commentary on Politics and a little bit of everything else

The New Aerial Tanker bid is around the corner?


The Dog still does not understand why there isn’t a dual bid?

The Air Force currently has two types of tankers…the big KC-10 (DC-10) and the smaller KC-135 (B-707)…why are they torturing themselves and the Congress?

Release of the final request for proposals (RFP) for the U.S. Air Force’s KC-X tanker could lead to a contracting conundrum. If the Northrop Grumman/EADS North America team follows through on its threat not to bid, the Pentagon’s ­strategy designed to elicit low, fixed-price offers from competitors could backfire.

With only Boeing in the running, the Pentagon’s plan could lead to insufficient insight and auditability into the contractor’s pricing.

Normally, when the government anticipates only one bidder, it structures the contract to include insight into a program’s costs and performance to keep a company honest. But that “insight” is not free. The contractor must designate personnel to the task, and the cost is passed on to the government. With multiple bidders, the cost-control mechanism comes through the competitive market forces.

Pentagon officials structured the RFP to lure Northrop Grumman into the game, but the company is still weighing its options. A key change to the new RFP, released Feb. 24, is designed to reduce the financial risk for bidders, but it is not dramatic, according to contractors.

A sole-source deal would leave the Pentagon in the precarious position of falling short after striving for eight years to craft a contest to build KC-135 replacements. The stakes are high for industry, with production expected to cost about $35 billion for 179 refuelers. They are also high for the Air Force acquisition corps, which has had two major awards—the 2008 selection of Northrop Grumman for the first KC-X competition and an earlier choice of Boeing to build combat search-and-rescue helicopters—overturned by government auditors.

Despite the sordid history of multiple KC-X false starts, Deputy Defense Secretary William Lynn says the forthcoming KC-X source selection is the “flagship” program for the Pentagon’s acquisition reform, which aims to promote transparency and motivate contractors to deliver on cost and schedule.

Despite the grand expectations, the Air Force may lose the chance to redeem its acquisition credo if a KC-X duel does not come to pass. Northrop Grumman CEO Wes Bush has threatened not to bid if the financial risk for the company is deemed too high. Team officials have said dramatic changes to the September draft RFP—which was widely viewed as favoring the Boeing 767 design—would be needed to justify crafting a proposal that could cost as much as $100 million.


March 2, 2010 - Posted by | Aircraft, Blogs, Breaking News, Government, Law, Media, Military, Other Things, Politics, The Economy, Travel, Updates | , ,

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