NGC KC-45: Why We Won - Fleet Effectiveness

Highlighting Reasons the U.S. Air Force Selected the KC-45 Tanker as Best for Our Men and Women in Uniform

(Washington, May 9, 2008) -- The U.S. Air Force found Northrop Grumman Corporation's (NYSE:NOC) bid to build the next generation of aerial refueling tankers superior to Boeing's in four of the five most important selection criteria. Despite this fact, the losing bidder wants the Government Accountability Office to overturn the Air Force decision to award the contract to Northrop Grumman even though the Air Force conducted what even Boeing described as a fair, open and transparent bidding process. Here is another reason Northrop Grumman won, drawn from a list of facts included in a redacted version of a protected Air Force selection document.

Fleet Effectiveness

In the KC-X Request for Proposal, the Air Force analyzed each competing aircraft's operational capability as part of its assessment criteria. To do so, the Air Force simulated the operations of a KC-45 and KC-767 fleet in a highly realistic global conflict scenario using a verified and validated Air Force simulation tool. The tankers had to fly missions operating from real-world bases in a range of demanding roles, such as supporting fighter deployments and refueling combat aircraft. The simulation thus factored in the complex interactions of aircraft performance in the context of ramp space constraints, airfield and ramp strength, distances to multiple refueling orbit locations, and high levels of refueling demand.

After completing the simulation, the Air Force calculated how many KC-135Rs were required to meet demand and divided this total by the number of KC-45s or KC-767s required. The resulting number generated a Fleet Effectiveness Value (FEV), which in essence quantifies the value of each new tanker in terms of KC-135 equivalents.

According to the Air Force's calculations, the KC-767's FEV was 1.79 compared to the KC-45's FEV of 1.90. As the Air Force source selection document stated, "Northrop Grumman (is) more advantageous." The Air Force continued, "Northrop Grumman's FEV of 1.90 is superior to Boeing's FEV of 1.79." What this means, the Air Force went on to explain, is that "Northrop Grumman's proposed aircraft can accomplish the designated scenario...with 22 fewer aircraft than Boeing's proposed aircraft -- an efficiency of significant value to the government."

The KC-45 provided superior operational performance in realistic combat scenarios. The Air Force concluded that Northrop Grumman's ability to fulfill future mission needs using fewer aircraft -- at lower cost -- "Was a discriminator" in the Air Force's ultimate decision that Northrop Grumman's bid provided better value than Boeing's offering.

As Sue Payton, the Air Force' chief acquisition officer, put it in a Feb. 29 news conference announcing the award, "Northrop Grumman clearly provided the best value to the government."

Source : Northrop Grumman Corporation

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