This week the normally thoughtful, balanced, even sophisticated journal The Economistpublished a piece on the decision by Northrop Grumman and EADS to withdraw from the competition for a new U.S. aerial refueling tanker. The headline was “The Best Plane Lost.” The publication asserted that “most neutral observers agreed that the KC-45 (the NG-EADS offering) was the better airplane.” But the trans-Atlantic team chose not even to respond to the request for proposal, claiming that the way it was written fundamentally disadvantaged the Northrop Grumman-EADS entry.
So why did it lose? According to The Economist, it was because of politics and protectionism. The Pentagon was pressured by Congress not to give the contract to a foreign company, one that had just been judged by the World Trade Organization to have received unfair government subsidies. There was also the fact that the plan had been to build the KC-45 in a solidly Republican state, thereby taking money away from a Democratic Washington state. So great was the alleged pressure that the Pentagon was unable to ignore the judgment by the independent Government Accountability Office (GAO) that the original competition which the KC-45 had won, was fundamentally flawed.
Is The Economist correct? Did the best plane lose and was the “fix” in for the Boeing candidate? The first assertion is based on the fact that the EADS candidate, the A330, was a larger aircraft that could carry more fuel, passengers and cargo than the somewhat smaller Boeing 767. At the same time, the larger aircraft was more expensive to buy, would cost more to maintain and burned more fuel when in the air. The A330 also requires more ramp space than the 767. The only way that the A330 could be judged to be the cost-effective solution was if the plane could be used as a cargo transport as well as an aerial refueler, or if the Air Force changed its long-standing practices with respect to aerial refueling to take advantage of the A330s greater offload potential. Thus, it may have been a better plane, but only if the missions were different.
The idea that Congressional politics and protectionism had anything to do with the decision is not supported by the facts. With the likes of long-time Boeing critic John McCain on the Senate Armed Services Committee, the idea that the U.S. competitor possessed a political advantage is simply silly. Moreover, the Air Force announced that it would not consider the WTO ruling in its deliberations.
Regarding the protest of the original award to Northrop Grumman-EADS and the subsequent GAO report, the Pentagon could not ignore the report’s findings. The GAO discovered a pattern of bias in the way the competition was conducted to include the addition of new scoring criteria after the proposals were submitted, improper communications between the Air Force and the Northrop Grumman-led team, the use of erroneous data on past performance and vehicle costs, and changing the weights assigned to certain factors after the proposals were received. These were not faux pas but major errors that bordered on criminal behavior.
So, if the best plane lost it was only because on a level playing field it could not win. When the revised solicitation did not presume a new Air Force approach to the refueling mission or give credit for exceeding the minimum requirements, the A330 was simply too expensive. In fact while the A330 lost, the better plane for the missions required by the Air Force is now positioned to win.
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