A Lot Of Money, A Lot Of Mess

You knew the GAO's detailed report about the botched Air Force refueling tanker procurement was on it's way. Well, it has arrived. And it paints an even uglier picture of the $40 billion deal than we anticipated.

The ruling, urging the Air Force to overturn the award to Northrop Grumman and European Aeronautic Defence and Space, came as a result of a protest from Boeing Co., the loser and incumbent.

It is essentially a technical critique of the procurement process, not an examination of the merits of the planes. In 67 pages, the GAO repeatedly rips the Air Force for mistakes and missteps in a process that is supposed to ensure a fair process that yields the best deal for taxpayers.

Here are some tidbits, gleaned from a jargon-laced report that nevertheless contains some sharp language, at least by GAO standards.

Among other things, the GAO found that the Air Force made "unreasonable" adjustments in Boeing cost estimates. Auditors found that some Boeing costs, said by the Air Force to be higher than Northrop's proposal, were in fact lower after the mistakes had been corrected.

The Air Force also ignored the fact that Northrop declined to commit to a two-year deadline to provide maintenance and planning support for the aircraft, a requirement spelled out in the original solicitation. The GAO report said "the Air Force improperly accepted Northrop Grumman's proposal, where that proposal clearly took exception to a material solicitation requirement."

Along the way, the Air Force seemed to guide Northrop through some pitfalls. In one instance, the Air Force first told Boeing that it had satisfied one set of objectives and later, after discussions had been closed, decided it had not. But the Air Force told Northrop about unmet objectives, allowing that company to change its proposal and meet the requirements.

"It is a fundamental precept of negotiated procurements that discussions, when conducted, must be meaningful, equitable, and not misleading," the GAO said in its assessment of the Air Force performance.

The GAO indicates that in its judgment the competition was almost a dead heat. "But for these errors, we believe that Boeing would have had a substantial chance of being selected for award," the report concluded.


By Robert O'Harrow |  June 25, 2008; 4:35 PM ET
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Comments

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There is no question that the Boeing plane is better for the taxpayers and the Air Force. The Boeing plane is more manueverable. It will not require the building of bigger hangars and runways. The fuel efficiency of the Boeing plane is superior at a time when fuel prices are going through the roof. The tanker pilots I know want the Boeing plane to be chosen!!

Posted by: For America | June 26, 2008 1:43 PM

Two potential reasons behind the Air Force's possible attempt to circumvent established contracting procedures come immediately to mind. One is a lofty political promise made to the European Union by our national leaders, a promise that -- of course -- is too complicated for common taxpayers to understand. The other lies in a possible web of interpersonal relationships at the USAF's highest levels, relationships similar to those behind a $50 million contract to produce a jumbotron audiovisual presentation for the Air Force Thunderbirds.

Posted by: Boomer1 | June 26, 2008 5:56 PM

It is getting increasingly difficult to get bidders on government contracts, and as a consequence the effectiveness of competition in getting the best possible deal for the procurement dollar is waning.

But even so, it is ultimately self defeating when you modify an RFP for no other reason than making a noncompetitive offering competitive. Not only do you procure something that does not correspond to the validated need, but you discourage future bidders when your source selection criteria are totally contrary to your RFP guidelines, as clearly happened in this case. And when you collude with one bidder to the disadvantage of another, or do not hold one bidder to the letter of the mandatory items in the RFP, as was done in this pathetic abortion of a source selection process, you imperil not just this procurement, but all future procurements.

I'm sorry, but it's been that way forever. If you don't have time to do it right, where on earth are you going to find the time to do it over?

This thing needs to be restarted from square one. The individuals who were involved should be disqualified from future procurement programs. Of even greater concern were the blithe reassurances given by senior Air Force leadership early on in this dispute. Their statement about the EADS deal being "substantially more advantageous economically" comes to mind. Given the size of the program, the apparent economic advantage of the EADS offering was trivial, and even that small advantage was totally the result of MULTIPLE ARITHMETIC ERRORS that the Air Force admitted to when the GAO questioned them. In fact, the Boeing offering was economically superior (although again, only at the margin).

Either the senior Air Force personnel involved were duped by their own people (which doesn't speak well for their stewardship of a $40 billion lead-in to a $100 billion procurement program) or they were coconspirators in one of the more egregious violations of accepted procurement practices in recent years (which would in fact be worse than mere incompetence).

Clearly, a start has been made to the restoration of USAF credibility by the firing of the USAF Chief of Staff and Secretary of the Air Force, but this should only be the start. The Air Force needs to do some housecleaning of their own. Everybody involved in this travesty should be questioned under oath about what they knew and when they knew it. Then they should have to explain just why they thought that this was in accordance with procurement law. As a former USAF procurement officer, I can tell you that this is a more scathing GAO report than I saw in over twenty years. This wasn't merely the gang that couldn't shoot straight. Laws were broken here.

Posted by: George Hanshaw | June 27, 2008 1:10 AM

I agree with the statement of George H. Laws were broken here. And they should be held accountable. This has become the norm and this is corruption at its finest level. The promises to the European Union by our so called "leaders" isn't that complicated that the "common taxpayers wouldn't understand. It's because they have kept the average taxpayer who is struggling to keep his head a float, too busy to get involved with what the Air Force is doing or what Congress is doing for that matter, until after they have voted on it. He doesn't care for the most part until it affects him directly, such as losing his job at Boeing because they have to cut back on employees. Then and only then will he be interested enough to care. So our high mucky muck officials are doing the same thing they have always done, "sell out to the group who lines their palms with the most seaweed". The bids should have to start over, but be looked at by an independent company.

Posted by: Dawn Hupfer | June 27, 2008 12:45 PM

You ask me to complete a survey and I get this.

Liberal democrats were better in the ol' days........

Posted by: pepiveas | June 27, 2008 1:13 PM

FREE MARKET FORCES

Posted by: bob_gutermuth | July 1, 2008 10:26 AM

I have worked as a low level government procurement official and can assure anyone that is interested that there can be and are pressures exerted from superiors for the selection of specific contractors. As a member of the contract evaluation team, I have been pressured by superiors to alter my evaluation of the proposal to skew it toward the preferred contractor. Given the size of the air force contract, there must have been extraordinary pressures exerted. The evaluation team, assuming there was one, has my sympathy.

Posted by: Graybeard3491 | July 8, 2008 9:50 AM

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