GAO releases tanker ruling; Northrop Grumman sticks head in the sand.

On Wednesday June 18th the General Accounting Office (GAO) ruled on Boeing's protest regarding the Air Force refueling tanker contract.  They recommended that the Air Force "obtain revised proposals, re-evaluate the revised proposals, and make a new source selection decision".  To most of the news media covering this, this sounded like a call for a re-bid, and they wrote that story.  Online conversations around the term "rebid" spiked as well.  It's clear what the blogosphere thinks is happening in this graph below.

At the same time discussions of the rebid spiked, so did the use of the term "fair" in relation to the process.  One presumes this was because most commentors found the process not fair.  The AP story cited the rebid, as did Reuters.  If you were a Boeing communications person on this day, your job was to appear not to gloat, and they did it. The blogs and the press were saying all the right things, so there was no reason to wade into it.

However if you were EADS or Northrop Grumman, you had a lot of work to do.  You needed to spin the GAO report and explain to the market why your tanker was the best value even with a modified Air Force procurement process.

Let's Not Make That Mistake Again
As I watched this play out, I was reminded of the last time EADS/Northrop Grumman had an opportunity to react, right after they won the bid and Boeing filed their protest. 

During that critical period they were quiet while their opponents rallied the media and the Congress into a fervent anti-outsourcing mob, while Northrop Grumman and EADS were ineffectively quiet.  The sight of Lou Dobbs ranting about outsourcing our military with barely a response from Northrop/EADS is seared in my mind as a teachable moment for communications professionals. 

I looked forward to an aggressive defense, as the GAO decision was a long time coming and they had plenty of time to prepare.

Would they comment on their local Mobile Alabama blog, the site of the new facility?  Would they use their special tanker blog to argue the merits of the plane and the boom?  Perhaps even their own website?

Northrop Grumman's Response
Believe it or not, no.  Northrop Grumman published what looked like a "thank you and goodbye" letter on their local Alabama site with the improbable title, "Outlook Remains Optimistic".  Please, saying it doesn't make it true folks.  The main tanker blog they operate doesn't even acknowledge and spin the GAO decision on the homepage.  The tiny bright spot of hope is a short press release on the NG website which responds to the GAO decision.  No proactive response to the rebid appears in any of the news stories.  The EADS chief executive is quoted as saying, "We are still under contract".

This is weak, very weak.

What Could Northrop Grumman Have Done Differently?
The 50,000 foot view says that if the blogosphere and the media are all talking about something, you need to talk about it, and your message points should be designed reshape the debate.  Saying everything is ok "Outlook Remains Optimistic!" is honestly just a credibility killer. So is not saying anything at all.

Northrop Grumman should have spent the last several weeks preparing materials for the release of this outcome.  They should have prepared an entire set of materials showing that if the Air Force re-evaluated the tankers with consideration given to the likely objections to the process, the Northrop Grumman plane is still the better purchase for America.

Then they should have followed it up with a response that they welcomed a rebid, but since it would result in the same outcome, and because the tankers are desperately needed by our men and women in harm's way, there's no reason to delay.

The goal is to promulgate the message that a new process is going to generate the same outcome.  And if you don't start saying it, nobody else will believe it.

If you work for the Northrop Grumman or EADS communications teams and you're readying a strategy of Chuck Norris awesomeness quality, I'd love to hear about it.  Heck, so would the media.  Or Congress.  Or the Air Force.

Disclosure: My firm, Virilion, is not engaged by any relevant party in the tanker bid conflict.

I am deeply indebted to my colleague Jason Alcorn for collaborating on this article.

We use a combination of Radian6 and human intelligence to monitor online conversations and generate graphs like the one included in this article.

Comments

[max]

Your opinion is just that because you operate outside the Ethics Policy of Northrop Grumman. Truth, honesty and fact are paramount to any opinion, spin or blogs. The USAF as is Boeing will be held in the highest reguard at all times. No person, no contract nor any issue will cause Northrop to waiver or abandon it's policy of ethics. If nothing more comes from this let it be known to all customers, partners, suppliers and all persons Northrop Grumman policy of ethics is as real as the next breath you take.

[Shabbir]

Looks like Northrop Grumman just didn't prepare well for the GAO announcement, as they released the following in an e-mail this morning, which I assume they've been mulling over for several days.

"Setting The Record Straight On Northrop Grumman's Tanker

Numerous media reports, today, focus on a single sentence in the 67-page GAO analysis reached yesterday supporting its decision to sustain the Boeing tanker protest. "But for these errors," the GAO stated, "we believe Boeing would have had a substantial chance of being selected for award." What readers should note is that the suggestion that the procedural errors it found might have led to a different result is the standard language included in any sustained protest.

The GAO also said its analysis does not "reflect a view as to the merits of the firm's respective aircraft." And, on the merits, the data provided in the GAO report clearly shows that the KC-45, which has been built, flown and tested, is superior to the Boeing airplane which, at this time, is only a design on paper.

As important as it is to understand the procedural flaws that led the GAO to sustain the protest, it is just as important to consider what the GAO analysis did not find. Out of 111 separate Boeing complaints, the GAO accepted only 8. The GAO found nothing that contradicts the initial Air Force conclusion - that the Northrop Grumman KC-45 was the winner in four out of the five major selection criteria established by the Air Force, and tied on the fifth.

In Mission Capability, the GAO did not say the Air Force was wrong. The GAO criticized the wording of the RFP but did not object to the Air Force's conclusion that the KC-45 outperformed the KC-767 in almost all areas.

In Proposal Risk, the GAO did not dispute the Air Force finding that both offerings had equal risk.

In Past Performance, the GAO took no issue with the Air Force finding that Northrop Grumman had better past performance. Note that while much of the GAO report on this point is redacted, there is no question about Boeing's delivery record. Its Japanese tanker - delivered one year late - is still not ready for service. Its tanker for Italy - now three years late - has not even been delivered.

In Cost/Price, the GAO stated that greater specificity was needed in some areas, but "Most Probable Life Cycle Cost" remains a dead heat. Further, the underpinning of the Air Force decision on cost was risk, and the GAO had no objection to the Air Force conclusion that the KC-767 remains a higher risk.

Finally, in its Integrated Fleet Aerial Refueling Assessment (IFARA), a real world simulation of how the competing tankers would operate in a combat situation, the GAO had no objection to the manner in which the Air Force conducted the simulation and the Air Force conclusion that the KC-45 provided better combat capability.

The Air Force needs a new tanker now and with a plane and a boom that have been built, flown and tested, the Northrop Grumman KC-45 is ready now to fulfill the Air Force need."

[George Hanshaw]

Or perhaps Northrop-Grumman put the best face on this they could, knowing that there was no hope.

I worked in Air Force procurement for a long time and I've never seen any GAO report quite as scathing as this one.

As Ann Richards once said, you can put lipstick on this pig and call it Jolene, but a pig is just a pig.

This source selection was fundamentally incapable of surviving the bright light of day. Now that the GAO report has dragged it out into the daylight, it's crumbling into dust.

Nobody could spin fast enough to save this contract.