The Air Force's Procurement Missteps

There is copious evidence here that the people running this process just did not know what they were doing.

So many of these mistakes seem to be traceable not to a bad process but to people who were not implementing the process objectively or professionally.

The Government Accountability Office (GAO) is the audit, evaluation and investigative arm of the United States Congress.

As part of its mandate, the GAO has statutory authority to preside over “protest(s) concerning an alleged violation of a procurement statute or regulation.”

Such protests include written objections to a solicitation for offers for a procurement contract, cancellation of a solicitation, the award of a contract, or the termination or cancellation of a contract, if the objection is based at least in part upon improprieties relating to the initial award.

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A recent GAO bid protest relates to the contract for 179 tankers worth up to $US100 billion to replace the Air Force's entire tanker fleet over the next 30 years. Tankers are used to refuel warplanes in mid-air.

Boeing, which has supplied the Air Force with all of its refueling planes, was the heavy favorite to win the contract. The Air Force, though, announced in February that Northrop and EADS, the parent company of Airbus, had won with a superior plane and proposal.

The Northrop tanker is based on the Airbus A330 commercial jet. Boeing's tanker would be based on the smaller 767.

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Upon being advised of being the unsuccessful supplier, Boeing filled a bid protest with the GAO.

Boeing challenged the Air Force’s technical and cost evaluations, conduct of discussions, and source selection decision.

The GAO released its decision last week and was scathing in the procurement selection processes that the Air Force had adopted in the selection of the alternative bid from Northrop.

The GAO noted:

• The Air Force did not assess the relative merits of the proposals in accordance with the evaluation criteria identified in the solicitation
  
  
• The Air Force violated the solicitation’s evaluation provision that “no consideration will be provided for exceeding [key performance parameter] KPP objectives” when it recognized as a key discriminator the fact that the Northrop proposed to exceed a KPP objective relating to aerial refueling to a greater degree than Boeing.
  
  
• The documentation did not demonstrate the reasonableness of the Air Force’s determination that the Northrop proposed aerial refueling tanker could refuel all current Air Force fixed‑wing tanker‑compatible receiver aircraft in accordance with current Air Force procedures, as required by the solicitation.
  
  
• The Air Force conducted misleading and unequal discussions with Boeing, where the Air Force informed Boeing that it had fully satisfied a KPP objective relating to operational utility, but later determined that Boeing only partially met this objective, without advising Boeing of this change in its assessment and while continuing to conduct discussions with Northrop relating to its satisfaction of the same KPP objective.
  
  
• The Air Force’s evaluation of military construction costs in calculating Northrop’s most probable life cycle costs for their proposed aircraft was unreasonable, where the evaluation did not account for Northrop’s specific proposals, and where the calculation of military construction costs based on a notional (hypothetical) plan was not reasonably supported.
  
  
• The Air Force’s use of a “Monte Carlo” simulation model to determine Boeing's probable cost of non-recurring engineering associated with the system demonstration and development portion of the acquisition was unreasonable, where the model’s inputs concerned total weapons systems at an overall program level and there is no indication that this is a reliable predictor of anticipated growth of Boeing’s non‑recurring engineering costs.

"But for these errors," the GAO said, "we believe that Boeing would have had a substantial chance of being selected for award."

The GAO’s ruling does not legally bind the Air Force to re open the bid process – rather it can only recommend a course of action.

There is, however, immense political pressure for this to be done.