Boeing, Northrop and the power of competitive procurement

Supply Management reports that Northrop Grumman and their European partner EADS have pulled out of a US Department of Defense $35 billion contract for a fleet of 'air tankers'.

This has been a tortuous procurement; in 2004, Boeing was awarded a contract, which was rescinded after an ethics scandal.  The competition was re-tendered and won by Northrop-EADS in 2008, only for Boeing to protest successfully, claimimng errors in the procurement process. This time, Northrop say that, under current rules, their larger A330 tanker could not win.

I don't know enough to comment on the detailed rights and wrongs of this, but you would have thought an output based specification was possible here to create a level playing field .  And there is no doubt that this will have a real cost to the US taxpayer; one of the very few things I have learnt as being undeniably true through my 25 years in business is this;  COMPETITION IS A GOOD THING.

But before we in the UK get too self-congratulatory, here is a Chief Exec of a  UK public sector organisation, commenting a little while ago when the third of four short-listed suppliers dropped out of a very important competition before final bid stage; he said the only bidder left was "an exceptionally strong bidder and we are making excellent progress".

That bidder has now been awarded the contract.  I do hope it is a good one....and it may well be. But would it have been better if they'd had that competitive pressure right up to decision point?  Of course it would.

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