Boeing Pitches a Fit After Losing Out on $80 Billion Defense Contract

Living in DC is in many ways a strange experience, that’s unlike any other in the U.S. Many people can say that about their locales. Certainly there’s nothing like the Manhattan experience. But DC is different in its own way.

When you ride the metro, the ads you see aren’t predominantly for consumer products. Most people riding the metro can’t afford to buy weapons systems, but you see ads for jet fighters anyway. The most expensive subway ads are in the Pentagon station and inside Capital South. They’re targeting very expensive ads to very narrow audiences: Defense Department procurement officers, and Congressional staff on just the right committee.

My all-time favorite was for defense contractors who wanted duplicate contracts to produce parts for the Joint Strike Fighter, arguing that even though Lockheed Martin was selected to build it, the project is so important that you want to fund other companies to work on it too. “Our nation’s security is too important to leave it to just one company…” these ads declared, and so the government should fund a new air refueling tanker and an alternate engine for the F-35.

When the government awards a contract, they have a whole set of procedures for companies that don’t get the contract to protest and sue.

Fortunately, despite the fact that the party on the other side of this equation is the government, you can protest and dispute government contract awards. In any of the situations above, the government likely violated competitive bidding standards. Here is a simple step-by-step process for protesting and disputing government contract awards

Since government bureaucrats can use their power to reward friends, to secure themselves future employment, or simply take kickbacks, there are a whole set of regulations constraining how government contracts should be awarded. Usually they have to go to the lowest bidder, but there are rules for selecting a higher cost bidder. Were those rules followed to the letter? Was the low cost bidder not getting a contract given the proper notice and chance to protest? Were affirmative action rules followed?

When it comes to Defense Department procurement, there are lots of processes that must be followed.

According to the Financial Times (paywall) Boeing is in a fight for its life over the single largest US government contract it could obtain this decade.

Boeing threw the future of the US long-range bomber programme into doubt on Friday when it announced an appeal against the “fundamentally flawed” decision to award the $80bn contract to a rival.

…The award of the contract to Northrop raised questions about the future of Boeing’s military aircraft division. Without the long-range bomber work, the division looks set to rely mainly on building military versions of its commercial airliners.

“Boeing and Lockheed Martin concluded the selection process for the Long Range Strike Bomber was fundamentally flawed,” said the companies in a joint statement.

“That flawed evaluation led to the selection of Northrop Grumman over the industry-leading team of Boeing and Lockheed Martin, whose proposal offers the government and the warfighter the best possible [long-range strike bomber.”

One-third of Boeing revenues derive from its defense business. Sometimes these disputes are settled politically with the business being split up among the company originally awarded to do the work, and the protesting company, in order to just be able to move on with the project. The ability to dispute awards effectively is a key capability for making money on government contract work.

About Gary Leff

Gary Leff is one of the foremost experts in the field of miles, points, and frequent business travel - a topic he has covered since 2002. Co-founder of frequent flyer community InsideFlyer.com, emcee of the Freddie Awards, and named one of the "World's Top Travel Experts" by Conde' Nast Traveler (2010-Present) Gary has been a guest on most major news media, profiled in several top print publications, and published broadly on the topic of consumer loyalty. More About Gary »

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Comments

  1. LPT: get around paywalls by Googling the article title and clicking through to the article via Google’s link.

  2. Any idea why the Air Traffic Controllers union has been running ads everywhere here in the DC area for awhile? We’re a long ways from 1981 and I have no idea what’s going on with them now.

  3. They say that Boeings military aviation is in doubt because of this, but wouldn’t the same apply to Northrop Grumman too? Severely affected anyway.

  4. I.have a friend working for FDA. she tells me about her $1000 office chair. Padded government contracts.

    Wars is how republicans steal, welfare is how democrats steal. Both bunch of assholes.

  5. A better question is whether we need to spend $80B on a long range bomber program. It’s not like the B2 has proved to be needed at all recently. Yes, it gets used occasionally, but is not really necessary. Unmanned aircraft are clearly the future.

    If they are just posturing against China, they should do it for a lot less money.

  6. Given Lockheed’s dismal performance on the F-22 and JSF contracts, maybe Boeing should have avoided teaming with them.

  7. Every winter the Los Angeles market is saturated with ads for movies that were in the theaters months earlier. Millions and millions of dollars of ads to influence a few hundred Oscar voters. The volume of these ads is beyond annoying.

    If I were an Oscar voter I would boycott any company that runs these ads, just as I boycott any business that litters my doorstep with its advertising rather than mailing it.

  8. Tagging onto @credit’s comment on wasteful gov’t spending:

    On Hilton.com check availability for the DT PHL airport location. Click on government rates — almost 50% higher than BAR!! Crazy…

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