Issue 63 – October 27, 2009

In this issue of the EADS North America Tanker Activity Update:

•	Congressional letter on Air Force tanker draft RFP sent to Secretary of Defense Robert Gates
•	"Check-the-box gamesmanship"

Congressional letter on Air Force tanker draft RFP sent to Secretary of Defense Robert Gates

Eight members of the Alabama Congressional delegation sent the following letter on October 26 to Secretary of Defense Robert Gates, expressing serious concerns on the structure of the Air Force’s draft Request for Proposal (RFP) for the KC-X air refueling tanker acquisition: 

Dear Secretary Gates:

In late September, Deputy Secretary of Defense Bill Lynn briefed us regarding the draft Request for Proposal (RFP) for the KC-X, the next-generation aerial refueling tanker that will replace the Air Force’s aging fleet of KC-135 Stratotankers.  At that time, we were invited to provide feedback regarding the draft RFP and offer the following comments and recommendations accordingly.   

Repeated delay of this program over the past decade has only increased the urgency of proceeding as quickly as possible with acquiring a new air-refueling fleet for the Air Force.  Since your decision to cancel the previous contract award post-GAO protest, testimony from numerous Combatant Commanders has validated the need to rapidly modernize the fleet with enhanced capabilities.  We are very troubled that the draft RFP fails to address this requirement. 

We note with alarm that the draft RFP also omits an assessment of risk associated with either schedule, past performance, or price, especially given that the quantity of mandatory threshold requirements has increased by a factor of ten over the previous competition.  It is unconscionable that the government would abandon its duty to assess risk on behalf of the taxpayers, particularly when cost and schedule realism proved to be significant discriminators during the last competition.  Consequently, it is imperative that the source selection process be modified to protect the government interests by assessing risk and ensuring that bidders cannot buy-in or promise a production schedule that is unrealistic. 

With regard to military capability, we are very concerned that the draft RFP explicitly marginalizes or eliminates 21st century performance that was highly valued during the previous competition, including capacity for airlift, passengers, and medical evacuation.  As a result, most of the RFP’s requirements could be met by the KC-135 designed over 50 years ago.  The draft RFP’s minimalist approach to military capability is inconsistent with statements of senior Air Force leaders, including Generals Schwartz, McNabb, and Lichte who have repeatedly stressed the importance of the KC-X as a ‘game changer’ for air mobility with its multi-role capabilities.  Since the draft RFP essentially asks for another KC-135, we can only conclude that the specified tanker configuration will not meet the future needs of operational tanker commands.  Future Congresses will be required to pay a premium to incorporate valued capability as upgrades once these new tankers are fielded.

In an era of acquisition streamlining and reform, we are very troubled that the draft RFP increases the number of mandatory threshold requirements from 37 to 373, and also fails to pursue a best value solution that allows for requirement tradeoffs based on importance.  This approach makes a mockery of the capability that our warfighters truly value by equating water flow in the toilet with fuel flow in the refueling boom.
  
From an acquisition policy perspective, the fact that the draft RFP locks-in schedule, price, and requirements for an 18-year period, a full 8 to 13 years longer than is current practice for major defense acquisition programs, creates an unworkable scenario.  This excessive contract duration is counter to the intent of the Acquisition Reform Act since it will either facilitate technology obsolescence or encourage requirements creep and contract changes.   An 18-year contract greatly exceeds the Department’s 5-year budgeting and planning process, unduly limiting Congressional oversight.  From a pricing standpoint, an 18-year fixed-price contract will force industry to fully price performance risk that may never materialize, increasing the overall price of these tankers for the taxpayer.  Indeed, the draft RFP’s fixed-price development approach will guarantee that the public pays more for this tanker selection than it would have for the winner in the last competition.

While we support the Department’s effort to quickly move forward with the tanker competition, this draft RFP is fundamentally flawed and does not achieve your stated objective of conducting a best value competition that is fair, open, and transparent.  It fails the test of rationality.

While this letter represents our formal comments on the RFP, we fully expect you to meet with us in person to further discuss our concerns at the earliest possible date.

Signed,

Richard Shelby United States Senator	Jeff Sessions United States Senator
Jo Bonner Member of Congress	Artur Davis Member of Congress
Spencer Bachus Member of Congress	Robert Aderholt Member of Congress
Mike Rogers Member of Congress	Bobby Bright Member of Congress

“Check-the-box gamesmanship”

U.S. Sen. Richard Shelby (R-Ala.) wrote this commentary for Mobile Press-Register, which was published in the newspaper’s October 25 edition:

The much-maligned Department of Defense acquisition process has taken a number of significant hits over the years.

Regrettably, as a result of numerous protests and delays, it has become apparent that the Department of Defense is less interested in procuring the best possible equipment for our warfighters and more interested in simply ensuring that a baseline standard is met using a lowest-cost acquisition process that seeks to minimize the possibility of successful protests.

This type of "check-the-box gamesmanship" should be utilized in procuring pencils and stationery, not planes and ships.

Two examples of this process in action are the Air Force's ongoing aerial refueling tanker saga and the continued troubles with the Navy's littoral combat ship program.
With regard to the tanker program, after review of the draft request for proposals, which sets the parameters for the new tanker acquisition, it is becoming increasingly clear that this is not structured as a "best value" competition that would ensure our warfighter receives the best plane.

Rather, it is structured as a "lowest price, technically acceptable" competition that does one thing and one thing only: reduce the likelihood that our warfighters will receive the most capable plane on the market.

In other words, it is a cost shootout where the cheapest bid wins, regardless of capabilities offered.

One would think that the Air Force's top priority would be to ensure that our men and women in uniform have the best, most capable equipment. Clearly, that is not the case.

A lowest-price, technically acceptable procurement process focuses almost exclusively on cost rather than advanced or additional capabilities available on the aircraft. This means that price is more important than quality and that performance is not a critical factor.

Additional capabilities — technology that could help save the lives of our men and women in uniform — are not a key consideration in the decision.

The Northrop Grumman-EADS tanker air frame has significantly greater capability than the Boeing offering, and provides a much better value to the military. It is bigger. It can carry more fuel and cargo. It can fly farther.

The Northrop tanker provides more "bang for the buck." Therefore, it does not make sense to structure a competition where none of these previous factors is a major consideration.

Especially disconcerting is that the requirements the Air Force is specifying in the upcoming tanker competition differ markedly from those of the previous tanker competition.

How could its requirements and priorities change so drastically in one year? The answer: The Department of Defense and the Air Force want to avoid a protest.

Thus, once again politics has trumped the welfare of our warfighters.

Unfortunately, a similar type of procurement process appears to be taking shape for next year's littoral combat ship competition.

On Sept. 16, the Navy announced cancellation of the current acquisition strategy for the LCS and is instead focusing on a new buying strategy that once again comes at the expense of additional capability.

The Navy has stated its intention to run this competition based solely on price.

The General Dynamics/Austal variant of LCS has far greater capability than its competitor. It is a bigger ship that carries more and has greater speed using significantly less fuel. It is more maneuverable and has a bigger flight deck, more weapons modules and greater range.

Yet the Navy has structured the competition to buy the cheapest ship without consideration of any other factor. Once again, the structure of a Department of Defense acquisition process appears detrimental to the ones who rely on this equipment the most, our warfighters.

If this procurement process is ultimately utilized for the LCS competition, it is abundantly clear that the cheaper, less-capable offering will win the day.

All of this is because our Department of Defense is more concerned about the political ramifications of the losing bidder than about making certain that our armed forces are as capably equipped as possible.

As the tanker and LCS procurement processes move forward, the Air Force and the Navy need to structure their respective bid solicitations to provide maximum benefit for our warfighters.

In approaching the acquisition of crucial and technologically advanced military equipment, we must be ever mindful of the adage: You get what you pay for.

Contact:
Guy Hicks
Vice President – Communications and Public Relations
EADS North America
Tel: 703 236-3300
e-mail: guy.hicks@eads-na.com