The US Government Accountability Office has revealed details of Boeing's rejected bid earlier this year to overturn the long-range strike bomber contract that was awarded to Northrop Grumman.
In its heavily redacted decision document released Tuesday, the GAO maintains that Northrop beat Boeing on the price of the bomber and that the US Air Force was not unreasonable in its selection. Despite Boeing’s allegations, the Office states that the USAF’s decision remained consistent with the request for proposals.
Although Northrop proposed a lower price for its bomber, Boeing alleged that its rival's bid would use low-skilled workers and “unrealistically low labour rates” to meet that cost. Boeing alleged the air force should have considered that Northrop’s failure to use high-level engineers would multiply technical risk and should have considered the increased risk in the technical capability evaluation.
But the GAO panned this portion of Boeing’s argument, stating that it saw no support that the air force failed to account for technical risk in its cost analysis. In a revised proposal, Northrop quelled the air force’s concern that its labour force consisted of too many low-level design engineers.
“Second, to the extent to revised cost evaluation cited a concern regarding Northrop’s actual labour rates, the Air Force considered and accounted for this risk by making corresponding upward adjustments to Northrop’s labor costs,” the GAO states. “By accounting for this as a cost concern, the agency was not required to further consider the matter as a technical risk.”
The GAO determined other factors contributed to Northrop’s significantly lower price for the low-rate initial production phase, including the company’s labour rate advantage and its decision to sink internal investment into the bomber programme. In a partially redacted paragraph, the Office notes that Northrop’s corporate investment decisions drove its proposed engineering, manufacturing and development costs lower than Boeing’s bid.
The GAO also notes that while Boeing’s proposal included four weaknesses, Northrop’s remained acceptable with ten weaknesses. Still, these weaknesses would have little or no impact on contract performance and could be mitigated with government monitoring.