Friday, November 06, 2015

Some Oddities About LRS-B Contract and Protest Noted by AvWeek

Not surprisingly, the Long-Range Strike Bomber protest is on. Boeing and Lockheed Martin claim the Air Force’s selection of Northrop Grumman for the development and early production work – worth $23.5 billion – was bungled. The service failed to conduct a proper assessment of the risk for both teams to execute the work and neglected to account for modern advances in manufacturing and life-cycle maintenance, all of which would reduce the cost of such a program, according to Loren Thompson, a Washington DC-based analyst. Thompson’s think-tank receives funding from both Boeing and Lockheed Martin, and the latter employs him as a consultant; he publicly endorsed the Boeing/Lockheed Martin bid despite the requirements and source-selection criteria being classified. Thompson receives no funding from Northrop Grumman.

The losers filed their protest with the Government Accountability Office Nov. 6 after receiving their debrief Oct. 30 from the Air Force.

And, not surprisingly, the other protest is on. You see, in Washington, there’s the protest – filed with GAO and subject to a 100-day audit – and there’s the Protest – the political campaign to disparage the agency that made the alleged flawed choice and its entire strategy. The latter is designed as an end run to whatever the GAO may rule. By undercutting the agency and its strategy at the knees in Congress, pressure can force an agency into submission regardless of a GAO ruling.

These are two parallel but separate avenues in any defense contractor’s red book for major programs; all the contractors keep war plans for protests alongside the process of bidding for programs these days. I’ll outline the two strategies below.


One new data point: The estimated price of the bids! Ta-da! Thompson said in his Nov. 6 Forbes piece that the Air Force unfairly doubled the estimate at completion for the work of both contractors. He later told me that each bidder was in the $10-$11 billion range, far below that $23.5 billion independent cost estimate, with Northrop coming in at a lower cost. He did not, however, have the cost of the actual contract.

If this is true, and the Air Force padded both contractors’ bids by 100%, this would certainly be unusual and worth a second look.

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