Boeing Protest Rejected, But Problems Just Beginning for U.S. Air Force's Next Stealth Bomber (excerpt)
(Source: Forbes; published Feb 16, 2016)
By Loren Thompson
WASHINGTON --- The Government Accountability Office today rejected a protest of the October decision to award Northrop Grumman the development contract for the Air Force’s next heavy bomber. Losing bidder Boeing had alleged the selection process was fundamentally flawed, but GAO found no basis to uphold its protest, stating that “the technical evaluation, and the evaluation of costs, was reasonable, consistent with the terms of the solicitation, and in accordance with procurement laws and regulations.”

In other words, the Air Force did not deviate from the process set forth in its solicitation, which was the basis for preparing rival bids, and it treated the offerors equally in making its selection. So the road is now open for the much-needed bomber program to go forward, right? Well, it depends on how you look at it. Even if Boeing does not go to court and does not mount a political campaign to reverse the bomber outcome, there is reason to suspect this program will founder long before the first “B-3″ is scheduled to join the force circa 2025.

The problem, in a nutshell, is that the Air Force’s budget to modernize its aging fleet of planes — the oldest in the service’s history — is so inadequate that it is forced to demand terms from offerors that cannot be met. Whether it’s a tanker or a bomber or a trainer, the offeror that wins is the one that bids the most aggressive price. Since 2009 the Pentagon has been required by law to generate an independent cost estimate for major acquisition programs that can be compared with actual bids to determine cost realism. But that doesn’t mean it has to act on what it finds.

In the case of the Long Range Strike Bomber, as the program is formally known, the independent cost estimate to develop the plane (not counting subsequent production) was $23.5 billion in 2016 dollars. Northrop Grumman won by bidding a fraction of that. Boeing bid aggressively too, but not quite as aggressively as its rival because there was too much risk involved. No kidding: a typical Boeing widebody jetliner costs more than what the Air Force thinks it is going to be getting its future bombers for. (end of excerpt)

Click here for the full story, on the Forbes website.


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