Boeing keeps protest options open as KC-X questions linger

Boeing wants answers to “unresolved questions” before moving beyond a US Air Force blunder that sent proposal data to the wrong bidding teams for the KC-X tanker contract, the company says.

No option – including filing a protest – has been ruled out after Boeing learned that the USAF error allowed EADS North America access to a document containing proposal data.

“We’re still reviewing what happened,” the company says. “We’re taking a hard look at the situation and implications. There are still some unresolved questions that we need to have answers for.”

The USAF initially said an investigation showed no proprietary data had been compromised on either side, but acknowledged on 1 December that one company accessed a computer file containing its competitors’ data.

EADS has not denied that its employees gained access to the file, but says the compact disc was secured “the minute” the error was realised.

Boeing, however, says two employees who received the compact disc recognised the problem before opening the file.

After inserting the disc into a classified laptop computer, the employees saw that the file name included an unexpected four characters – “K30B”. EADS markets the US tanker version of the Airbus A330-200 as the KC-45, but previously advertised the aircraft as the KC-30B.

The employees ejected the disc and called security, the company says. As the security team stored the disc in a sealed location, the employees notified the USAF of the potential error.

Air Force scrambled to fix tanker information mix-up

When Boeing tanker-team officials got the errant disk last month, they recognized from the labeling that the disk was intended for EADS, and did not open it.

But their EADS counterparts did open the disk they received and looked at a spreadsheet of data on the mission performance of the Boeing 767 tanker, Air Force Col. Les Kodlick confirmed Tuesday.

Only afterward did the EADS reviewers realize the error. They then contacted the Air Force and returned the disk.

“EADS opened Boeing’s spreadsheet. Boeing did not look at the EADS spreadsheet,” said Kodlick.

To ensure that neither side could claim bias, he said, the Air Force then sent the corresponding spreadsheet data on EADS’ Airbus A330 tanker to Boeing and gave EADS back the spreadsheet on the Boeing tanker.

. . .

The disks sent to each manufacturer contained other files, but the Air Force believes only the performance analysis spreadsheet was accessed.

Kodlick said that an independent forensic computer analysis was done to confirm exactly what data files Boeing and EADS had viewed.

. . .

Boeing has requested access to the outcome of that analysis, according to a person with knowledge of the situation. That suggests Boeing is gathering all information that might be relevant to any protest of the eventual outcome.

. . .

Each disk contained an Air Force spreadsheet quantifying the effectiveness of one proposed tanker in a series of mission simulations.

. . .

An Air Force analysis of the Boeing 767’s performance as a tanker is arguably even more valuable to EADS than a proprietary Boeing analysis. Likewise, the Air Force analysis of the A330 is likely s more valuable to Boeing than an EADS self-assessment.

A crucial question is whether the leaked information could affect the final pricing of the airplanes. Kodlick reiterated the spreadsheet did not include “any offer or proposed pricing.”

. . .

Knowing this cost data could factor into an adjustment of the offering price still ahead in the contest’s final stages.

But the Air Force believes that since each company now has the other’s data, that doesn’t matter.

“Each offerer has the same information, so each could do the same thing” in weighing any price adjustment, said Kodlick. “It’s a level playing field.”

Here’s the interpretation from Zeke at A.net

The USAF did not release any information about either bid to their competitors. What they inadvertently released is something that is actually far more valuable. They release the USAF interpretation of the data provided by the vendors as the input matrix to the IFARA analysis.

The input matrix will actually allow the vendors to run IFARA simulations using the same input dataset that the USAF is using. The vendors can also compare how the USAF interpreted their propriety data to derive the USAF IFARA matrix.

KC-X, Just Let it Happen Already

Aboulafia who points out that the Republican takeover might embolden outgoing House Appropriations defense subcommittee chairman Rep. Norm Dicks, D-Wash., in his pro-Boeing fights since he won’t hold the powerful chairmanship — which I’ve heard some speculate caused him to rein in his blatant support for Boeing – much longer.

“Dicks never did much to disguise his pro-Boeing intentions and he may get even more pro-Boeing, . . . And since neither side has a lock on governmental power, this election paves the way for more KC-X gridlock.”

Meanwhile, Lexington Institute analyst Loren Thompson . . . says that Dicks’ loss of the chairmanship will hurt the Chicago-based company.

. . .

Iris Independent Research’s Rebecca Grant, who last month released a study on KC-X that seemed to favor a larger jet with more fuel offload capacity (sound like EADS’ KC-45, anyone?), expects “a tussle between key defense Republicans on the House side.”

Rep. Todd Tiahrt, R-Kan., “came on strong for a U.S. plane with U.S. jobs, while presumptive HASC Chair, Buck McKeon [R-Calif.] has been all about running a fair competition,” Grant said.

“The real questions is whether Dem or GOP members would try to end-run an award to EADS,” Grant added. “For example, DoD has ruled out considering the twin World Trade Organization cases in its evaluation of KC-X bids. Could Congress pass a law demanding exploration of price subsidy allegations?

. . .

Still, “all these sound far-fetched despite emotions running high at times on KC-X,” Grant admits. “Altering the KC-X competition now or blocking an award to EADS if that happens would take a lot of energy from a new House Republican majority focused on bigger issues.”