasons listed two ones that stand out is that they gave EADS credit for exceeding a requirement when they should not have, and rather than just noting the risk associated with the Boeing bid the Air Force calculated a dollar figure to overcome that risk. This alone drove up the cost proposal of the Boeing K-767 aircraft. The Air Force technically still does not have to withdraw the award to Northrop Grumman and EADS, but they would be best off reopening the competition.
Market bets on new tanker competition
Filed under: Boeing, Contract Awards, EADS, GAO, Northrop Grumman Corp., Protest, U.S. Air Force, commercial aviation, development program, logistics, production program
EADS shares are down in Europe, and I am sure Northrop Grumman’s will also drop today. See this article. The market is assuming that the Air Force will follow the GAO’s recommendation and reopen the competition. EADS performance has been heavily affected by the delays to the A380 and the scandals with their management. Also they have labor issues as they try to sort out the French-German split and make themselves more efficient. There is still a good chance that EADS will win the new competition.
Boeing’s protest sustained by the GAO
Filed under: Boeing, Contract Awards, EADS, GAO, Military Aviation, Northrop Grumman Corp., Protest, U.S. Air Force, commercial aviation, development program, logistics, production program
The GAO ruled today in Boeing’s favor on the KC-45 protest. They decided that the Air Force failed to properly apply its source selection criteria and did not calculate some of Boeing’s costs correctly. See a story here. The GAO recommended that the competition be reopened. This is what happened with the CSAR-X contract, ironically enough won by Boeing but now back in source selection. The Air Force is not required to follow the GAO’s recommendation, but if it does not Boeing is sure to go to the Court of Appeals and Congress could make it very difficult for the Air Force to execute the contract.
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