Thursday, May 8, 2008

Northrop Grumman KC-45: Why We Won - Past Performance

Northrop Grumman KC-45: Why We Won - Past Performance

Highlighting Reasons the U.S. Air Force Selected the KC-45 Tanker as Best for Our Men and Women in Uniform

WASHINGTON - May 5, 2008 - The U.S. Air Force found Northrop Grumman Corporation's (NYSE:NOC) bid to build the next generation of aerial refueling tankers superior to Boeing's in four of the five most important selection criteria. Despite this fact, the losing bidder wants the Government Accountability Office to overturn the Air Force decision to award the contract to Northrop Grumman even though the Air Force conducted what even Boeing described as a fair, open and transparent bidding process. Here is another reason Northrop Grumman won, drawn from a list of facts included in a redacted version of a protected Air Force selection document.

Past Performance
A contractor's past performance on related projects is a critical element in the Air Force's assessment of competing proposals. Because replacing America's fleet of aerial refueling tankers is the number one acquisition priority for the Air Force, it paid special attention to Boeing's assertions that it could complete the contract on time and on budget. While Boeing likes to claim that it has a better track record than Northrop Grumman in building tankers, the Air Force determined that Boeing's past record actually meant it was riskier to do business with Boeing than Northrop Grumman.

According to an Air Force document assessing the two bids, in program management " ... There was a notable difference between the two offerors. Northrop Grumman received a rating of 'Satisfactory Confidence,' while Boeing received a rating of 'Little Confidence.'"

A rating of little confidence means the Air Force concluded that "Based on the offeror's performance record, substantial doubt exists the offeror will successfully perform the required effort." The reasons for the Air Force's poor rating of Boeing were redacted for business competition reasons.

The Air Force stated that Northrop Grumman received a superior rating because of its "Excellent and satisfactory (risk) ratings on six (other) contracts." The Air Force document concluded "The higher confidence rating for Northrop Grumman ... was a discriminator" because "This difference in the program management provides better overall confidence. Northrop Grumman (was) more advantageous."

It is worth noting that while Northrop Grumman has built, flown and tested a prototype aircraft and conducted a successful fuel transfer through its boom, Boeing has not yet built, flown or tested its proposed new design KC-767 aircraft. In addition, Boeing has been late in delivering tankers to Italy and Japan. These aircraft are significantly different from the design proposed to the Air Force.

About the KC-45
The KC-45 Tanker aircraft will be assembled in Mobile, Ala., and the KC-45 team will employ 48,000 American workers at 230 U.S. companies in 49 states. It will be built by a world-class industrial team led by Northrop Grumman, and includes EADS North America, General Electric Aviation and Sargent Fletcher.

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