Mike[_7_]
March 4th 08, 02:44 PM
http://lexingtoninstitute.org/1234.shtml
TANKER COMPETITION: NORTHROP WON BY A WIDE MARGIN
Loren B. Thompson, Ph.D.
Issue Brief
Mar 3, 2008
Last week Northrop Grumman and European partner EADS confounded
expectations by beating incumbent Boeing for the contract to build the
Air Force's next-generation aerial refueling tanker. The initial
contract will be for 179 modified wide-body jets, but eventually the
entire fleet of 600 cold-war tankers will need to be replaced, making
this one of the biggest marketing coups in defense-industry history.
However, that is just the beginning of what Northrop Grumman has
achieved, because Boeing didn't manage to beat Northrop in a single
measure of merit. Here's how they were evaluated...
1. Mission capability. Arguably the most important factor, this
metric compared the teams on performance requirements, system
integration & software, product support, program management and
technology maturity. The teams tied in most measures, but the
Northrop offering was deemed to offer superior refueling and airlift
capacity at 1,000 nm. range and substantially superior refueling and
airlift capability at 2,000 nm. range. The superior airlift capacity
of Northrop's plane was deemed a "compelling" consideration in giving
Northrop the edge for this factor.
2. Proposal risk. This is the sole factor in which Boeing managed to
match the appeal of the Northrop proposal, but it did so only after
being pressed to accept a longer development schedule for its tanker.
The Boeing proposal was initially rated as high-risk because reviewers
felt the company was offering a plane that in many regards had never
been built before, and yet claiming it could be built fast at
relatively low cost. The company was forced to stretch out its
aggressive schedule, adding cost.
3. Past performance. The Northrop Grumman team received higher
ratings in past performance due to satisfactory execution of half a
dozen programs deemed relevant to the tanker competition. Air Force
reviewers had less confidence in Boeing's past performance due to poor
execution in three relevant programs. In addition, Northrop's
subcontractors were rated more highly on past performance than
Boeing's.
4. Cost/price. This was the factor in which many observers expected
the Northrop-EADS team to shine, because EADS subsidiary Airbus
usually underbids Boeing in commercial competitions. But Boeing
compounded its difficulties in the eyes of reviewers by failing to
adequately explain its assumptions in calculating the cost of
developing a tanker. The resulting low confidence in Boeing cost
projections undercut its claims of lower life-cycle costs. Northrop
was rated higher.
5. Integrated assessment. The "integrated fleet aerial refueling
assessment" was designed to compare how the competing planes would
fare in an operational setting using a realistic wartime scenario.
The review found that the Northrop Grumman proposal could accomplish
specified missions with nearly two dozen fewer planes than the Boeing
proposal, a big advantage.
So Northrop Grumman's victory was not a close outcome. Although both
proposals satisfied all performance requirements, the reviewers
concluded that if they funded the Northrop Grumman proposal they could
have 49 superior tankers operating by 2013, whereas if they funded the
Boeing proposal, they would have only 19 considerably less capable
planes in that year. The Northrop-EADS offering was deemed much
better in virtually all regards.
TANKER COMPETITION: NORTHROP WON BY A WIDE MARGIN
Loren B. Thompson, Ph.D.
Issue Brief
Mar 3, 2008
Last week Northrop Grumman and European partner EADS confounded
expectations by beating incumbent Boeing for the contract to build the
Air Force's next-generation aerial refueling tanker. The initial
contract will be for 179 modified wide-body jets, but eventually the
entire fleet of 600 cold-war tankers will need to be replaced, making
this one of the biggest marketing coups in defense-industry history.
However, that is just the beginning of what Northrop Grumman has
achieved, because Boeing didn't manage to beat Northrop in a single
measure of merit. Here's how they were evaluated...
1. Mission capability. Arguably the most important factor, this
metric compared the teams on performance requirements, system
integration & software, product support, program management and
technology maturity. The teams tied in most measures, but the
Northrop offering was deemed to offer superior refueling and airlift
capacity at 1,000 nm. range and substantially superior refueling and
airlift capability at 2,000 nm. range. The superior airlift capacity
of Northrop's plane was deemed a "compelling" consideration in giving
Northrop the edge for this factor.
2. Proposal risk. This is the sole factor in which Boeing managed to
match the appeal of the Northrop proposal, but it did so only after
being pressed to accept a longer development schedule for its tanker.
The Boeing proposal was initially rated as high-risk because reviewers
felt the company was offering a plane that in many regards had never
been built before, and yet claiming it could be built fast at
relatively low cost. The company was forced to stretch out its
aggressive schedule, adding cost.
3. Past performance. The Northrop Grumman team received higher
ratings in past performance due to satisfactory execution of half a
dozen programs deemed relevant to the tanker competition. Air Force
reviewers had less confidence in Boeing's past performance due to poor
execution in three relevant programs. In addition, Northrop's
subcontractors were rated more highly on past performance than
Boeing's.
4. Cost/price. This was the factor in which many observers expected
the Northrop-EADS team to shine, because EADS subsidiary Airbus
usually underbids Boeing in commercial competitions. But Boeing
compounded its difficulties in the eyes of reviewers by failing to
adequately explain its assumptions in calculating the cost of
developing a tanker. The resulting low confidence in Boeing cost
projections undercut its claims of lower life-cycle costs. Northrop
was rated higher.
5. Integrated assessment. The "integrated fleet aerial refueling
assessment" was designed to compare how the competing planes would
fare in an operational setting using a realistic wartime scenario.
The review found that the Northrop Grumman proposal could accomplish
specified missions with nearly two dozen fewer planes than the Boeing
proposal, a big advantage.
So Northrop Grumman's victory was not a close outcome. Although both
proposals satisfied all performance requirements, the reviewers
concluded that if they funded the Northrop Grumman proposal they could
have 49 superior tankers operating by 2013, whereas if they funded the
Boeing proposal, they would have only 19 considerably less capable
planes in that year. The Northrop-EADS offering was deemed much
better in virtually all regards.