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i 

45–258 2009

[H.A.S.C. No. 110–157] 

SOURCE SELECTION AND PATH 

FORWARD REGARDING THE 

AIR FORCE KC–(X) PROGRAM 

HEARING 

BEFORE THE

AIR AND LAND FORCES SUBCOMMITTEE 

OF THE

COMMITTEE ON ARMED SERVICES 

HOUSE OF REPRESENTATIVES 

ONE HUNDRED TENTH CONGRESS 

SECOND SESSION 

HEARING HELD 

JULY 10, 2008 
(II) 

AIR AND LAND FORCES SUBCOMMITTEE 

NEIL ABERCROMBIE, Hawaii, Chairman 

JOHN SPRATT, South Carolina 

SOLOMON P. ORTIZ, Texas 

SILVESTRE REYES, Texas 

ADAM SMITH, Washington 

MIKE MCINTYRE, North Carolina 

ELLEN O. TAUSCHER, California 

ROBERT A. BRADY, Pennsylvania 

JIM MARSHALL, Georgia 

DAN BOREN, Oklahoma 

HANK JOHNSON, Georgia 

JOE SESTAK, Pennsylvania 

GABRIELLE GIFFORDS, Arizona 

KENDRICK B. MEEK, Florida 

KATHY CASTOR, Florida 

JIM SAXTON, New Jersey 

HOWARD P. ‘‘BUCK’’ MCKEON, California 

JEFF MILLER, Florida 

JOE WILSON, South Carolina 

FRANK A. LOBIONDO, New Jersey 

TOM COLE, Oklahoma 

ROB BISHOP, Utah 

MICHAEL TURNER, Ohio 

PHIL GINGREY, Georgia 

CATHY MCMORRIS RODGERS, Washington 

GEOFF DAVIS, Kentucky 

W. TODD AKIN, Missouri 

DOUG LAMBORN, Colorado 

HEATH BOPE, Professional Staff Member 

LYNN WILLIAMS, Professional Staff Member 

BEN GLERUM, Staff Assistant 
(III) 

C O N T E N T S 

CHRONOLOGICAL LIST OF HEARINGS 

2008 

Page 

HEARING: 

Thursday, July 10, 2008, Source Selection and Path Forward Regarding the 

Air Force KC–(X) Program .................................................................................. 1 

APPENDIX: 

Thursday, July 10, 2008 .......................................................................................... 71 

THURSDAY, JULY 10, 2008 

SOURCE SELECTION AND PATH FORWARD REGARDING THE AIR 

FORCE KC–(X) PROGRAM 

STATEMENTS PRESENTED BY MEMBERS OF CONGRESS 

Abercrombie, Hon. Neil, a Representative from Hawaii, Chairman, Air and 

Land Forces Subcommittee ................................................................................. 1 

Hunter, Hon. Duncan, a Representative from California, Ranking Member, 

Committee on Armed Services ............................................................................ 4 

Saxton, Hon. Jim, a Representative from New Jersey, Ranking Member, 

Air and Land Forces Subcommittee ................................................................... 4 

Skelton, Hon. Ike, a Representative from Missouri, Chairman, Committee 

on Armed Services ................................................................................................ 3 

WITNESSES 

Gordon, Daniel I., Deputy General Counsel, Government Accountability Office; and Michael Golden, Managing Associate General Counsel, Procurement Law Division, Government Accountability Office .................................... 6 

Young, Hon. John J., Jr., Under Secretary of Defense for Acquisitions, Technology and Logistics ............................................................................................. 40 

APPENDIX 

PREPARED STATEMENTS: 

Gordon, Daniel I. .............................................................................................. 75 

Handy, Gen. John ............................................................................................. 90 

DOCUMENTS SUBMITTED FOR THE RECORD: 

GAO Decision Matter of The Boeing Company Report ................................. 103 

GAO Protests of Air Force Procurements Sustained during FY 2005 - 

FY 2008 .......................................................................................................... 98 

Size Comparison Chart KC–30 is Overkill ..................................................... 95 

Testimony submitted by the Hon. M. Jodi Rell, Governor of Connecticut .. 96 

WITNESS RESPONSES TO QUESTIONS ASKED DURING THE HEARING: 

Mr. Abercrombie ............................................................................................... 174 

Mrs. Boyda ........................................................................................................ 174 

Mr. Dicks ........................................................................................................... 174 

Mr. Miller .......................................................................................................... 175 

Mr. Skelton ....................................................................................................... 173 
Page

IV 

WITNESS RESPONSES TO QUESTIONS ASKED DURING THE HEARING—Continued 

Mr. Tiahrt ......................................................................................................... 175 

QUESTIONS SUBMITTED BY MEMBERS POST HEARING: 

Mr. Abercrombie ............................................................................................... 179 

Mr. Bonner ........................................................................................................ 192 

Mr. Dicks ........................................................................................................... 184 

Mrs. McMorris Rodgers .................................................................................... 192 

Mr. Miller and Mr. Dicks ................................................................................. 192 
(1) 

SOURCE SELECTION AND PATH FORWARD REGARDING 

THE AIR FORCE KC–(X) PROGRAM 

HOUSE OF REPRESENTATIVES, COMMITTEE ON ARMED SERVICES, AIR AND LAND FORCES SUBCOMMITTEE, Washington, DC, Thursday, July 10, 2008. 

The subcommittee met, pursuant to call, at 2:07 p.m. in room 

2118, Rayburn House Office Building, Hon. Neil Abercrombie 

(chairman of the subcommittee) presiding. 

OPENING STATEMENT OF HON. NEIL ABERCROMBIE, A REPRESENTATIVE FROM HAWAII, CHAIRMAN, AIR AND LAND 

FORCES SUBCOMMITTEE 

Mr. ABERCROMBIE. Aloha, everyone. Thank you for coming. As 

you can see, we have separated the combatants as far as possible 

physically. And welcome to all interested Members. 

We will proceed in regular order today. We do have—the subcommittee has guests, including the Chairman and the Ranking 

Member today. And we will try to move expeditiously with the 

hearing today. Subsequently, depending upon how the membership 

feels, we are going to have to go to a closed session. Certain proprietary elements associated with the issue require that. And we will 

have to make a decision then as to whether to move to 2337 or stay 

here while the equipment is taken out. We will decide that when 

the time comes. I would prefer to stay here if it can be done expeditiously, and maybe by that time people will want to take a break 

anyway. So I am just going to move ahead at this stage. 

Today the Air and Land Forces Subcommittee meets to receive 

testimony from the Government Accountability Office (GAO) and 

the Office of the Secretary of Defense (OSD) on the Air Force’s aerial tanker program. We will have two panels. The first panel includes Government Accountability Office witnesses, Mr. Daniel 

Gordon, who we are pleased to see. I have got Daniel. Right. There 

you are, Mr. Gordon. Sorry. This got in the way. Daniel Gordon, 

who is the Deputy General Counsel for the GAO; and Mr. Michael 

Golden, the Managing Associate General Counsel of the GAO, a 

friend of the committee already, the Procurement Law Division. 

The second panel, witnesses will be the Honorable John J. 

Young, Jr., who is the Under Secretary of Defense for Acquisition, 

Technology and Logistics (USD(AT&L)), another friend to the committee. We are very grateful to have him here today. 

We have members of the full committee, as I have indicated, including the Chairman and Ranking Member, and members from 

other committees that have asked to attend the hearing because of 

their interests. I ask unanimous consent that nonsubcommittee 
2 

members be allowed to participate in today’s hearing after all committee members have had the opportunity to ask questions. Any 

objection? 

Hearing none, we will move ahead with the idea that nonsubcommittee members will be recognized at the appropriate time. 

After completion of the second panel with Secretary Young, as I 

indicated, we will adjourn the hearing and possibly reconvene in 

2337, depending upon the situation at that time. We will convene 

a meeting of the subcommittee to address the acquisition-sensitive 

information. Ms. Sue Payton, who is the Assistant Secretary of the 

Air Force for Acquisition, will join our other witnesses at that 

closed meeting. 

I don’t have to tell anyone here how important the tanker program is, how important the integrity of the DOD acquisition process is, or how important the integrity of the GAO protest review 

process is, or indeed how important our constitutional role is in 

overseeing these processes. 

When Secretary Young saw us back in March, he commented 

that the OSD staff was more involved in observing the tanker 

source selection, quote, because it is so important to the Nation 

that we successfully conduct these source selections, unquote. I 

couldn’t agree more with the statement of Secretary Young then, 

nor could I agree more now. Yet with all the effort and oversight 

that went into this particular source selection, the acquisition system failed. And unfortunately, this isn’t the first time in the recent 

past that the acquisition system has failed us. 

We had been assured by the most senior Office of the Secretary 

of Defense and Air Force acquisition officials that the tanker source 

selection was handled fairly, openly, and quote, well executed, unquote. That does not appear to have been the case, resulting in 

huge expense to the taxpayers, seemingly endless delays, and personnel flying very old tanker aircraft that have become increasingly 

expensive to maintain. It is not an infrequent occurrence that we 

read about tanker aircraft experiencing in-flight emergencies and 

having to abort their missions for emergency landings, the most recent ones being in Afghanistan two weeks ago and the former 

Pease Air Force Base in New Hampshire last week. 

These tankers are old and getting older. We have little experience with flying 45-year-old aircraft, and no experience in flying 

70- to 80-year-old aircraft, which our constituents are going to have 

to do if we are not able to move expeditiously. The acquisition process, in my judgment, has to be fixed. The questions we need to answer include: Is it too complex? Do we have the right people? Do 

they have the right training? Does it consider the right factors? Is 

this primarily an Air Force problem? Are the selection criteria too 

subjective, providing such latitude to Pentagon and GAO reviewers 

that in close competitions well-intentioned professionals can come 

to opposite conclusions? Is the integrity of the process on all sides 

being confirmed? 

This is the start of trying to get complete answers. We must act 

promptly. We must act properly. And we must fix the system. We 

have asked Mr. Gordon and Mr. Golden from the GAO to provide 

some context for the GAO decision relative to other protests, the 
3 

GAO protest consideration process, and the details of their decision 

on the specific tanker protest. 

I want to add parenthetically that I believe that it serves the interests not only of the Armed Services Committee, but the Congress as a whole to have the GAO indicate in public how its decision-making process relative to other protests and the consideration of the process itself takes place, because that may be something with which we are simply not familiar. We take it for granted, but we don’t know exactly how it works. 

We will also want to hear their views on what needs to be done 

to fix the acquisition process. We have asked Secretary Young to 

tell us about how he will proceed, and what will be done differently 

in the new source selection to have a satisfactory acquisition outcome. 

I am, of course, very pleased to have my mentor and Chairman 

here, Chairman Ike Skelton. 

Mr. Chairman, do you have any opening remarks? 

STATEMENT OF HON. IKE SKELTON, A REPRESENTATIVE 

FROM MISSOURI, CHAIRMAN, COMMITTEE ON ARMED SERVICES 

The CHAIRMAN. Yes, I do. 

Let me compliment Mr. Abercrombie on calling this hearing. I 

think it is of utmost national importance that we have this today, 

and I thank him for this opportunity. 

Chairman Abercrombie, I welcome today’s witnesses and will 

make just a few brief remarks, if I may. 

As everyone in this room is painfully aware, this matter of replacing the Air Force’s KC–135 fleet is one that has taken wrong 

turns and dragged on far longer than it should. Collectively, I believe we are letting down the American warfighter, not so much in 

current operations, but in future operations where the KC–135 

fleet is at risk and reaching the end of its service life without adequate replacement. That really concerns me. 

As concerned as I am about the impact of failures on the Air 

Force’s tanker program and the tanker fleet, I am equally, if not 

more concerned about what these failures might mean for acquisition generally. This source selection was thought to be the most 

thoroughly vetted, carefully considered process in the Department’s 

history. I was certainly told as much. However, the GAO uncovered 

basic and fundamental errors in the process that are highly troubling: unequal discussions with competitors, determinations on the 

basic acceptability of a proposal made without significant analysis 

or apparent documentation, even seemingly errors in arithmetic. 

My hope is that today’s hearing will focus not just on these 

issues, but on how our acquisition system allowed such errors to 

occur. We must have requests for proposals that represent what 

the Department actually wants and that doesn’t mislead competitors. We must have decisions about whether proposals meet the 

government’s basic requirements, made in ways that are sound 

and, of course, verifiable. We must have calculations of costs that 

are realistic and are accurate that we can actually produce. Do we 

have the people and the systems in place to produce those positive 

outcomes? 
4 

So I look forward to Secretary Young providing answers to those 

questions and recommendations on the issues before us today. I 

certainly wish to welcome the two witnesses we have before us, as 

well as Secretary Young in a later moment. 

Again, I compliment Mr. Abercrombie on calling this very important meeting and hearing. Thank you. 

Mr. ABERCROMBIE. Thank you very much, Mr. Chairman. 

I will now turn to the Ranking Member of the full committee, the 

former Chairman of the committee, our colleague and my very good 

friend, and equally a mentor to me who is leaving, we all regret, 

I can tell you, Mr. Hunter. And if you have remarks, I would appreciate hearing them at this time. 

STATEMENT OF HON. DUNCAN HUNTER, A REPRESENTATIVE 

FROM CALIFORNIA, RANKING MEMBER, COMMITTEE ON 

ARMED SERVICES 

Mr. HUNTER. Well, thank you, Mr. Chairman. And thanks for inviting Ike and I to participate in the hearing, a very important 

hearing. And I think the Chairman said it well. I would just add 

that while the air bridge that is so important to the projection of 

American military power is obviously critical to us, and upgrading 

that air bridge with a new fleet of tankers is of great interest, and 

an important American national interest, equally important is 

maintaining the aerospace industrial base in this country upon 

which our military force and capability in the future is girded. So 

thank you again for having the hearing, and I look forward to the 

witnesses. 

Mr. ABERCROMBIE. Thank you very much, Chairman Hunter. 

And then just before we begin then formally, I would like to turn 

to our last speaker before the testimony, my good friend and colleague from New Jersey Mr. Jim Saxton, my partner not only on 

this subcommittee, but on other committees in the Congress as 

well, again whose leave-taking I most personally regret very, very 

much. And we wish to say to you, Mr. Saxton, at this time that we 

are looking forward to your remarks. 

STATEMENT OF HON. JIM SAXTON, A REPRESENTATIVE FROM 

NEW JERSEY, RANKING MEMBER, AIR AND LAND FORCES 

SUBCOMMITTEE 

Mr. SAXTON. I thought you were going to say you are looking forward to my demise. 

Thank you, Mr. Chairman. I appreciate being here today, and I 

want to thank our witnesses for being here as well. 

As you said, Mr. Chairman, we are here today to learn about the 

Department’s plan for the way ahead with the KC-(X) tanker acquisition after the GAO upheld the contract award protest by the Boeing Company. 

Yesterday Secretary of Defense Gates announced that the original request for proposal will be amended to address the GAO findings, and the competition will be reopened. I look forward to learning more about how this will be executed, and am specifically interested in learning about the timeline, because as both you, Mr. 

Chairman, and the Chairman of the full committee Mr. Skelton 

have said, time is not on our side on this issue. 
5 

As all the members of the subcommittee know, every day that 

goes by that we aren’t fielding a new tanker is one day longer that 

the already aged KC–135s must continue to operate. We need to 

get on with this, and we need to get on with it as soon as possible. 

As part of the discussion today, I hope we will be able to get into 

the broader issues of the defense acquisition process, what I would 

like to call the elephant in the room. How does the High-Priority 

Acquisition Program, with intense oversight and scrutiny at the 

highest levels of the Department of Defense, fall so short of the 

mark? Is it lack of personnel with the critical acquisition skills that 

are needed? Has the complexity of the modern weapons system 

raised the complexity of the acquisition process? Or are the policies 

and procedures in place adequate to guide decision-making? 

The bottom line is that we need to get on with this process. But 

in that vein, I just want to say this: I am concerned about the requirements development process and the manner in which the requirements drive the acquisition. I have been told by an old 

friend—and I will tell you who the old friend is because he has 

written it himself for publication—his name is General John 

Handy, Retired. I have been told by him personally that on this 

subject that the Air Force very well—he served the Air Force very 

well, and he shared with me his opinion that the Air Force’s original selection of the A330 was a terrible decision. 

Now, let me just say I have no personal stake in this issue. Neither of the companies or any of their associated companies are located in my district or my State. My only concern is that we get 

a tanker that fits the bill. And his thought, he thought the decision 

had two fatal flaws, that is General Handy; first, that over time the 

life cycle of the operation of the A330, we were going to end up 

spending an awful lot more money keeping that airplane flying 

than it would have cost to fly the 767. He also said that if we buy 

these A330’s, we won’t be able to park enough of them in the theater because they are too large. They take too long of a runway to 

land, and he said now, in his mind, the warfighter requirement to 

have a tanker that we can afford to operate in the years to come 

and to have a tanker that we can actually park in the theater of 

operations are clear basic requirements. 

Now, this is not somebody that has an axe to grind. I am not advocating for Boeing, and I am not advocating for their competitor. 

Our job here is to try to oversee a process that gets the right equipment for the warfighter. That is the only objective that we have. 

And I have relied over the years on people like General Handy, 

who are so knowledgeable about these issues, for guidance on these 

issues. 

With that I welcome our witnesses, and I look forward to hearing 

the testimony, Mr. Chairman, and thank you. This is a really important hearing, and I hope that we can accomplish something 

good as a result. 

Mr. ABERCROMBIE. Very good. As you just said, time is not on our 

side. Nice timing. Here, Mr. Gordon, I apologize to you. We have 

business at hand. It is the last business of the day. I understand 

there to be four votes, including a recommittal, which means we 

are likely to be gone for 40 minutes or better. This is not the way 

I would like—— 
6 

Mr. GOLDEN. We understand, Mr. Chairman. 

Mr. ABERCROMBIE. Just for the record, I wish we had days where 

we had hearings and days when we have voting. Unfortunately, we 

have hearings and voting on the same days. Of course, all of the 

witnesses’ prepared statements will be included in the record. We 

now have 15 minutes to vote. How long is your opening statement? 

Mr. GORDON. Less than five minutes, Mr. Chairman. 

Mr. ABERCROMBIE. Why don’t you proceed, and then we will go 

to Mr. Gordon and see if we can get the statements in before we 

have to leave, although Members, of course, can leave at any time. 

STATEMENT OF DANIEL I. GORDON, DEPUTY GENERAL COUNSEL, GOVERNMENT ACCOUNTABILITY OFFICE; AND MICHAEL GOLDEN, MANAGING ASSOCIATE GENERAL COUNSEL, PROCUREMENT LAW DIVISION, GOVERNMENT ACCOUNTABILITY OFFICE 

Mr. GORDON. Thank you, Mr. Chairman. Mr. Chairman, Ranking 

Member Saxton, and from the full committee Chairman Skelton 

and Ranking Member Hunter and other members of the committee, 

my colleague Michael Golden and I thank you for the opportunity 

to be here today to discuss GAO’s June 18th decision sustaining 

the Boeing Company’s protest of the Air Force’s award of the aerial 

refueling tanker contract to Northrop Grumman. I understand, Mr. 

Chairman, that my written statement will be introduced into the 

record. 

Mr. ABERCROMBIE. That is correct. 

Mr. GORDON. Thank you. 

With that, and with the 67-page decision that GAO has published, I will, and I think it will accommodate the committee’s 

schedule, be very brief in my remarks today and limit them to 

some context for the GAO bid protest decision. 

GAO has been deciding bid protests since the mid–1920’s, and 

shortly after we were established in 1921. 

Mr. ABERCROMBIE. Mr. Gordon, could you pull the mike just a 

tad closer? 

Mr. GORDON. Yes, sir. 

Bid protests are challenges, usually by unsuccessful bidders, to 

Federal agencies’ procurement actions, and especially to the award 

of the contracts. Since the 1980’s, our protest process has been set 

out in law, the Competition in Contracting Act, or CICA, as we 

often call it. 

Two points are worth highlighting about our bid protest process 

under CICA. First, protests are a way of holding government accountable. Just as in GAO’s primary audit role, our bid protest 

process serves as a way to hold agencies accountable for their actions. And our work is and must be independent, fact-based, and 

impartial. 

Second, protests are legal disputes. Unlike GAO in its audit role, 

our bid protest function is a legal one, carried out by our Office of 

General Counsel. In deciding protests, GAO is acting in a quasi-judicial capacity, adjudicating, much like the Court of Federal Claims 

which also hears protests, the allegations raised by a protester and 

deciding whether the contracting agency followed procurement law 

and regulation. The resulting decision, such as our decision on the 
7 

Boeing protest, is a legal decision, and it does not address broad 

programmatic issues, as GAO routinely does in its audit work. 

In that context, a few brief remarks about the Boeing protest and 

our ruling on it. Boeing raised many challenges, and GAO considered them all. To be sure that we had the facts that we needed to 

resolve the protest and that we were being fair to all of the parties, 

Boeing, the Air Force, and Northrop Grumman, we allowed the 

parties to make voluminous submissions to us, all the parties. We 

conducted a hearing over five full days at which we heard testimony from 11 Air Force witnesses that the Air Force selected. We 

invited Boeing and Northrop to provide witnesses, but they declined to. 

Our review of that very large record led us to conclude that the 

Air Force had made a number of significant errors that could have 

affected the outcome of what was a close competition between Boeing and Northrop Grumman, and because of that, we sustained 

Boeing’s protest. 

We did also deny a number of challenges that Boeing raised. We 

recommended that the Air Force reopen discussions with the 

offerors, obtain revised proposals, reevaluate those revised proposals, and then make a new source selection decision. 

But in closing these brief remarks, I do want to underscore what 

our protest decision does and does not say. It does say that we 

found serious errors in the procurement process that could have affected the outcome of, again, what was a close competition. But our 

legal decision does not say anything about the merits of Boeing’s 

and Northrop’s proposed tankers. 

With those very brief remarks, Mr. Chairman, Michael Golden 

and I will be happy to respond to questions, whether it is before 

or, if you prefer, of course, after the break. 

[The prepared statement of Mr. Gordon can be found in the Appendix on page 75.] 

Mr. ABERCROMBIE. Mr. Golden, does Mr. Gordon’s statement 

stand for you at this point? 

Mr. GOLDEN. Yes, Mr. Chairman. 

Mr. ABERCROMBIE. Thank you. 

I am very pleased, Mr. Gordon, that you made that statement, 

because I think it sets exactly the foundation for the hearing. 

Mr. GORDON. Thank you. 

Mr. ABERCROMBIE. The GAO is not here to talk about the merits 

or demerits of the proposals as to the Air Force. The question that 

you are answering is how the protest—the circumstances and the 

context of the protest, your decision-making process, and then the 

reasons for your decision, which we will go into when we return. 

Inasmuch as Mr. Golden has no remarks at this stage, I think 

rather than get into questions that can’t necessarily be answered, 

I will adjourn—or recess rather until the final vote is taken. And 

then we will—within five minutes of the last vote being called, we 

will come back into session. 

[Recess.] 

Mr. ABERCROMBIE. Thank you very much for waiting. I am afraid 

the vote took a bit longer—votes took a bit longer than we anticipated. Mr. Skelton and Mr. Hunter are detained for other reasons 

for the moment. So we will proceed. 
8 

I was going to almost say Mr. Gordon, would you like to repeat 

what you said? But I think the statement was excellent, not only 

succinct, but insightful, and provides an excellent and firm foundation for our questions. 

Mr. GORDON. Thank you. 

Mr. ABERCROMBIE. I have a couple myself, and then we will go 

to the Members in the order of their appearance at the hearing. I 

do want to indicate as well, Mr. Gordon, no disrespect to you or Mr. 

Young, but some of the Members are required to leave because of 

plane reservations, and it was unavoidable. 

Mr. GORDON. We understand. 

Mr. ABERCROMBIE. We originally anticipated being in session tomorrow, and that has been altered, so some people have had to 

make alternative plans. 

I want to preface this question to you, Mr. Gordon, and obviously, Mr. Golden, if you think it is appropriate, I would appreciate 

your answer as well. I want to preface this question by saying I am 

not trying to imply any wrongdoing during the GAO’s evaluation 

of this or any other protest. For our benefit, can you explain to the 

committee what internal checks and balances the GAO Procurement Law Division implements to ensure integrity and objectivity 

as you evaluate protest allegations? You indicated in your testimony that you, in fact—that is, in fact, your goal and your object 

and the ethos, if you will, that you follow. But for purposes of the 

record, can you elucidate for us exactly how you implement the integrity and objectivity that you cited? That is, the GAO is charged 

with evaluating DOD source selection processes for fairness and in 

accordance with the request for proposals. How does the GAO ensure that its evaluation, that is to say GAO’s evaluation, of the 

DOD source selection process is fair and unbiased? 

Mr. GORDON. Thank you, Mr. Chairman. Let me offer an answer, 

and then if my colleague, Mr. Golden, wants to supplement it, that 

would be fine. 

Several different layers are in the answer. And if you don’t mind, 

I will go through several of them to give the committee a sense of 

what we do to ensure the reliability, fairness, and fact-based nature of our bid protest decisions. 

First, as I said earlier, they are products of our Office of General 

Counsel. Attorneys only are working on them, and they are done 

by a separate group. The attorneys that handle our bid protests do 

only bid protests. They are specialized in the area, and they have 

extensive expertise. We were somewhat embarrassed when we did 

a quick count and added up the years of experience handling bid 

protests by the team that worked on this, because I am afraid we 

got to over a century of experience when we were totaling up the 

years. So we were dealing with a group—— 

Mr. ABERCROMBIE. You never embarrass Members of Congress by 

totaling up years of experience. 

Mr. GORDON. In addition, we have a careful internal review process as a draft decision goes up where we rigorously check and question and doubt ourselves to be sure that we are getting the answer 

right. You will see citations throughout the decision. And, in fact, 

if I could, I would say that the decision itself is one of the best 

guarantees, because in this case, admittedly, it was an unusually 
9 

long decision, but in that sense it is actually a good example in the 

context of this hearing. 

Mr. ABERCROMBIE. So the 67 pages, 69 pages, 67 pages is actually a distillation then of this process; is that fair? 

Mr. GORDON. It is, but it is a very transparent distillation, Mr. 

Chairman. That is to say anybody reading those 67 pages can see 

what GAO was thinking. We are totally transparent. And we work 

very hard to be sure that we fairly state the arguments. As you 

read through the decision, I know everyone here has had a chance 

to look at it, you will see us say, this is what Boeing argued, this 

is what the Air Force responded, and in many cases Northrop made 

this argument, and we explain why we ultimately came down on 

one side or the other. 

And a final layer, if I could, is external to us, but it is an important one, because I think you were saying in your opening remarks, 

Mr. Chairman, who audits the auditors? Of course, though, we are 

not auditors in this function, we are attorneys, but who checks on 

us? The fact is that once we issue the decision, that is not the end 

of the process. Not only is there appropriate congressional oversight, such as in this hearing, but the parties themselves have the 

right to request that we reconsider our decision, and that happens 

every year. We do get requests for reconsiderations. I would note 

that neither the Air Force nor Northrop Grumman, or, for that 

matter, Boeing requested in this instance that we reconsider our 

decision. 

And finally, as I said, there is a completely external process, and 

that is a dissatisfied protester who thinks we haven’t been fair can 

go to the Court of Federal Claims and file a protest there. And 

there are a handful of disappointed protesters each year who lose 

at GAO and file protests at the court. The court usually, but not 

in every case, agrees with GAO. 

Mr. ABERCROMBIE. That has not happened in this case, right? 

Mr. GORDON. That has not happened in this case. 

Mr. ABERCROMBIE. Thank you. 

Do you have anything else to add to it, Mr. Golden? 

Mr. GOLDEN. No. 

Mr. ABERCROMBIE. Then I have one other question, and we will 

move on. Thank you very much. I want to ask a question concerning historical data. In fact, you just mentioned that the decisions have been reversed only in a few instances. With regard, 

then, to the historical data you provided the committee concerning 

the Department of Defense’s (DOD) last five years—we requested 

that of you, and you did provide it—and the GAO’s protest 

sustainments, now in this instance regarding Air Force contracts, 

if I read your information—the information you sent me correctly, 

over the last 5 years the GAO has sustained 191 of 843, or 23 percent, of merit protests filed against DOD contract rewards, approximately 1 out of 4. The GAO has sustained 54 of 179, or 30 percent, 

of the merit protests filed against the Air Force contract awards. 

This makes the Air Force average 33 percent greater than the DOD 

average. 

Has the GAO performed any trend analysis as to why the Air 

Force protest sustainments are higher than the DOD average? And 

if so, could you share those findings with the committee? 
10 

Mr. GORDON. The short answer, Mr. Chairman, is that unfortunately, we don’t have a lot to offer in terms of explaining the difference in the rates of protests being sustained between the Air 

Force and the other services, or for that matter the other Federal 

agencies. I think, though, there are several points that the committee might find of interest in that regard. 

First of all, we discuss the bases for protests being sustained internally and also externally. We have a very vigorous outreach program that goes to the Air Force, as well as the other services and 

Federal agencies, and includes the private bar as well, in which we 

talk through and explain what are the issues that are causing us 

to sustain protests? 

Let me give you, if I could, one quick example. We ran into a series of protests being sustained now it is probably 7 or 8 years ago 

that involved public-private competitions under Circular A–76. 

That was an issue where we could point and say—— 

Mr. ABERCROMBIE. Would you say what the A–76 is for those 

who are not familiar with it? 

Mr. GORDON. Of course, Mr. Chairman. 

Circular A–76, issued by the Office of Management and Budget 

(OMB), calls for cost comparisons when the agency is making a decision to contract work out to the private sector, and in theory 

bringing work into the public sector. Those decisions were a nice 

example of a systemic problem that we were seeing. Similarly, you 

could point to, and we have pointed to, a series of decisions involving organizational conflicts of interest, where we have said there is 

an unusual number of protests that we are sustaining involving 

this issue. And both Mike Golden, who now heads the Bid Protest 

Unit at GAO, and I, who used to head that unit, have worked very 

hard in reaching out to the private sector and to the public sector, 

the agencies and the civilian side, and at DOD, to discuss those 

things. 

There is one other thing, if I could, Mr. Chairman, about the statistics that you might find illuminating. We count protests in our 

data, but you will often get multiple protests in one procurement. 

For example, on the front page of the bid protest decision in the 

Boeing case, you will see that, in fact, in the GAO system it is actually eight protests, because Boeing filed multiple protests. But it is, 

of course, only one procurement that was at issue, albeit an extremely important one. 

We went back and looked at the number of Air Force procurements—not protests, but Air Force procurements—that were successfully protested over the past five years, and I think that it 

helps put the numbers in proportion. In fiscal 2008 to date, there 

have been two Air Force procurements where GAO sustained the 

protests. One of the two, obviously, was the tanker. In fiscal 2007, 

there were seven Air Force procurements where GAO sustained the 

protest. In fiscal 2006, there were seven. Now, it is true that the 

number of protests was larger because there were multiple protests 

of one procurement. In fiscal 2005, there were four Air Force procurements that were successfully protested. And in fiscal 2004, 

there were three. The numbers are relatively small, but I don’t 

want, when I say that, to discount the importance of the basis for 

protests that we sustain or the importance for our warfighters of 
11 

having a procurement held up because of the flaws in the procurement that causes GAO to sustain the protest. 

Mr. ABERCROMBIE. So the number—if I understand you correctly, 

the number is less important than the reasons for it. Supposing 

you add all those up, and it is 12 or 13 or 14 sustainments. If there 

was a trend in those sustainments where the same problem appeared—— 

Mr. GORDON. Yes. 

Mr. ABERCROMBIE [continuing]. Have you had a chance to look 

at that kind of thing, a particular way in which the process was 

implemented that caused the procurement protest to be sustained 

more than once? 

Mr. GORDON. I am not sure, and I will give my colleague—— 

Mr. ABERCROMBIE. If you don’t have the answer right now, I 

think it is something worth looking at. 

Mr. GORDON. We have looked at it, Mr. Chairman. And that is 

what we will see, and what we tell the agencies when we do our 

outreach visits is often what is at issue is a very straightforward 

matter. We see situations in which they lay out evaluation criteria 

in the solicitation, and then they deviate from those criteria. They 

either add a criterion that is not included in the solicitation, so 

they have an undisclosed evaluation criterion, which isn’t fair to 

the offerors, or they have one which they fail to take into account 

even though it is in the solicitation. 

Mr. ABERCROMBIE. Are you citing that because you found that 

more than once? 

Mr. GORDON. It is something that comes up with some frequency. 

And let me see if my colleague wants to supplement it. 

Mr. GOLDEN. I thought prior to this, Mr. Chairman, you had expressed an interest when we talked last about this. I went back, 

and I will share this with the committee, where we are going 

through, because it requires us to research back and look at the 

cases individually. 

But in 2007, for instance, there were a number of cases concerning the evaluation ground rules being deviated from and our 

holding the Air Force accountable. But there were a number of protests that bear no relationship that we were sustaining, small business issues, a sole source that was not justified, and we will share 

that information with you—— 

Mr. ABERCROMBIE. Okay. Very good. 

Mr. GOLDEN [continuing]. Because it may be helpful to see in 

terms of identifying trends and what is going on, because I think 

you do have to look at the individual cases. 

Mr. ABERCROMBIE. Very good. Thank you. Thanks for your answers. I wish every hearing we could have questions and responses 

as direct and as helpful as yours have been already. 

Mr. GORDON. Thank you. 

[The information referred to can be found in the Appendix on 

page 98.] 

Mr. ABERCROMBIE. Mr. Hunter. 

Mr. HUNTER. Thank you, Mr. Chairman. And again, thanks for 

letting myself and the Chairman sit in on the hearing. 

Gentlemen, just real quickly, and then I may have a question or 

two at the end of the hearing, but it looked to me like the finding 
12 

that the Air Force credited Northrop Grumman for proposing to exceed what they call a solicitation key performance parameter objective for fuel offload versus unrefueled range, that is the amount of 

fuel a tanker could afford to offload to a receiver aircraft at a given 

distance of flight by the tanker without itself refueling, that they 

gave that a greater—gave that a heavy weight with respect to the 

Northrop Airbus aircraft even though the solicitation plainly provided that no consideration would be given for proposing to exceed 

key performance parameter objectives. And I agree with that, that 

it appeared that they did give—the Air Force did give weight to 

that particular aspect of performance. 

I guess my question is is that factor, in analyzing this competition the way it is framed—in your professional opinion, should exceeding the performance parameters be a consideration that, in 

fact, should be redefined in a future competition? Do you have any 

opinion as to whether or not this competition was well-framed—I 

guess that is my—I guess that is my question, and you have had 

a chance to study the competition fairly carefully—in such a way 

that extra credit is given if the competitor comes with an aircraft 

that exceeds parameters in certain areas? 

Mr. GORDON. I understand, Representative Hunter, and I want 

to be very careful here in my answer, and I want to be very precise 

in responding to your question. 

We do not have an opinion about whether it is a good idea to give 

the offerors extra credit for exceeding the level of the objective in 

this case. It is a very good demonstration of what we are looking 

for in a protest in terms of deciding whether to sustain it. 

When we have in front of us the award of a contract that is being 

challenged, the ground rules of the competition are a given for us. 

It is too late for anybody to say, oh, the ground rules should have 

been different. The only question in front of us is did the agency 

follow the ground rules when it assessed the competing proposals? 

And as you recognize, the problem here was that the agency had 

in a sense caught itself, because it had said in the ground rules 

that if there was an objective, you wouldn’t get extra credit for exceeding it. There was an objective, Northrop exceeded it by quite 

a bit, and Northrop got all that extra credit. We have no opinion, 

we have no view on whether it was a good idea. 

Incidentally, had we weighed in and said we think you should 

give extra credit in advance, had we taken a position, I would have 

concerns about our having independence. And it is critical for us 

to have independence. We have to be able to look in the protest and 

say did the agency follow its ground rules? 

Mr. HUNTER. Okay. With respect to runways, you know, one 

thing that I saw after the competition was over were analyses of 

the number of runways available to U.S. forces for power projection 

around the world and a limited number of runways with one aircraft, that is a bigger 330, and a higher number of runways for the 

smaller aircraft, that is the Boeing aircraft. Was that, in fact, a 

weighted factor? Was there a minimum number of runways which 

could be accommodated, or was that considered to be a factor in 

which you had a graduated weighting? 
13 

Mr. GORDON. Well, I am more confident, if I could, Representative Hunter, in telling you it is not an issue in the protest, but let 

me check with my colleagues. 

Mr. HUNTER. Yeah, I know you have got some comment there. 

Mr. GORDON. I am told, Representative Hunter, that it, in fact, 

was not an evaluation factor at all. And as I said, it was not a protest issue whatsoever. 

Mr. HUNTER. Let me just comment on this, and, Mr. Chairman, 

again, thank you for letting us sit in on this. 

You know, I listened to Mr. Saxton, and he quoted General 

Handy, who is a person on whom we have relied greatly with respect to his professional expertise in these issues. And he points 

out that a large number of runways can’t be accommodated by one 

of the planes. The fact that this wasn’t in the parameters, in the 

competition parameters, the fact that it is difficult—and I know 

you can’t comment on it, but it is difficult to explain the weighting 

system on such things as offloading fuel at range, because if offloading great amounts of fuel at range were important, the 777 

offloads almost twice as much fuel at range than either one of the 

two competitors and has a 1,900-mile greater range. 

It appears to me that this is an excellent illustration, this competition is an excellent illustration of the need for Congress to involve itself in the objectives of the competition, that is to say, 

whether or not we want to have aircraft that can utilize all the 

runways that are available for power projection; whether we want 

to have aircraft that have greater legs, shorter legs; and if there 

is a trade-off, where that trade-off should be. 

And finally, on the issue of subsidy, you know, we have a defense 

industrial base here which is supported by the taxpayers of the 

United States, and the idea that we have allowed into this competition a company which is subsidized, in fact, which the U.S. Government believes, in fact, is unfairly subsidized, by the treasury of the 

nations which comprise the aircraft company, and yet that is not 

considered in this competition, also, I would think, compels us to 

come to the conclusion that Congress should weigh in on setting 

the parameters on this competition. And I think perhaps that is 

where we have missed the mark, because it appears to me that several important criteria and objectives were not set in this competition. And the party which has the oversight to set them is, in fact, 

the U.S. Congress. 

I don’t know if you have any comment on that or whether you 

can have a comment on it. But I think that you did your job very 

effectively in terms of looking at what you were handed and 

ascertaining as to whether the glove fit the hand. In this case it 

didn’t. 

Mr. GORDON. I appreciate—— 

Mr. ABERCROMBIE. Mr. Gordon, you need not tell the Congress 

what to do, but if you care to comment, you are welcome. 

Mr. GORDON. On the contrary, Mr. Chairman, I was going to 

thank Mr. Hunter for his understanding that we can’t comment on 

that. We defer to the Congress for their role and to the Air Force 

and the Department of Defense for theirs. 

Mr. HUNTER. Thank you, Mr. Chairman, for letting me sit in on 

this. And I think that there clearly is a case to be made for our 
14 

involvement in setting these parameters before a future competition. 

Mr. ABERCROMBIE. Mr. Skelton chooses to pass at this point, so 

Mr. Spratt is next. 

Mr. SPRATT. In your opening paragraphs you indicate that you 

had 11 witnesses as part of your appeal. Did these witnesses include members of the Source Selection Team? 

Mr. GOLDEN. Yes. 

Mr. GORDON. Yes, they did. 

I should say, sir, if I could, that we actually—it was a fairly unusual—there were several things that were unusual about this 

case, even though broadly it was handled under our normal procedures. One unusual thing was that none of the parties asked for 

a hearing. GAO initiated the hearing, which we have the right to 

under our regulations, because we thought it was important to be 

sure, A, that we understood everything that happened, and, B, that 

the parties got a chance to tell us their side of the story. 

Boeing and Northrop Grumman did not want to provide witnesses, and we didn’t feel we needed them, so that was fine. The 

Air Force we told we did need to have information. We gave them 

point by point what the issues were that we needed to hear from 

them about, and they selected, the Air Force selected, the 11 Air 

Force witnesses who came to address those issues. And in direct response to your question, that was both on the Cost Evaluation 

Team and on the Technical Evaluation Team. 

Mr. SPRATT. For example, you took exception to the fact that 

Northrop Grumman had not shown that it could refuel all tankercapable aircraft. There was a problem also, I think, with overrun 

velocity and things of this nature. When you presented that particular problem to the witnesses, the Air Force witnesses, did they 

have a corrective answer or an explanation? 

Mr. GORDON. We asked those questions. We had testimony at 

length on each of the issues that you named, and our conclusion 

in the end was that the record did not provide an adequate basis. 

Again, I want to underscore it is not the GAO decided that the 

Northrop plane wouldn’t meet the requirements. We made no determination about the capacity of the Northrop plane or the Boeing 

plane. What we concluded was that the Air Force hadn’t explained 

why it was comfortable in saying that, yes, the Northrop plane 

would meet the requirements. 

If I could give you one example of those, in the overrun issue, 

and the overrun and breakaway both involve speed. Incidentally, 

this is an area where there is some proprietary information, but we 

think we can fully explain the decision without getting into proprietary information. 

The Air Force during the procurement had concern about the 

overrun speeds for the Northrop Grumman plane. They raised 

questions about it. Northrop answered. We looked at the record. 

We couldn’t understand why the Air Force had decided that it had 

gotten an adequate basis to say, yes, Northrop’s plane meets the 

overrun requirement, and that is why we pursued that at the hearing. And at the end of the day, we still had concerns. 

The breakaway procedures, actually that was not something that 

the Air Force raised concerns about during the procurement. So 
15 

overrun they raised during the procurement, Northrop responded, 

and we didn’t think that the answer was satisfactory. Breakaway 

was raised for the first time during the protest. So it was particularly important when we raised questions about it in the pleadings 

and then in the hearing. And again, we found the answers unsatisfactory, not that GAO reached a conclusion about the capacity of 

the Northrop plane, but we did not think that the Air Force had 

a reasonable basis for its finding that the Northrop plane met the 

breakaway requirements. 

Mr. SPRATT. Another of the exceptions that you raised was that 

the Air Force in its Request for Proposal (RFP) weighted certain requirements and certain features of the airplane, but then in awarding the contract did not adhere to those same weightings or features. 

Mr. GORDON. Yes, sir. 

Mr. SPRATT. Do you have an explanation for that, or did the Air 

Force provide you with an adequate explanation for that? 

Mr. GORDON. They provided us an answer. We pursued it at 

length in this numerous record in the back and forth at the hearing. We just didn’t find it persuasive. 

Let me be fair, and we try to be fair to everybody on every issue, 

it is true that in the briefing slides to the Source Selection Advisory Committee (SSAC) and to the Source Selection Authority, they 

did begin essentially by saying, well, here is the weighting scheme. 

The key performance parameters (KPP) are weighted higher than 

the key system attributes (KSA), which are weighted higher than 

the others. But then when we looked at the evaluation decision 

itself, we saw no—no account being taken of the fact that Boeing’s 

strengths tended to be associated with the more highly weighted 

KPPs, whereas Northrop’s tended to be associated with the less 

highly weighted others. So our concern was that they simply hadn’t 

followed the weighting scheme. 

Mr. SPRATT. One final question. If the GAO wanted expert advice 

about runway speed, overrun speeds and things of this nature, or 

certain features of the airplane, where did you go for that advice? 

Or did you have access to that advice? 

Mr. GORDON. We got a lot of advice. First of all, we had three 

parties that had a great interest in getting us advice, and each of 

the parties was able to bring in whether affidavits or declarations 

of consultants or experts that they wanted. The Air Force had the 

added opportunity through the hearing to provide witnesses that 

could educate GAO, walk GAO through the questions. GAO also 

has internal resources that we draw on, although that was done to 

a limited extent, but we have internal resources that were able to 

advise us. So we felt very comfortable that we understood the 

issues as articulated by Boeing and the responses of the Air Force 

and Northrop. 

Mr. GOLDEN. Can I just clarify one thing? 

Mr. SPRATT. Yes, sir. 

Mr. GOLDEN. On the weighting issue, we looked at the record 

that we had, the evaluation record. We were looking for contemporaneous documentation that it was weighted in accordance with 

the evaluation criteria. And that was what was lacking in that situation, okay, the documentation from the evaluation team, from 
16 

the SSAC, that they looked and weighted appropriately and consistent with the evaluation criteria and the RFP. 

Mr. SPRATT. Thank you very much. 

Mr. ABERCROMBIE. Mr. Saxton. 

Mr. SAXTON. Thank you, Mr. Chairman. 

I would like to ask a question, and I hope that you will share 

your—if this doesn’t come right in your lane, I hope that you will 

kind of step out of your lane a little bit and give us your opinion, 

because you have been very much involved in this process, and you 

have some insights that we can’t have because we have not done 

the study that you have. 

So it is my belief that the former Air Mobility Command (AMC) 

Commander, who I—tankers, of course, are assets of the Air Mobility Command. The former Air Mobility Command Commander, who 

I mentioned earlier, John Handy, has written quite articulately 

about what he believes—how he believes this situation went wrong. 

And I would just like to say what he has said in his words to you 

and then ask you if you would tell us why you think the criteria 

that he thinks important were either not considered or were not 

relevant to the final decision that was made by the Air Force. Is 

that fair? 

Mr. GORDON. Yes, sir. You can certainly ask. We will do our best. 

Mr. SAXTON. Okay. Here we go. Handy says that, first of all, you 

need to recall that we started this acquisition process in order to 

replace the Eisenhower-era KC–135 aircraft with a modern version 

capable of accomplishing everything the current fleet does. Now, 

that is the KC–135 fleet, of course. Thus, the required aircraft is 

of small to medium size, much like the KC–135. Makes sense if you 

are going to ask it to do all the things that the current fleet can 

do that it would be similar in size to the KC–135. Not a large aircraft, he says, like the KC–10, because the KC–10 has a different 

role. We use the KC–10 in what is called an air bridge. We fly 

them and refuel our aircraft on the way to and from the theater. 

That is the air bridge concept, and that is what the larger aircraft 

that we have to do today does. It doesn’t perform—that is, the KC– 

10 does not perform well in theater, according to John Handy, because it is too large. 

Why a smaller to medium aircraft he asks? Because first of all, 

you want tankers to deploy in sufficient numbers in order to accomplish the assigned tasks. You need to bed them down on the 

maximum number of fields around the world along with our forces, 

or close to our forces; that is, airborne fighters, bombers, and other 

mobility assets in need of fuel close to the fight or right over the 

fight. And he says that KC–135-like aircraft take up far less ramp 

space, is far more maneuverable on the ground, and does not have 

the risk of jet blast reorganizing the entire ramp. 

Second set of requirements, he says, is survivability. The aircraft 

and crew must be able to compete in a threat environment that 

contains enhanced surface-to-air missiles and other significant 

threats. And I won’t read the whole paragraph, but he concludes 

by saying all this means the warfighter has the requirement for a 

large number of highly flexible, agile, and survivable aircraft. A 

smaller airplane. 
17 

I also want to—he goes on the third set of requirements, his requirements. We also want the acquired aircraft to be integrated 

with current defense transportation system. That means—and I 

don’t know what the number means exactly—that means that 463– 

L compatible pallets, floor-loaded—a floor-loaded on the freighter 

aircraft—the load on the freighter aircraft floor capable and compatible with the current modern airlift fleet. When we put passenger seats in the aircraft, we want to be sure that the existing 

aircraft seats fit the airplane. Again, this all mitigates to a small 

or medium-sized aircraft. 

Mr. SAXTON. So if you look at these rather simple requirements 

and look at the previous offerings from industry, he says anyone 

would probably agree with me that the KC–767 more closely fits 

these needs. 

So, again, my question is, if the operators define the requirements and if the requirements are these that are similar to these 

that former the boss of AMC has pointed out to us, how do we go 

so far in the other direction? 

Mr. GORDON. Congressman, I will tell you that I am very proud 

of the attorneys in our bid protest shop and the work that they do. 

But part of their talent is knowing when not to get ‘‘out of their 

lane’’, to use your phrase; and I think we would be out of our lane, 

and not in a good way, for us to lose sight of what GAO’s role is, 

what the Congress’ role is and what the DOD and the Air Force’s 

role is. 

It is not for GAO to tell the Department of Defense or the Department of the Air Force how much flexibility they need in their 

planes, the survivability, the size of the planes. Those are issues 

that are within the province of the Department of the Defense, the 

Department of the Air Force, obviously, without minimizing Congress’ role. It is not for GAO. 

I would, though, if I could, make a couple of points that may be 

relevant. In the audit side of the House at GAO, we do look at 

some of these questions. We have been issuing reports since I believe at least 1996 about the need to replace the tanker fleet. It is 

something that GAO does look at. 

Or, for example, last year there was testimony, I believe in front 

of this very subcommittee, by GAO expressing concern that the Air 

Force’s decision to include the airlift capacity with the refueling capacity in the same plane was made—that decision was made without the required analysis. 

So that in terms of looking at the decision-making process, GAO 

has looked at the decision-making process and expressed concern. 

But, that said, in determining the requirements, it is not for GAO 

to usurp the role of the Department of the Air Force and DOD. 

Mr. ABERCROMBIE. Would you yield a moment? 

I would suggest that Mr. Young is listening to the hearing so far 

and he may be making notes as we speak. 

Mr. GORDON. He will be far better placed to respond to the questions along those lines than we can. 

Mr. ABERCROMBIE. He may be not as quite as comfortable as you. 

Is that it, Mr. Saxton? 

Mr. Smith is next, to be followed by—we will figure it out. 

Mr. SMITH. Thank you, Mr. Chairman. 
18 

Mr. Saxton really asked the question, and I know you are not the 

one in the position to answer it, so I won’t restate it. But there is 

a sort of a different way of asking a similar question. 

I mean, certainly it is baffling in this, because it seems in midprocess that the Air Force rather radically changed their mind 

about what they were looking for. And I think what the GAO went 

through and looked at was that they did not adequately justify that 

change of mind in terms of the cost, in terms of a lot of things. 

That, as we have heard from many witnesses here, it is just very 

difficult to understand that how they all of a sudden understand 

that bigger was better when there was considerable evidence to the 

contrary. But not your area. 

The question I am curious about is how the RFP process works. 

Because it seems like that big of a change in the middle of it 

should require more than just sort of the nudging and moving that 

happened inside of this. It should require an entire rebid, which, 

as I understand it, they didn’t do; and maybe you can explain to 

me how this works out. 

Because there was a point in this process when in fact Airbus 

was rumored to be contemplating withdrawing their bid because 

they simply did not fit what was being asked for and for one very 

simple reason. Their plane was too big. It didn’t fit the requirements. 

And then all of a sudden there were some conversation, some letters from Members of Congress who were advocating on the Airbus 

side of the bid saying, can’t you sort of look at this a little bit differently? And, presto, they looked at it a little bit differently; and 

Airbus submitted their bid. 

And that seems bad, in a word, like sort of—well, how could I 

put this exactly—not within what the process should be. If you, in 

fact, look at it and say, okay, we made a mistake. We should—you 

know, we have a different requirement here. We are going to— 

shouldn’t you go back and restart the process at that point a little 

more formally than the Air Force in fact did in this case? 

If you can sift through that and address those points, that would 

be helpful. 

Mr. GORDON. Representative Smith, accurately describing your 

requirements, telling the vendors what matters more to you and 

what matters less to you is extremely important. Because the vendors put together, the companies put together their proposals based 

on the ground rules. They read the solicitation very carefully, especially the evaluation criteria. They will put their proposal together 

based on what you and the government tell them you care about. 

If you care more about price, they are going to sharpen their pencils more. If you care more about technical capability, they may 

give you a more expensive solution with more technical capability. 

I do want, though, to point out some issues very relevant to our 

decision in this case. I don’t think it is fair to say that we saw evidence that the Air Force changed its collective mind. We had very 

specific concerns where we, when we drilled down, we concluded 

that the Air Force had not followed the ground rules properly. But 

the talk of the Air Force changing its mind and deciding that it 

wanted a larger plane is not us speaking. It is not our bid protesters. 
19 

Mr. SMITH. Understood. Let me just say that the most important 

part in that to me is not so much whether or not they changed 

their mind but that they sort of decided that bigger was a little bit 

better without the sufficient rigor behind that decision that went 

into the original RFP that tracked what Mr. Saxton was saying in 

terms of what the requirements were. 

And that is the problem. Not just because, you know, as you said, 

the vendors won’t know what to ask for but because you wind up 

with something that the taxpayers aren’t getting their money’s 

worthy because you haven’t actually analyzed all of these questions 

being raised, and all of a sudden you are asking for something on 

the fly. That is the larger concern. 

Mr. GORDON. I understand your point, sir. I think that our decision doesn’t go to the extent that you are saying. 

If I could say a slightly different point but it may also be helpful 

to the committee; and that is that there is a long history, of course, 

of procurements and, in fact, in protest procurements to the Air 

Force. 

In the Druyen matter, which happened several years ago, we had 

evidence, admitted evidence, in that case of criminal misconduct. 

We had no evidence no allegation of evidence of criminal misconduct, and we never saw a whit of evidence of criminal misconduct. There was no evidence, there are no allegations but also 

no evidence, not an iota of evidence of intentional wrongdoing by 

any Air Force official. This was not a case of criminal impropriety 

or of intentional wrongdoing. They had the rules, and there were 

several discrete areas in which they deviated from those rules. 

Mr. SMITH. I understand. 

One quick area and then I thank the chairman’s indulgence. 

In terms of lifecycle costs, that is one of the big things. I mean, 

the bigger the plane, the more fuel it is going to use. And we have 

all this evidence that the KC–135 very rarely even uses all the fuel 

that it has. So if you are expanding capacity—and the fuel I’m talking about here is the fuel that it takes to fly the plane, as opposed 

to what it is delivering—do you think that lifecycle costs with regard to the fuel costs were adequately considered when looking at 

these two bids? 

Mr. GORDON. We had concerns about the lifecycle costs, although 

there are several different components. Partly there were some errors—as you know from the decision, the Air Force admitted a few 

errors in the calculation of costs. But, in addition, we had concerns 

with the methodology that the Air Force used in estimating the 

costs. 

With respect to fuel, that was one of the issues where we didn’t 

sustain the protest because of the fuel costs. We didn’t think that 

the record gave us a basis to sustain it. But we had enough concern 

about the way the Air Force was calculating fuel costs that we said, 

since we are sustaining the protest anyway, we think that the Air 

Force should pursue that. 

We made the same point with respect to the boom approach from 

Northrop Grumman. When the Air Force said Northrop’s boom approach caused only low schedule of cost risk, we didn’t sustain the 

protest of that issue, but we had enough concern that the—— 
20 

Mr. ABERCROMBIE. Mr. Gordon, excuse me. Can you explain for 

those who don’t know what the boom question actually involves 

physically? 

Mr. GORDON. I want be to sure that I don’t misspeak, Mr. Chairman. Northrop had their technical approach—and we are not going 

to get into proprietary information—but their approach of connecting the plane that was doing the refueling with the plane that 

was being refueled—and you are going to quickly get to the edge 

of my technical knowledge. 

Mr. ABERCROMBIE. Okay, now everybody knows what we are 

talking about now. 

Mr. GORDON. That boom approach had aspects to it which caused 

the Air Force to call it a weakness. Notwithstanding that, the Air 

Force said the approach didn’t pose anything more than a low 

schedule to cost risk, a surprising juxtaposition to call it a weakness but then say there is only a low schedule to cost risk. 

We explored the issue to a certain extent, didn’t find enough to 

sustain the protest, but because of our concern in this area we suggested that the Air Force should go back and look at this issue and 

the fuel cost issue. 

Mr. SMITH. Thank you, Mr. Chairman. 

Mr. ABERCROMBIE. Thank you. 

Mr. Miller is next. 

Mr. MILLER OF FLORIDA. Thank you, Mr. Chairman. 

In your opening comments, you had said that the GAO’s role is 

quasi judicial: provide an objective, independent and impartial 

process for the resolution of disputes. Correct? 

Mr. GORDON. Yes. 

Mr. MILLER OF FLORIDA. But then you used words like significant, reasonable, unreasonable, improper, refused, which could inflame people one way or another—in fact, one member left this 

room as we were going to a vote—using some of your words, to 

boost their cause. So words do and wordsmithing does mean something different. 

I am curious about GAO and the union issue, which nobody has 

raised at this point. Back in 2007, September, the analysts at GAO 

voted to join the International Federation of Professional and Technical Engineering, known as IFPTE. 

IFPTE announced its campaign to support the Boeing bid in January of 2008 and lobbied Congress. February 2008, Air Force announced the award to Northrop Grumman. March, 2008, GAO’s 

IFPTE issued a press release blasting the Air Force, claiming falsely that the contract was being awarded to a French company. April, 

IFPTE sent letters in a press release arguing that Congress should 

defund the program. It also stressed its strong relationship to Boeing which had brought the protest. June of 2008, GAO upholds 

Boeing’s protest. 

Can you tell me unequivocally and show me how you come to 

this decision that there was no bias by anybody at GAO in this report? 

Mr. GORDON. Yes, sir. I can tell you that unequivocally there was 

no bias related to the union issue or any other issue in the way 

we handled this protest. 
21 

First of all, I am not sure that membership in the union would, 

in fact, disqualify GAO analysts for working on a job in which the 

union had a position. But we don’t need to reach that question. The 

union—as you recognized in your statement, the union organized 

our analysts. The bid protests are decided by a separate shop. It 

has zero analysts in it, zero members of the union in it. Those who 

decide the bid protests are my colleagues in the Office of General 

Counsel. There is zero members of the union in the Office of General Counsel. 

[The information referred to can be found in the Appendix on 

page 175.] 

Mr. MILLER OF FLORIDA. What do the analysts do? 

Mr. GORDON. Analysts write reports for Congress in response to 

congressional requests—— 

Mr. MILLER OF FLORIDA. They don’t do anything for anybody 

within GAO, providing information for the attorneys or the team, 

providing—they just report to Congress. They don’t report—— 

Mr. GORDON. They do our very important audit work. 

Mr. MILLER OF FLORIDA. Did any analyst that is a member of the 

union provide any information to the team? 

Mr. GORDON. There was—— 

Mr. MILLER OF FLORIDA. That is all right. 

Mr. GORDON. I do have an answer for you. 

Mr. MILLER OF FLORIDA. You are taking my time. 

Mr. GORDON. No, sir. 

Mr. MILLER OF FLORIDA. Yes, you are. 

Mr. GORDON. I apologize. 

Mr. ABERCROMBIE. That is all right. Jeff, you have time. Go 

ahead, Mr. Gordon. 

Mr. MILLER OF FLORIDA. You are answering my question. 

Mr. GORDON. Yes, sir. 

Mr. MILLER OF FLORIDA. My question. Not the chairman’s. Mine. 

Mr. GORDON. The work was done, the writing was done 100 percent by our attorneys. Our attorneys consulted with one person, 

who was an auditor, in order to ensure that we were using the correct technical words. That auditor had no input whatsoever to the 

outcome of the protest. 

Mr. MILLER OF FLORIDA. So somebody with the union did in fact 

have input into the writing of the report? 

Mr. GORDON. No, sir. Absolutely not. 

Mr. MILLER OF FLORIDA. They did provide information to the person that wrote the report. 

Mr. GORDON. They checked to be sure we were using the right 

technical language. Nothing else. And that person was not involved 

in any way, shape or form in resolving the protest. 

Mr. MILLER OF FLORIDA. You said that Northrop Grumman refused to commit to the required two-year time frame, referenced 

the depot issue. They refused to commit to the schedule. And I am 

just wondering, because the depot portion was—the funding was in 

the contract. Northrop Grumman said it would support the organic 

depot concept and meet any schedule that was required. Although 

you said that wording did not correspond to the two-year requirement, somehow an agreement to meet the requirement in the 

schedule is not good enough. You just needed it written down? 
22 

Mr. GORDON. The Air Force twice—at least twice—went to Northrop Grumman and they said they needed this commitment to 

provide support for the two year transition—— 

Mr. MILLER OF FLORIDA. But didn’t the Air Force say it was an 

administrative oversight? 

Mr. GORDON. After the fact. 

Mr. MILLER OF FLORIDA. They didn’t refuse. They didn’t say we 

are not going to get it to you, correct? 

Mr. GORDON. They did not provide it. And that is a difference. 

Mr. MILLER OF FLORIDA. They did not refuse to provide it, correct? 

Mr. GORDON. The words that Northrop Grumman’s attorneys 

used in their final submission to us after the hearing was ‘‘Northrop Grumman made an intentional decision’’—those are their attorney’s words—‘‘not to address this’’. 

Mr. MILLER OF FLORIDA. Then why wouldn’t you have used in 

your comments that same thing? You used an intentional—you 

used the word refused, instead of an intentional decision. 

Mr. GORDON. When the Air Force twice asks for something that 

a company declines intentionally to provide them, I don’t see the 

difference. 

Mr. MILLER OF FLORIDA. And that is why we have got a problem 

with the report. Because you are saying out of 100 plus issues, we 

are down to 7. Yet you are saying that there are significant and 

serious issues, so you are feeding the fire in this decision. 

My time has run out, and I will wait if we have another round. 

Thank you. 

Mr. GORDON. May I respond. 

Mr. ABERCROMBIE. Yes. No, Jeff take the time. 

Mr. MILLER OF FLORIDA. I have two other people. 

Mr. ABERCROMBIE. Okay. I want to make sure everybody understands. Take all the time you want. This is a serious issue. We 

have no place to go. So if you want—do you feel—— 

Okay. Mr. Larsen is next. We are going to limit his time. I know 

him. 

Mr. DICKS. The witness can respond. 

Mr. GORDON. On the issue of there being 100 or more than 100 

issues that were raised, I have seen numbers like that floating 

around the press. We don’t understand how people come up with 

those numbers. You can count the number of counts or issues or 

arguments or allegations that a protest raises in many different 

ways. We don’t focus on this being 7 out of 100 or more than 100. 

We focus on the 7 that we found that caused us to sustain the protest. 

Mr. MILLER OF FLORIDA. Mr. Chairman, then I need to respond. 

Mr. ABERCROMBIE. Okay. 

Mr. MILLER OF FLORIDA. It is very difficult. You are using a bureaucratic answer. You want to be able to say it could have been 

10 and we found 7 serious issues. That is what you are implying. 

So that is what I am saying. Be very careful with how you word 

your answer, because you are continuing to fan the fire, and it is 

not necessary. 

Mr. ABERCROMBIE. Mr. Larsen. 

Mr. GOLDEN. May I say something, Mr. Chairman? 
23 

Mr. ABERCROMBIE. Yes. 

Mr. GOLDEN. It is not our intention to be fanning any flames. 

What happened—and it is really a two-step process and—when 

we do these cases and, obviously, it is a process that—for the first 

time, one of the few times we are talking about, we look, identify 

flaws in the procurement, and then we assess whether they are 

prejudicial, whether they could have resulted in prejudice to the 

company, in this case Boeing. And that is our—that is the assessment we made. 

Whether it was three, four, five, okay, six or seven, we found the 

totality of those issues, okay, to result in prejudice; and I don’t 

think—you know, the language used in this decision is not very different than other decisions where we have similar issues. 

Mr. ABERCROMBIE. Mr. Larsen. 

Mr. LARSEN. Thank you, Mr. Chairman. 

Just to point on this, I don’t feel sorry for Northrop Grumman/ 

Airbus. I don’t feel sorry for Boeing in this. I feel sorry for the 

warfighter in all this. And sometimes your job at GAO is to come 

tell us things that we don’t like to hear. And that is usually what 

you come tell us, honestly. And so, you know, thank you for doing 

that and not just today but every time we ask you to come up here. 

So the first question I want to ask you is having to do with the 

KPPs and the KSAs. Just to clarify for me, the Air Force RFP specifically said it wouldn’t award extra credit for a tanker that had 

additional fuel off-load capability; and then essentially extra credit 

was given anyway. Is that about right? 

Mr. GORDON. Right. Again, it has nothing to do with their sense 

of the merits. It was just a ground rule that says, if there was an 

objective, you don’t get extra credit for exceeding it. And there was 

an objective, and yet they gave Northrop extra credit. 

Mr. LARSEN. On the flip side, page 30 of the report, the Air Force 

failed to give the Boeing offer credit for meeting far more systems 

requirement documents (SRD) requirements than the Airbus proposal. Is that correct? 

Mr. GORDON. Yes. We saw no evidence that Boeing was given 

credit for offering many more SRD requirements than Northrop. 

Mr. ABERCROMBIE. Excuse me. Mr. Gordon, can you say what 

that—you characterized it with an alphabet. 

Mr. GORDON. I apologize. Systems requirements document. And 

the most unfortunate thing, Mr. Chairman, is that we used the 

word requirement here, and they don’t mean a requirement. It was 

sort of a desirable. 

The solicitation said the Air Force wanted as many as possible 

of those systems requirements, documents requirements; and Boeing offered far more of those than did Northrop. But we didn’t see 

evidence that Boeing was given credit for it. 

Mr. ABERCROMBIE. Can I ask everybody, if you get to the acronyms and so on, use the full designation and then say what it is. 

It is because most everybody here knows what it is all about but 

not everybody does, and this is for the record. So just for clarity’s 

sake. 

Mr. GORDON. Point well made. Thank you, Mr. Chairman. 

Mr. LARSEN. A-OK, Mr. Chairman. 
24 

Then you also determined that Air Force failed to consider that 

Boeing’s proposal—the proposal’s strengths referred to as major 

discriminators were in vital KPP, or key performance parameter, 

areas, whereas the Airbus proposal strengths were in areas that 

were weighted relatively lower in non-key performance and key 

system attribute requirements. Is that correct? 

Mr. GORDON. It is. 

Mr. LARSEN. Page 31. 

Mr. GOLDEN. Yes. 

Mr. LARSEN. So it does seem that the Air Force gave Northrop 

Airbus extra credit when it wasn’t supposed to and didn’t give the 

Boeing offer credit when it was supposed to. 

Mr. GORDON. In those instances, that is true. 

Mr. LARSEN. In those instances. 

Moving—as we move forward, there has been some discussion 

about how the Air Force would potentially amend a new RFP. And 

I don’t know if you can answer this, and maybe it is a question I 

am asking for the next panelist. But if you can please offer an answer, how should Congress—or perhaps how would you as well— 

but how should Congress look at an amended RFP that changes 

the relative weights for certain requirements that were weighted 

differently in this RFP but not other requirements? 

Mr. GORDON. Two parts to the answer, if I could, Representative 

Larsen. 

First of all, I am sure your next panelist, Secretary Young, will 

be the better person to answer than we would; and that relates to 

the second point. 

GAO, what is going to happen is this, assuming, as I understood 

from Secretary Gates’ press conference yesterday, that the Air 

Force is in fact going to implement our recommendation, amend 

the solicitation, have discussions, get revised proposals and then 

move forward. We can’t speak about what particulars the agency, 

the Air Force should or should not—what steps they should take 

in those amendments for at least two reasons. Reason number one, 

it is up to the Air Force to decide its requirements, not us. Reason 

number two, in fact, one of the private companies when it sees the 

amendments, could file a protest with us. And we have to maintain 

our independence. 

They could—one of the companies could say, by what the Air 

Force is doing in the solicitation, they are skewing the competition 

in favor of the other side, either one of the companies; and they 

have the right to protest the amendment to the solicitation. And, 

as a result, we can’t speak to the particulars of what the Air Force 

should or should not do in amending the solicitation. 

Mr. LARSEN. If I may, Mr. Chairman, just another question. 

Mr. ABERCROMBIE. One more. 

Mr. LARSEN. As a ‘‘for instance’’ on that, if the DOD—in this case 

AT&L—should be responsible for the next steps in this, said, fuel 

off-load capability is going to be more important and we are going 

to add more points for that this time around, but fuel costs which 

you did not say they ought to but it certainly seemed from the report said they may want to certainly take that into consideration, 

fuel costs and fuel use, fuel costs should not be a heavy factor. That 

would seem to some to say that that might skew the process. They 
25 

may try to make it look objective, but it would certainly look to 

some like it would skew the process toward one offeror over the 

other offeror. 

Mr. GORDON. Your example proves my point. Someone could protest and say that that was an anti-competitive change to the solicitation and it restricted the competition unduly. We will not be able 

to speak to that. 

Mr. ABERCROMBIE. Thank you. 

Mr. Akin. 

Mr. AKIN. Thank you. 

Mr. ABERCROMBIE. Excuse me. Mr. Akin, just before we proceed, 

the reference was made to AT&L. That means acquisition, technology and logistics and refers to the Under Secretary of Defense, 

Mr. Young. 

Mr. GORDON. Mr. Chairman, I apologize. 

Mr. ABERCROMBIE. You are A–OK. 

Mr. GORDON. What does A–OK stand for? 

Mr. ABERCROMBIE. I hesitate to say. 

Mr. AKIN. Thank you, Mr. Chairman. 

The third finding in your comments here, we found that the Air 

Force determined that Northrop Grumman’s proposed aircraft 

could refuel all current Air Force fixed-wing tanker-compatible aircraft using current Air Force procedures required by the solicitation. Is it my understanding that the KC–10 could not fly slow 

enough for some assets that had to be refueled currently? Is that 

the problem? 

Mr. GORDON. The Northrop plane. The KC–10 is one of the current tankers. 

Mr. AKIN. Excuse me. The Northrop plane, did it have trouble 

flying slow enough to refuel some of the aircraft that we wanted 

to refuel? 

Mr. GORDON. We are very close to proprietary information, but 

I can tell you that, in fact, the issue wasn’t that it couldn’t fly slow 

enough. 

Mr. AKIN. But the report’s findings was that it could not refuel 

some of the planes that the KC–135 could refuel. 

Mr. GOLDEN. What it concluded was that the record did not demonstrate—the evaluation record that we got from the Air Force did 

not demonstrate that. Therefore, we could not find their conclusion 

reasonable. 

Mr. GORDON. Nothing in the decision goes to the capabilities of 

the Northrop plane or the Boeing plane. It goes to the way the Air 

Force did the evaluation. 

Mr. AKIN. I see. So it may be that Northrop plane could do it 

fine. 

Mr. GORDON. Absolutely. 

Mr. AKIN. But it was just in terms of procedurally there was no 

proof that it could. 

Mr. GORDON. I am not sure it would use the word ‘‘procedural’’, 

but we are not expressing a view on whether the Northrop or the 

Boeing plane could meet the requirements. 

All we know is that when we looked at the record and we went 

through these issues, these are, in fact, the overrun and breakaway 

issues we were talking about earlier. We investigated these at 
26 

great lengths with the witnesses at the hearing as well as in the 

written record; and they did not provide, in our view, a reasonable 

basis for their conclusion. The planes may well have had the capability. 

Mr. GOLDEN. Typically, what we are doing in this kind of record 

is we are looking for an analysis. And what you said is right, documentation, exactly what you said. 

Mr. AKIN. As other members have commented, I appreciate you 

are very strict in keeping on that line very precisely in terms of 

doing what your job is and all of us have an interest in making 

sure that you do that. We don’t want to pull you over the line. So 

I appreciate your clarifying that point. 

That is all I had. Thank you. 

Thank you, Mr. Chairman. 

Mr. ABERCROMBIE. Thank you. 

Mr. Dicks, to be followed by Mr. Rogers. 

Mr. DICKS. Mr. Chairman, I think Mr. Rogers is a member of the 

committee. Do you want to go with him first? 

Mr. ABERCROMBIE. We are going Republican, Democrat, Democrat, Republican. 

Mr. DICKS. Thank you, Mr. Chairman. Thank you very much. 

One of the findings of GAO’s protest decision is that the Air 

Force conducted misleading and unequal discussions with Boeing. 

Could you tell us what part of the proposed evaluation this related 

to and why it was a concern and how the source selection was conducted? 

Mr. GORDON. Thank you. 

The question goes to—actually, I should point out that this is an 

instance where this word that has certainly caught people’s attention—the word ‘‘misleading’’—it is, for better or for worse, a standard word in the case law in this area both at GAO and in the Court 

of Federal Claims and that is—— 

Mr. DICKS. Is it equivalent to lying? 

Mr. GORDON. No, sir. 

Mr. DICKS. Okay. 

Mr. GORDON. No, sir. What happened in this case with regard to 

one of the objectives of a key performance parameter, and this one 

related to operational utility, was that the Air Force told Boeing at 

one point that Boeing had fully satisfied the objective. At some 

point thereafter, the Air Force changed its assessment, which they 

are permitted to do. They changed their assessment and concluded 

that Boeing had only partially met the objective. 

The problem was they continued with discussions with Boeing 

and with Northrop Grumman and didn’t tell Boeing that they had 

changed their mind. Had they told Boeing, we have decided you 

only partially met this particular key performance parameter objective, that would have been permissible. But, as it was, Boeing was 

left advised that they had fully met it, all right, and understandably felt that they didn’t need to make any change in their proposal, and that the impact of that was to meet the standard of 

what we call in the case law misleading discussions. In the discussions, they said you fully met it. After the fact, it turned out that 

was no longer true. 
27 

Mr. DICKS. Now you said that there was nothing done here that 

was illegal. But if you read your report, it comes across to me as 

if there was a bias or a predisposition to go in one direction here 

and that they did everything twisting and turning to make the 

thing come out the way they wanted to. 

You talked about the fact that there was three to one in these 

key discriminators in favor of Boeing, but that was discounted, that 

there was a miscalculation in the addition on military construction, 

a very major issue, that made Northrop Grumman the low bidder. 

And if there hadn’t been a protest, no one could have ever known. 

If Boeing hadn’t protested, no one would have ever known. 

Now this bothers me very much. Because there was—you didn’t 

say ‘‘illegality’’. You said there wasn’t any illegality. But there was 

certainly unauthorized discussions with the press immediately 

after the release of the decision, which is not supposed to happen. 

It is unfair to Congress. It is unfair to the Boeing Company. And 

it was done immediately. This was an overwhelming decision. It is 

a slam dunk. They won on every single point. And this was directly 

from the Air Force. Is that proper? Is that appropriate conduct for 

the Air Force? 

Mr. GORDON. Congressman, I can’t speak to the propriety of 

those contacts between the Air Force and the press. What I can 

say—I want to go back and be sure the record is clear. 

On the issue of illegality, it is a word that we tend not to use. 

When we sustain the protest, it means that we conclude that the 

procuring agency, the Air Force in this case, violated procurement 

law, either statute or regulation, in a way that was detrimental, 

prejudicial, as we say, to this protester’s ability to get the contract. 

So, in that sense, we did make a finding of unlawful action. 

What we didn’t find—it wasn’t alleged by Boeing, and we didn’t 

see an iota of evidence of it. We didn’t find that there was intentional wrongdoing, no evidence of bias, no evidence of criminality. 

That is absolutely true. 

On your comment, Congressman, with respect to the value of the 

protest in terms of airing these concerns, we very much concur. 

The protests provide a very important avenue for holding agencies 

accountable for their actions. 

Mr. DICKS. You know, I have been around here a long time. General Handy mentions it in his op-ed, that this is almost an unprecedented series of charges or protests sustained by the GAO against 

the Air Force and that these are not minor matters, that these 

were major matters that could have changed the outcome. In fact, 

the addition mistakes, in fact, changed who was the low bidder. So 

from your perspective, these are not—as people are characterizing 

these, these are not minor matters. These are significant issues 

that the GAO has decided, isn’t that correct? 

Mr. GORDON. Yes. We choose our words very carefully. We would 

not characterize the errors we found as minor. We, after great deliberation, would characterize them as significant errors that could 

have affected the outcome of what was a close competition between 

Northrop Grumman and Boeing. 

Mr. DICKS. Thank you, Mr. Chairman. 

Mr. ABERCROMBIE. Thank you. 

Mr. Rogers. 
28 

Mr. ROGERS. Thank you, Mr. Chairman. 

That is a perfect segue—— 

Mr. ABERCROMBIE. Excuse me. To be followed by Mr. Tiahrt and 

then Mr. Bonner. 

Mr. ROGERS. That was a perfect segue into what I want to talk 

about, and that is I want to limit my comments to process. I understand that is all that you reviewed and you did say ‘‘could have.’’ 

There is no evidence that you found, from my reading of this, that 

these seven or eight points where there is a deviation in process 

did in fact change the outcome. Is that correct? 

Mr. GORDON. That’s right. We are not saying that Boeing should 

have been selected. That is not what we were saying in the report. 

Mr. GOLDEN. What we said in the report is that it meets the 

legal standard of showing prejudice. That doesn’t mean that the result would necessarily change. 

Mr. ROGERS. Right. I want to make it clear. I know you touched 

on this a couple of times. There is no evidence that bribes was offered this time around in the bidding of this contract, is that correct? 

Mr. GORDON. That is absolutely correct. Neither bribes nor any 

other criminal conduct. 

Mr. ROGERS. No malfeasance, no impropriety of any kind Northrop Grumman demonstrated in winning in this contract? 

Mr. GORDON. No intentional impropriety. 

Mr. ROGERS. It was a clean bid process in the way of misbehavior 

is concerned. 

Mr. GORDON. We saw no evidence of intentional misconduct. 

Mr. ROGERS. I want to make the point—I know several folks 

want to talk about the merits of the contract being issued to Northrop, and I know we are going to talk more about that on the next 

panel. But you found nothing as to the merits of which plane was 

better or not. 

Mr. GORDON. That’s right. Nothing in our decision should be read 

to say that the Northrop plane is better or the Boeing plane is better. 

Mr. ROGERS. In this process, the Air Force is the customer, is 

that correct? 

Mr. GORDON. In the sense that they are making the purchase, 

yes. 

Mr. ROGERS. They are making the purchase, and the Air Force 

selected the Northrop Grumman plane, and from what I read there 

is no evidence that there was impropriety in the way they made 

their selection. So you are not saying they didn’t get the best 

plane? 

Mr. GORDON. We are not expressing an opinion about it one way 

or the other. 

Mr. ROGERS. I want to go back to a point that you were talking 

about with Mr. Miller and that is the number of issues. We had 

a briefing with your office a couple of weeks ago that was not public and there was a specific number of protests that were offered 

by Boeing. Do you know that number? 

Mr. GORDON. It depends what you mean. There were eight protests that were filed. One moment. 
29 

Mr. GOLDEN. Are you talking about—I think I identified 22 

major issues at that briefing. 

Mr. ROGERS. That is my point. There were 22 issues that they 

visited as being possible deviations. 

Mr. GOLDEN. Yes, and I pointed out there were subsets and other 

arguments related to those major—— 

Mr. ROGERS. So that may have been where the hundred or so 

items came from that Mr. Miller referenced? 

Mr. GOLDEN. I have seen it even higher at times, to be honest 

with you. 

We looked at everything. We didn’t spend a lot of time counting. 

We had a deal with all the issues in the protest. 

Mr. ROGERS. But of the 22 that were offered you found 14 that 

was no problem. 

Mr. GORDON. I am not sure we would count them that way. 

Mr. GOLDEN. I think that the issues are integrated. It is hard to 

divide them in the way people would like to. We found seven issues 

that we sustained, that we found in favor of the protest, that we 

found problems with the procurement. 

Mr. ROGERS. I guess the point I want to leave here with knowing 

is that you folks just dealt with process. You are just a legal team 

looking at the process, and you are not making any statement that 

the wrong plane was selected or that this process deviation in fact 

changed the outcome or would have changed the outcome. You are 

just saying that it could have, but there is no evidence of impropriety or criminal behavior or anything that would lead somebody 

looking at this to go to say, well, but for those seven items, Boeing 

would have won this contract. 

Mr. GOLDEN. I think we have been pretty clear in the written 

testimony and our testimony today that we did not—our job is not 

to evaluate the merits of the planes or decide which plane—what 

we focus on is violations. Our role is to look and examine when a 

protest is filed, deal with allegations of violations of law regulations 

in the selection process. 

Mr. ROGERS. That is my point. I hear too many of my colleagues 

and folks in the private sector who point at this as if it was like 

the last contract where there was all this improper behavior, and 

that is not what I have been reading or hearing from you all in our 

private briefing or in this one. And that is just there are seven deviations in process that may or may not have made any difference 

at all. 

Thank you, Mr. Chairman. 

Mr. ABERCROMBIE. Is that it for you, Mr. Rogers? 

We will go to Mr. Tiahrt. 

Mr. TIAHRT. Thank you, Mr. Chairman. 

I am a little worried when I have the only seat in the House 

without a microphone. 

Mr. ABERCROMBIE. I am sorry, Mr. Tiahrt. I was distracted. Did 

you ask me something? 

Mr. TIAHRT. No, I was just making a comment without an acronym. 

As I count—I am reading through the report of your executive 

summary, whatever you call it. I find eight areas that you have, 
30 

rather than seven. I have heard seven repeated a couple times, but 

I think eight is probably the proper number. 

You guys look at about 1,200 different protests a year, is that 

about right? This year you have already looked at I think 1,000, 

is that about right? 

Mr. GORDON. I didn’t hear the last statement. 

Mr. TIAHRT. How many protests have you looked at this year, approximately? 

Mr. GORDON. We get something on the order of 1,300 protests a 

year, plus or minus 200. 

Mr. TIAHRT. What has been your experience when one of the bidders to a proposal fails to meet the requirements of that proposal? 

Mr. GORDON. I think you probably mean when the company that 

receives the contract is alleged not to have met the requirements 

of the competition, am I right? 

Mr. TIAHRT. No. I mean, during the bidding process, what usually occurs when one of the bidders fails to meet the requirements? 

Mr. GORDON. It depends on the context. We have a complicated 

procurement system. 

In brief, there are some situations in which they are simply out. 

That is the end of the matter. They are nonresponsive, and they 

are not considered. 

There are other situations in the negotiated procurement context 

where it is perfectly normal for the agency to decide that this bidder, this offeror, fails to meet the requirements in this area, that 

area and the other. You then have discussions, negotiations, and 

during those discussions you raise with them your concern. You 

haven’t met the requirements here, there and the other. After discussions, all the companies get a chance to revise their proposals 

and then they will be evaluated. So you hope that at the end of the 

process they have acceptable proposals. 

Mr. TIAHRT. Would you consider this a negotiated contract or—— 

Mr. GORDON. Yes, this was a negotiated procurement. 

Mr. TIAHRT. And so, even in a negotiated contract, when a contractor fails to meet the requirements or chooses not to meet the 

requirements, what is the normal process? 

Mr. GORDON. If at the end of the day you have a proposal that 

doesn’t meet the requirements, you can’t make award to it. You are 

either going to have another round of discussions or they are not 

going to get the contract. 

Mr. TIAHRT. So if a contractor chooses not to meet the requirements then either you need to go into renegotiations or reject the 

contract, is that what you said? 

Mr. GORDON. Yes, if it is a material requirement. 

Mr. TIAHRT. Okay, and I noticed in one of the material requirements according to your report that—I think it was the second 

one—that one of the two bidders made a decision not to meet the 

requirement, made a decision not to meet the requirement and 

therefore was noncompliant. And according to the FAR, Federal Acquisition Regulations, section 14.404–2, it falls into the category of 

rejection of individual bids. Was it not a little bit peculiar that this 

bid was not rejected because of failure or noncompliance? 

Mr. GORDON. It actually goes back to what I was saying before 

when I said there is a dichotomy between some situations—— 
31 

Mr. TIAHRT. You also clarified that by saying even in a negotiated contract that if one party chooses not to meet the requirements, then it is not an acceptable bid. 

Mr. GORDON. I understand. But the part of the Federal Acquisition Regulation that you cited actually is not relevant here. Because you have cited a part of the Federal Acquisition Regulation 

which would be important in the context of invitation for bids, 

sealed bidding. 

In negotiated procurements, the agency has the right to pursue 

the matter, all right? What they can’t do is say, we have a material 

requirement, this company hasn’t met it, and yet we are still going 

to make award to them. That is an unacceptable solution. They 

have to do one or the other. 

Mr. TIAHRT. I understand that. And perhaps I got the wrong section in the FAR, but it is still applicable that if you fail to meet 

the requirements, even in a negotiated contract, as you explain this 

is, and in confirmation in your report, it says that there is a choice 

made to not comply with the requirements of this contract. And yet 

the Air Force accepted the procurement and awarded the contract. 

Mr. GORDON. They essentially concluded that the requirement to 

provide the help with the transition to the organic level—the organic depot level maintenance capability was not material. Because 

they called it an administrative oversight, and we just didn’t see 

that as supported. 

Mr. TIAHRT. And, further, in areas where it was not clear whether one of the two bidders met the requirements, they failed to provide any evidence that they did. 

You cited earlier the off-load of fuel. You cited the overrun requirements. You cited the breakaway requirements. You cited the 

boom requirements. You also mentioned the depot levels maintenance requirements. So here we have multiple areas where there 

was no evidence that one of the bidders met the requirements of 

the contract, or of the proposal, the RFP. Is that unusual? 

Mr. GORDON. The way you characterize the situation goes beyond 

what we found. The Air Force found—— 

Mr. TIAHRT. Wait a minute. Did you not find there was insufficient information on the boom? Whether it could meet the requirements or not? Did you not tell me that there were requirements 

that there were insufficient information about? Did you not say the 

same thing about the breakaway requirements? 

Mr. GORDON. We had concern about the sufficiency of the basis 

of the agency’s findings. 

Mr. TIAHRT. So it appears to me that, where they couldn’t meet 

the requirements, the Air Force was obviously vague about whether they even analyzed it properly and they couldn’t provide you 

with the information to confirm that they did meet the requirements. 

Mr. GORDON. We certainly had concerns as to each one of the 

issues. But I don’t want to overstate the concerns. We were not in 

a situation where we would have ever considered saying, oh, Northrop cannot meet the requirements and therefore the contract 

should go to Boeing. What we saw was that the agency—that the 

Air Force hadn’t done enough to establish that Northrop’s solution 

would work. 
32 

Mr. TIAHRT. Thank you for confirming what I thought; and that 

was, were there areas where there was a question on whether they 

met the requirements or not, there was insufficient data provided 

by either the Air Force or the bidders to the contract. Because it 

is appearing several times at least, on five different occasions—and 

you specified two of them—two of the eight items that you identify 

directly address it, and then you mentioned several others at the 

end of your report. I think it is a considerable problem. 

I also was a little bit concerned about the extra credit item that 

was referred to earlier. It seems that you found that extra credit 

was considered when one of the two bidders exceeded a threshold—— 

Mr. GORDON. An objective, yes. 

Mr. TIAHRT [continuing]. And then exceeded the objective. Because normally the way this works—and correct me if I am 

wrong—but a request for a proposal has a threshold. In this case, 

it is the KC–135R. That is what is characterized in the request for 

the proposal. That is the threshold. 

Normally, there is an objective. And when you reach the objective 

then you get the extra credit and all parties that reached that objective get the extra credit. Is that not correct? 

Mr. GORDON. I am not sure that I would characterize that as 

normal. But the situation here was fairly straightforward. If you 

met the objective, you were to get credit for it as it’s a meets. If 

you went above the objective, all right, you weren’t supposed to get 

extra credit. And as to one of the objectives, Northrop exceeded the 

objective and got extra credit. 

Mr. TIAHRT. In one? What about passenger capacity? Was there 

extra credit given there? 

Mr. GORDON. That, I understand from my colleagues who are 

more expert on technology, was not a KPP objective. So the issue 

of exceeding the objective and improperly being given credit, it is 

improper only because the solicitation said we will not give you 

credit for exceeding the objective. If it hadn’t said that, they could 

have done it. But that arose only in connection with the one objective that we cite. 

Mr. TIAHRT. Which was the fuel capability? 

Mr. GORDON. Yes. 

Mr. TIAHRT. I guess I was referring to Secretary Payton when 

she mentioned in the contract award that there was extra credit for 

passenger and extra credit for cargo, and I think she may even— 

the medical package pallets may be mentioned. 

Mr. GOLDEN. The cargo capability, that was permissible under 

the solicitation. These other items you are talking about were—it 

was permitted on the solicitation to give credit for that. It was not 

for the fuel, for want of a bad summary, the fuel capability requirement. 

Mr. ABERCROMBIE. Mr. Tiahrt, Ms. Payton will be in the closed 

session, if you want to pursue that further. 

Mr. TIAHRT. Thank you for your assistance, Mr. Chairman. I will 

wait until then to pursue that then. 

Mr. ABERCROMBIE. Mr. Bonner. 
33 

Mr. BONNER. Thank you, Mr. Chairman. Also, thank you for allowing those of us who are not a member of your subcommittee and 

full committee to be here. 

Mr. ABERCROMBIE. May I say before you begin, Mr. Bonner, Mrs. 

Boyda chooses to pass at this juncture, and unless there is a second 

round we will move to Mr. Young. And then, subsequent to that, 

I am going to take a show of hands as to whether we just stay here 

and allow the media to leave or whether we adjourn to 2337. 

Mr. BONNER. Thank you. 

Good evening, Mr. Gordon. Please help me and help especially 

the people back in my district who were so excited on February 

29th when the Air Force made the decision that the Northrop 

Grumman EADS team had won the account contract. Help us understand the process, because that is in fact what you all are here 

to discuss. 

Am I right or wrong that in the conclusion and recommendation 

of the findings of the GAO where you said, but for these errors we 

believe that Boeing would have had a substantial chance of being 

selected for award—would you ever sustain a protest if you didn’t 

have a sufficient number of findings where the protester would 

have had a chance for the award? 

Mr. GORDON. No. Prejudice, as we call it, is a requirement for us 

to sustain the protest. And we often see cases where the agency 

made errors of procurement law, but it didn’t make a difference. 

We have to have a situation where the protester—not only were 

there violations of procurement law regulation but where the ‘‘but 

for those errors’’ the protester would have had a substantial or significant—you see both words in the case law—chance of obtaining 

the award. 

Mr. BONNER. The reason I raise that, as my colleague, Mr. Miller, raised earlier, words are powerful, and many people have chosen to take the word ‘‘substantial’’ and make it into something perhaps bigger than it is or perhaps what it is. Is ‘‘substantial’’ anything other than a justification for the sustaining of the protest? 

Mr. GORDON. It is the basis for sustaining the protest, but it is 

a meaningful word. It is not—it can’t be a situation where the 

chances of the company winning the contract would have been negligible, de minimis. There was a substantial—— 

Mr. BONNER. It they had been negligible, then you would not 

very likely have had reasons to sustain the protest. 

Mr. GORDON. Yes. Yes. 

Mr. BONNER. Further in this conclusion, did either of you have 

a chance to see the press conference yesterday with Secretary 

Gates? 

Mr. GORDON. We both did. We watched it together. 

Mr. BONNER. Then in the conclusion where you say, we recommend the Air Force reopen discussion with the offerors, obtain 

revised proposals, re-evaluate the revised proposals and make a 

new source selection decision consistent with this decision—I know 

some parts of that recommendation have not necessarily had time 

to come to fruition, but, based on what you saw yesterday, do you 

believe Secretary Gates, on behalf of the Department of Defense, 

has acted in good faith on the GAO’s recommendations and the 
34 

process going forward is adequate, based on your recommendations? 

Mr. GORDON. Adequate goes to the colloquy that we had earlier. 

We need to see the details. We have gotten nothing in writing. And 

even when we get something in writing, we will wait to see whether the private companies, either one of them, files a protest. 

But if you want an initial informal opinion, it certainly sounded 

to me like Secretary Gates was acting in good faith to implement 

the recommendations, but that doesn’t bind GAO in terms of a protest that we might get down the road. I think he used words very 

close to ‘‘we intend to implement GAO’s recommendation.’’ 

Mr. BONNER. Would I be correct or incorrect if I said in that, in 

the report, the GAO stated that the Air Force calculated correctly 

that the KC–45 could off-load more fuel over distance? 

Mr. GORDON. I didn’t understand the question. 

Do you understand it? 

Could you restate the question? 

Mr. BONNER. Sure. Would I be correct or incorrect if I said that 

the GAO stated that the Air Force calculated correctly that the 

KC–45 could offload more fuel over distance? 

Mr. GOLDEN. I think the answer is yes. 

Mr. BONNER. Would I be correct or incorrect if I stated that the 

GAO found that the Air Force correctly reported that the KC–45 

was superior in air refueling efficiency? 

Mr. GOLDEN. I think the wording is—could you repeat the wording? We didn’t—— 

Mr. BONNER. Sorry, I am from Alabama. 

Mr. GOLDEN. It is not your fault. 

We are very careful in these decisions. What we are reviewing 

is the reasonableness of the agency’s actions. And so—— 

Mr. ABERCROMBIE. Mr. Golden, excuse me. Could you speak a little more into the microphone? I realize you are addressing Mr. 

Bonner. 

Mr. GOLDEN. I am sorry. 

What we are doing in these decisions is reviewing the reasonableness of the Air Force’s actions, their evaluation findings. And 

I am not sure that either of these now that you are raising really 

were, in a sense, a protest issue that we went to the merits and 

assessed. So I am hesitant to say definitively, you know, give you 

a definitive response on these things. 

Mr. BONNER. Okay, forgive me. I thought that you had nodded 

in the affirmative that they both were correct. 

I could go down a list, just as our friends on the other side could 

as well, making their point. I don’t intend to do that. 

Mr. GOLDEN. No. Is what you are saying did the Air Force report 

that to us in the record? 

Mr. BONNER. It was my understanding that the GAO stated that 

the Air Force in both cases calculated correctly that the KC–45 

could offload more fuel over distance and that the Air Force correctly found that the KC–45 was superior in air refueling efficiency. 

And I was just asking if that is consistent with your understanding of your work. 
35 

Mr. GORDON. I hesitate to say this, Congressman, but if you 

could point us to someplace in our decision where it is there. 

Mr. GOLDEN. Right. 

Mr. GORDON. We don’t think that is actually in the decision. But 

it is a very long decision—— 

Mr. BONNER. It is. 

Mr. GORDON [continuing]. And perhaps our collective memories 

are—— 

Mr. DICKS. I thought we weren’t getting into the planes. 

Mr. BONNER. Well, I won’t take any more of your time on that. 

I would just like to, since so much has been made earlier—— 

Mr. ABERCROMBIE. Could I say, Mr. Bonner? 

Mr. BONNER. Yes, sir. 

Mr. ABERCROMBIE. If you would yield for a moment. 

Mr. BONNER. Absolutely. 

Mr. ABERCROMBIE. Could I suggest that you take a look and get 

back to Mr. Bonner? 

Mr. BONNER. With pleasure. 

Mr. GORDON. Okay, with pleasure. 

Mr. ABERCROMBIE. And to the committee. 

Mr. BONNER. Mr. Chairman, I don’t have another question, just 

a comment in closing for this panel. 

Mr. ABERCROMBIE. Go ahead. 

Mr. BONNER. So much has been made of General Handy’s opinion. He is a respected leader in the Air Force. I think it should be 

noted that he is also a former commander of U.S. TRANSCOM. He 

retired in 2005. And the current commander of U.S. Transport 

Command (TRANSCOM) , General Schwartz, as well as the current commander of Air Mobility Command, General Lichte, were 

both very involved in setting the requirements for tanker. And 

those requirements from the Air Force expressed a preference for 

a larger, more capable, more flexible aircraft. 

I don’t say that on the record to ask for your comment. I just 

wanted to say, with no disrespect to the general whose name has 

been mentioned so often, there are many generals, current and retired, who have expressed an opinion on this. And I don’t know 

that that necessarily has anything to do with the process; I just 

wanted to get it on the record. 

Mr. Chairman, thank you. 

Mr. ABERCROMBIE. Thank you, Mr. Bonner. 

Mr. Miller has a follow-up question, I believe, and I have one 

question for the record. And then unless someone else has a desire 

to ask questions again at this stage, we will go to Mr. Young. 

And I would remind the other members that after Mr. Young, as 

I say, we will take a show of hands, which I hope will say we are 

going to stay here. Both Mr. Gordon and Mr. Golden, as well as 

Mr. Young and I believe Ms. Payton, will be at the closed session. 

We will just take a very short break and continue. 

Oh, Mr. Miller. 

Mr. MILLER. Thank you, Mr. Chairman. 

Real quick, and I know and appreciate the time that you have 

given to us today and the clarity with which you provided the answers. 
36 

You had said in one of the items that the Air Force said that the 

KC–45 could, in fact, refuel all Air Force aircraft. You said that you 

felt as though they had not provided enough documentation to 

prove that. Is that correct? 

They needed to provide better documentation to prove that they 

thought that the boom could refuel all aircraft. 

Mr. GORDON. You pointed out earlier, Congressman, and rightly 

so, that words matter. I want to look at our words and be sure that 

I answer you with the right words. 

Mr. MILLER. Okay. 

Mr. GORDON. All right. Our finding was that the record didn’t 

show that the Air Force reasonably determined that Northrop 

Grumman’s proposed aircraft could refuel all current Air Force 

fixed-wing tanker-compatible aircraft using current Air Force procedures, which was required by the solicitation. 

Mr. MILLER. And I lay that as groundwork to ask this question. 

Is that one of the significant errors that could have affected the 

outcome of the contract? 

You consider a judgment on GAO’s part that the Air Force 

made—I mean, I would rather have somebody who flies for a living 

make the determination rather than somebody who flies a desk 

make the determination as to whether or not it could provide air 

fueling requirements for the Air Force. 

And so I am just saying, do you still contend that is a significant 

issue, that the Air Force didn’t prove it? 

Mr. GORDON. We think it is a significant issue, yes, sir. 

Mr. MILLER. That is all. 

Thank you very much. 

Mr. ABERCROMBIE. Mr. Dicks, did you have a follow-up? 

Mr. DICKS. Yeah, just briefly. On page 66 of the report, in a footnote, I think it says, ‘‘The report also recommends that fuel costs, 

because of their dramatic effect on lifecycle cost, be considered in 

a future evaluation of proposals.’’ 

And I have a chart, Mr. Chairman, that I would like to see submitted into the record, along with General Handy’s statement, 

which basically lays out the difference in fuel consumption between 

these two aircraft. 

Mr. ABERCROMBIE. Without objection. Without objection, the document will be entered in the record. 

[The chart referred to can be found in the Appendix on page 95.] 

[The prepared statement of General Handy can be found in the 

Appendix on page 90.] 

Mr. ABERCROMBIE. Now, did you want to re-ask your question? 

Mr. DICKS. Did you say yes—you just said yes to the fact that 

there was a recommendation that fuel costs be considered in the 

future in the footnote? 

Mr. GOLDEN. It is footnote 89 I believe you are talking about. 

And we said, ‘‘Given our recommendation below that the Air Force 

re-evaluate proposals and obtained revised proposals, this is another matter that the agency may wish to review to ascertain 

whether a more detailed analysis of the fuel costs is appropriate.’’ 

That is the language in the decision that I think you are referring to. 

Mr. DICKS. Yes. Thank you very much. 
37 

Mr. ABERCROMBIE. Can you site the page that you are referring 

to? 

Mr. GOLDEN. I am sorry. It is page 66, footnote 89. 

Mr. ABERCROMBIE. Thank you. 

And Mr. Larsen. 

Mr. LARSEN. Thank you, Mr. Chairman. 

Just to clarify, I, too, hope that the Air Force can certainly define 

what their requirements are. Your job is not to do that, and you 

have been very clear about that. Your job is to ensure that, in this 

process, the agency followed what they said they were supposed to 

do under the law. And so your conclusions are based on whether 

or not the agency did. 

And if they can’t back it up with documentation, as I understand 

it, then you have to call foul on them. They have to back up what 

they say they are going to do. And, in many regards, when you cite 

these significant errors, they were not able to back that up. 

And that is what your job is to do in these protests. It is not to 

fly an airplane or fly a desk or anything else. It is to hold the agency accountable. In this case, it happens to be the Air Force. In 

other protest decisions, it is whatever agency is having to make a 

procurement decision. 

Is that generally correct? 

Mr. GOLDEN. Yeah. Under the Federal Acquisition Regulations, 

the agencies are required to document and support their evaluation 

record. There are specific requirements. And—— 

Mr. LARSEN. And when they don’t, you have to call them on it 

if there is a protest. 

Mr. GORDON. But I want to be very concrete here. With respect 

to the overrun speeds, the Air Force itself had concerns during the 

procurement about whether the Northrop plane would, in fact, 

meet the requirement. 

With respect to breakaway, that didn’t come up until the protest. 

But the problem isn’t our making a judgment about whether the 

plane meets the requirement. 

Mr. LARSEN. Right. 

Mr. GORDON. Our question is to the Air Force, tell us why you 

made that determination. 

Agencies, including the Air Force in this procurement, in this 

protest, get enormous leeway. This is not, in this case or in any 

case that we have, a question of ‘‘reasonable minds can differ, and 

GAO decided X.’’ This is, if you will, the agencies get to make the 

decision. The agencies have huge leeway. We give them deference 

in making those decisions. 

What we do is say, we want to be sure that you follow the evaluation criteria and that what you said holds together. It is when 

we ask and get an answer that doesn’t hold together—not because 

we are experts in the technology, but because we are seeing a concern, and we are asking what is the response to the concern, and 

the response is simply not satisfactory. That is why we sustained 

this protest ground. 

Mr. LARSEN. But, gentlemen, I can assure you that the pro-GAO 

faction in Congress is bigger than the pro-Northrop, pro-Boeing and 

pro-Air Force factions put together. I assure you of that. You do a 

great job, and we rely on you for a lot of things. 
38 

Mr. GORDON. Thank you. 

Mr. GOLDEN. Thank you. 

Mr. LARSEN. Thanks. 

Mr. ABERCROMBIE. Thank you. 

One question for the record before Mr. Young comes, because I 

am not clear on it, and I think everybody needs to know this on 

the subcommittee and those who are interested. 

Did the GAO call Secretary Payton, who is the source selection 

authority, and/or Lieutenant General Hudson, the chair of the 

Source Selection Advisory Council, as witnesses during the protest 

hearings? 

And with regard to your answer, why would they be called or 

why would it be likely that they should be called or not likely? Why 

or why not, depending on your answer, affirmative or negative. 

Mr. GORDON. Absolutely. Neither one was called. But it is a very 

helpful question in terms of giving us a chance to explain to the 

subcommittee how this process works. 

We told the Air Force and the private parties exactly what our 

questions were. We told them what the issues were that we intended to explore in the hearing. We let the Air Force identify the 

people they felt were best qualified to answer those questions. If 

the Air Force had picked the source selection authority, we would 

have been delighted to have the SSA in front of us, and we would 

have proceeded with that. 

In fact, we gave the Air Force and the private parties fairly extensive notice of the need to hold a hearing, because we recognized 

that, when you are calling high-level officials, it is tough to get on 

their calendars. 

So we gave them advance notice of the hearing dates in order 

that they would be able to bring both the SSA, the source selection 

authority, and the chair of the SSAC that you mentioned. We 

wanted to provide them every opportunity so they could do it if 

they felt that those people should be the witnesses for the Air 

Force. 

Mr. ABERCROMBIE. You understand why I asked the question. 

Because it was clear from your testimony that you did not pick the 

people coming to answer the questions; the Air Force did. 

Mr. GORDON. We nor Northrop nor Boeing picked them. 

Mr. ABERCROMBIE. Right. And that is why I asked the question, 

because it struck me as, I don’t know, strange. Again, regardless 

of the side one is on or if one doesn’t have a side, it struck me as 

almost incomprehensible that either the source selection authority 

or the General in charge of the advisory council would not be 

among those chosen to come to speak to you. 

The fact that they were not is something I am going to have to 

find out about. And I think all the members will be interested in 

that. 

Maybe you can’t answer that. When I said ‘‘why not,’’ simply because they didn’t choose them, right? 

Mr. GORDON. Yes. 

Mr. ABERCROMBIE. That is your answer? 

Mr. GORDON. Mr. Chairman, I would say there are occasionally 

protests—— 
39 

Mr. ABERCROMBIE. I am editorializing here a bit, I realize, because it is incomprehensible to me that they wouldn’t come. 

Mr. GORDON. I understand. Mr. Chairman, that was their call. 

There are situations in which GAO says, we need a particular official. The classic example would be where we have gone through 

the record—and we always go through the written record before we 

have the hearing. We sometimes go through the record and we can 

see a particular evaluator or sometimes a source selection official 

has changed their mind or there is an inconsistency in the record. 

We will say, ‘‘We have a document that shows that Mr. Jones did 

something. We want to hear from Mr. Jones.’’ This was not a case 

like that. 

Mr. ABERCROMBIE. I understand that. 

Mr. GORDON. We left it to the agency. 

Mr. GOLDEN. Yeah. And, Mr. Chairman, in all fairness, we identified issues, and we told the parties, ‘‘Hey, give us the people who 

can best talk about these issues.’’ I mean, and, you know, I think 

your question is best raised with the Air Force. 

Mr. ABERCROMBIE. Right. It is going to be raised there. I just 

wanted to make sure that I had it correct, because I will tell you 

that I assumed—and I will tell you, I would be very surprised if 

any member sitting here didn’t assume that the source selection 

authority and/or the Chief Advisory Council general wouldn’t be 

the first two to be, you know, cited to come. So we are going to 

have to find out about that. 

But I recognize that that wasn’t something that you had to pursue. That is something we have to pursue. And I wanted to make 

sure I was right. 

And if that is it—I know you are still standing by. I appreciate 

that. I must confess to you that I—well, I thought we had a different set of timing. So I didn’t make any arrangements for dinner 

and so on. I am just going to have to keep right on going. So I presume that also part of the GAO charter is this fortitude. 

Mr. GORDON. We live to serve, sir. 

Mr. ABERCROMBIE. Thank you. 

Mr. GOLDEN. Be glad to do it. 

Mr. ABERCROMBIE. So I am going to ask you to stand by, and 

then we will ask Mr. Young to come at this point. 

Mr. DICKS. How about a three-minute break, Mr. Chairman? 

Mr. ABERCROMBIE. Yes. While Mr. Young is coming—Norman, 

wait, wait, wait. Norm, time out. Before you go—well, okay. 

Mr. DICKS. Yes, Mr. Chairman? 

Mr. ABERCROMBIE. I have his proxy. 

Mr. DICKS. I am still here. 

Mr. ABERCROMBIE. Can we take a vote right now? Can we just 

stay here and have them clear, rather than everybody having to— 

okay. 

That is what we will do, Doug. 

Mr. DICKS. But that is after Mr. Young. 

Mr. ABERCROMBIE. Yeah, after Mr. Young. Then we will have the 

second part of the hearing, and we will give the media a chance 

to break. Maybe you can have your offices send over a sandwich 

or something. 
40 

So we will recess for three minutes while Mr. Young puts on his 

armor and gets into his chair. 

[Recess.] 

Mr. ABERCROMBIE. Secretary Young, thank you for your patience. 

I trust you were listening in. 

And you have a statement, which we will incorporate into the 

record. If you wish to summarize it or take sections of it, that is 

fine. And I think we will just move ahead. 

Mr. Skelton has been able to join us again. 

And then, subsequent to your statement, we will go to questions 

or commentary for your observations and your commentary and/or 

answer to questions. And then we will take a short break again, 

and then we will go into the closed session. 

Secretary Young, please proceed. And thank you, again, for coming. 

STATEMENT OF HON. JOHN J. YOUNG, JR., UNDER SECRETARY 

OF DEFENSE FOR ACQUISITIONS, TECHNOLOGY AND LOGISTICS 

Secretary YOUNG. Certainly. 

Chairman Abercrombie, Chairman Skelton, Ranking Member 

Saxton and distinguished members of the subcommittee, thank you 

for the chance to testify on the Department’s—— 

Mr. ABERCROMBIE. Can you bring the mike just a touch closer, 

please? Thank you. 

Secretary YOUNG. Thank you for the chance to testify on the Defense Department’s plans for proceeding with the Air Force tanker 

competition. 

After seven years, it is critical that the Defense Department 

move forward with the purchase of a new tanker for our 

warfighters. The KC–(X) replaces the KC–135 tanker aircraft that 

are rapidly reaching the end of their service life. The oldest tanker 

is 50 years old, and the average age is 47 years. 

KC–(X) represents the first phase of a three-phase tanker replacement program. And the Defense Department intends to compete for the future KC–(Y) and KC–(Z) phases. 

This afternoon I will briefly summarize how the Defense Department plans to move forward. I want to note that the Department 

is in the middle of an active, competitive source selection. We generally do not discuss ongoing source selections or competing proposals. 

First, such a discussion could taint the competition. In this case, 

we have a solid competition that is advantageous to the warfighter 

and the taxpayer. We want to protect and encourage that competition. 

Second, complete discussion of the proposals or their evaluation 

would include proprietary information of the companies and source 

selection information of the Government. Public release of such information would not only affect the competition but also implicate 

the Trade Secrets Act, a criminal statute, and the Procurement Integrity Act, which provides both criminal and civil sanctions. 

Thus, I am very limited in my ability to discuss these matters 

in open session. I would ask your patience and assistance in main-
41 

taining the integrity of this process, while I also try to be as forthcoming as possible at this hearing. 

The Government Accountability Office completed a comprehensive review of the KC–(X) tanker competition. The Defense Department accepts the GAO findings. In reviewing roughly 110 protest 

issues, which do include a number of overlapping issues, the GAO 

issued eight specific findings. The GAO found no basis to sustain 

the vast majority of the protest issues. 

The eight findings are correctable. None of the findings suggest 

a concern with our acquisition strategy. And we will continue with 

a best-value source selection approach, with the intention of awarding a single contract. 

I want to assure you the Department will address each of the 

findings in completing a new source selection for the tanker program. Building on a carefully and thoroughly reviewed foundation 

of documents and discussion, the Defense Department will amend 

the tanker request for proposals, or RFP, and seek modified proposals from industry bidders. We anticipate releasing a draft RFP 

amendment to industry for comment in late July or early August. 

The Department will conduct a new source selection based on 

modified proposals submitted in response to the amended RFP. 

Grounded in the warfighters’ requirements and the pursuit of 

best value for the taxpayer, the Defense Department is the only organization that can fairly and knowledgeably conduct this competition. The Department plans to complete the proposal evaluation 

and reach a source selection decision by late 2008 or early 2009. 

Secretary Gates directed, with the full support of the Air Force, 

the appointment of a new source selection authority and completely 

new joint membership on the Source Selection Advisory Committee. 

Secretary Gates made these changes to maintain objectivity and to 

assure all interested parties that the process would be fair and equitable. 

The Defense Department has reviewed and considered the idea 

of awarding a contract to both companies. In the Department’s 

judgment, this approach would be a mistake, because it would result in an extraordinarily higher cost, as well as complicated logistics, training and operations for the Air Force. A dual award illserves both the taxpayer and the Air Force. The Defense Department and the taxpayer are far better served by reserving the opportunity to hold competition for KC–(Y) and KC–(Z). Competition 

has driven innovation and cost control in this Nation, and a strategy to award to both companies undermines these principles. 

We will seek to make only adjustments in the RFP which are 

grounded in the GAO findings, the warfighters’ requirements, and 

our obligation to get best value for the taxpayer. I would ask the 

support of this committee and your colleagues in allowing the Defense Department to conduct a fair, open and transparent new 

source selection process. We will make every effort to earn the confidence of industry, the Congress and the American people in the 

new solicitation. 

The Defense Department does not care which tanker wins the 

competition. The Defense Department’s sole objective is to get the 

required capability for the men and women who serve this Nation 

at the best price for the taxpayer. 
42 

I look forward to working with the Congress in support of this 

important program, and I am prepared to answer your questions. 

Mr. ABERCROMBIE. Thank you, Mr. Young. 

In that context that you just outlined, where you said that you 

are prepared to earn the confidence in the American people, on 

March 11th of this year you testified before this subcommittee that, 

and I quote, ‘‘I asked part of my acquisition, technology and logistics team to observe the source selection process and help the Air 

Force,’’ unquote. And quote, ‘‘The Department did its very best,’’ 

underlined by me, emphasis by me—‘‘The Department did its very 

best to evaluate two very high-quality proposals with excellent dialogue with both industry partners,’’ unquote. 

If the Department did its very best during this past source selection, what specific changes are you going to make for the upcoming 

KC–(X) source selection process to regain that confidence that you 

just stated you wish the public to have in you and the Department 

of Defense? 

Secretary YOUNG. Well, as I noted, Secretary Gates will change 

the source selection authority. We will change the Source Selection 

Advisory Committee. And we have studied in great detail all of the 

GAO findings. We will seek to address those findings, again, 

grounding ourselves in the requirements document and the pursuit 

of best value for the taxpayer. 

We will have an independent team review this. One of my only 

regrets is that what I told you was we would begin the independent 

team review process in December. Final proposals were turned in 

in, I think, March. We needed to start from the very beginning. We 

now have the opportunity to start at the very beginning and have 

a team, and an independent team, observe this process and try to 

make sure we have multiple eyes looking at all angles of the competition. 

Mr. ABERCROMBIE. When you say ‘‘observe the process,’’ are you 

not taking over the process? 

Secretary YOUNG. That is correct, sir. 

Mr. ABERCROMBIE. So you won’t be observing; you will be implementing. 

Secretary YOUNG. But I will have an independent team observing 

the process also and advising me. 

Mr. ABERCROMBIE. All right. Then that leads me to the timing 

question. Do you have confidence that the Department can make 

a sound KC-(X) source selection decision by the end of the year? 

And what challenges do you foresee that could prevent the Department from doing so? 

I think for our purposes here in the Congress, from an oversight 

point of view, this is an election year, I expect we will adjourn well 

before the election. There is some question as to whether we might 

come back. I think we need to have confidence that this can be 

done by the end of the year, especially because of the length of time 

that it has taken to get to this stage. 

Secretary YOUNG. Mr. Chairman, that is an excellent question. I 

think when you start on a journey you have to have a goal, one. 

Two, this competition has drawn out for seven years now. It is very 

important to get on with it. 
43 

I cannot guarantee you we will make that schedule. This is an 

event-driven schedule. Every single day is critical. There is probably an infinite number of obstacles. As you heard in earlier testimony, when we release the draft RFP, the draft request for proposals, that is a protestable issue. The air is charged around this 

competition. The Congress is watching it very carefully. 

So I have a personal obligation, the Department has an obligation to the warfighter and to you to try to deliver this product. I 

can’t anticipate all the roadblocks that will come up, but we have 

laid out an aggressive schedule. We will try to make it. I cannot 

guarantee you we will make it. 

Mr. ABERCROMBIE. Okay, again, though, but I am sorry, I have 

to pursue this with you a little bit. 

An aggressive schedule—is it by the end of the year? Is it going 

to be before the new Congress is sworn in and a new President is 

sworn in? 

Because, I will tell you, if you don’t, if you aren’t finished by the 

end of the year, then this thing is going to start all over again. And 

it is going to take a heck of a lot longer. 

And this also, I suppose, takes me to my next and last question, 

which has to do with the acquisition system then. I mean, if you 

are going to change all the criteria, then it may take longer. If it 

is just going to be something else—we need to go into that a little 

bit. 

And I think everybody here has their—some more than others 

because of the constituency situation and all the rest, but our principal constituency, as has been pointed out, is the warfighter and 

the taxpayer. 

Now, is the timing question—and I will ask you my other question, and perhaps you can combine the answer. 

The DOD currently maintains control of Air Force space system 

acquisition decisions and now the KC–(X). As the DOD’s senior acquisition official—and you know how much respect I have for the 

work that you are doing. I have expressed that both publicly and 

privately to you. And I say again publicly that the procedures that 

you are using in your everyday work, including your work on the 

weekends, is something that I approve of personally and I think 

the Congress appreciates. 

As the DOD’s senior acquisition official, what is your view of the 

Air Force acquisition system? And what changes, if any, is your office going to implement to ensure that the Air Force deficiencies 

are corrected in a timely manner? 

And will the DOD solution be to maintain permanent control of 

major Air Force acquisition decisions? Now, that is obviously a little bit of a separate question, but you have that power right now. 

Secretary YOUNG. Yes, sir. 

Mr. ABERCROMBIE. And I realize there is another administration 

coming and a new Congress to be elected. So the question, I think, 

is pertinent, because whatever time you have left—my view has always been you do your job, regardless of whether somebody else 

has done theirs or will do theirs or whether there is going to be 

some change in the future. There are no excuses for not doing your 

job when it is your responsibility. That is an observation, not an 

accusation. 
44 

Secretary YOUNG. No, but could I try to address it? 

Mr. ABERCROMBIE. Yes. 

Secretary YOUNG. I have spoken to the entire acquisition team 

several times now, and I speak to them weekly in notes. And I fundamentally reject the notion that we are into the drift period at the 

end of the administration. 

Mr. ABERCROMBIE. Good. 

Secretary YOUNG. This is a precious opportunity for me, for the 

next several months, to do as many things right as I possibly can. 

My principles disagree with putting this process on auto-pilot. So 

I have to do the best I can to start a process that could yield a 

source selection. If forces object to that, I still have to try to make 

progress, and I have to try to do it right. I may not make the end 

of the year, but I am going to make every effort to do that. 

With regard to the Air Force acquisitions process and control, I 

will speak on the specific term you mentioned, space. Personally, 

my personal opinion, I fundamentally disagree that a single service 

should have the total acquisition decision authority, milestone authority for a set of programs, as was done in space. And I would 

intend to retain acquisition authority over space programs. It provides a check and balance in the system. 

I am very happy with the service, the Air Force, or any of the 

services to execute their programs to the standards that I am trying to set. When those standards are not met, I intend to pull milestone decision authority, make programs special interest programs, 

and exercise OSD oversight of programs to achieve better results, 

which is what you are asking for. 

Mr. ABERCROMBIE. And you will do that with the KC–(X)? 

Secretary YOUNG. I will do that initially with the KC–(X) on the 

source selection. I would potentially yield contract execution to the 

Air Force until such time as I felt that execution was not meeting 

the standards. 

Mr. ABERCROMBIE. Very good. Thank you. 

We are going to move to Representative Boyda and then to Representative Saxton. 

Mrs. BOYDA. Thank you very much, Mr. Chairman, for such an 

important hearing. 

And we all appreciate the work that you are doing. 

I have the pleasure of representing two very large and important 

Army installations and the head of the National Guard in Kansas. 

We just very proudly put to bed a KC–135E after 51 years of service. You can imagine where my question is going. 

It would appear, when you are looking at it, as if there is a surely unintentional but yet significant bias that is brought into the 

whole program when we look at a lifecycle that is 25 years. 

Can you just comment on that? I have some follow-up questions, 

too. But why was 25 years chosen? Do you think that it, in fact, 

does have a bias? 

I think the KC–135s were initially predicted to last for 10 years. 

As I say, it was lovingly tucked in bed after 51 years, the oldest 

one in our fleet. 

Could you just comment on that, please? 

Secretary YOUNG. Certainly. I apologize, but I do want to be 

clear: I absolutely reject the notion of bias in the enterprise. 
45 

Mrs. BOYDA. Certainly, I fully believe that it would have been 

unintentional, had it been there. But do you think it put some bias 

into it? 

Secretary YOUNG. I want to talk about moving forward. 

Mrs. BOYDA. Okay. 

Secretary YOUNG. I think—— 

Mrs. BOYDA. My question, maybe in the interest of time for everybody, can we get to 40, 50 years, is where we are going? Why 

would we not have a lifecycle that is more representative of what 

the expected lifecycle of this is to really be? Why would we cut that 

in half? 

Secretary YOUNG. Well, I don’t know—there are a couple of 

things. The truth is, KC–135s currently have, on average, 17,000 

hours, and they have a structural life of 36,000 to 39,000 hours. 

Those airplanes have plenty of life. We could continue with those 

airplanes structurally. Those airplanes were designed in a time 

where we developed more robust structures. Today’s airplanes have 

less robust structures. I think it remains to be seen whether those 

planes can serve for 25, 40 or 50 years. 

Having said that, also there is another important piece. And we 

are constantly having this discussion across the board in acquisition in the Defense Department about lifecycle costs and properly 

prioritizing lifecycle costs, which are still a predicted and projected 

issue versus the known cost of developing and purchasing something. 

We should assess both. But the future is somewhat soft. We have 

seen in many systems, particularly our fighter aircraft, that how 

we use those aircraft are different than what we projected, and so 

we experience different lifecycle costs associated with them. So it 

is very hard to predict that. 

And the Air Force made a decision that was grounded in the concept that it is hard for us to predict lifecycle costs accurately, and 

certainly out to longer periods of time, you certainly can’t predict 

what the price of fuel will be out—— 

Mrs. BOYDA. Excuse me for interrupting, but it seems as if, in 

the evaluation, some of the criteria would be looking at if they were 

25, if they were 35, if they were 45, or 20, 30 and 40, to have a 

full evaluation of what some contingency may be. 

It seems as if, you know, again, these 135s, maybe the next ones 

aren’t going to last for 50 years, but there is, I think, a very strong 

possibility that they will last beyond the 25 years. And so should 

that not be included as a criteria for what if these go? 

The price of gas—do you know what is the price of fuel that will 

be put into that equation? 

Secretary YOUNG. I could get that for the record for you. 

[The information referred to can be found in the Appendix beginning on page 174.] 

Mrs. BOYDA. Okay. I assume that, as greenhouse emissions, all 

of these political and important factors are taken in, the fact that 

this aircraft uses so much less fuel I would think would be a very, 

very significant portion of this, in addition, of course, weighed into 

all of these. But the lifecycle costs—you know, I just bought a new 

car, and clearly, what do you think the number-one issue that I 

was worried about? 
46 

Secretary YOUNG. I am sure fuel consumption, in today’s environment. 

Mrs. BOYDA. Yes. 

Secretary YOUNG. You don’t know whether that car will last 5 

years or 10 years or 15 years and what it will cost you at year 15 

versus year 5. 

Mrs. BOYDA. I understand that. But, again, I think we have a 

historical record to say that these planes—you know, let me point 

out again, too, I think everybody in this room knows it, but that 

51-year-old KC–135 was built by the Boeing Corporation. I think 

everybody always appreciates that. It was projected to be out there 

for 10 years; it stayed out there for 50 years. 

So when will we know what the lifecycle projections in the RFP 

will be? You will be putting that out with the RFP, or will you be 

able to comment on that any earlier? 

Secretary YOUNG. We will put that in the RFP. 

I had a chance to talk with one of your colleagues, Congressman 

Dicks, yesterday, and so I wanted to adjust the discussion I had 

with him. I can do it in responding to your question. But I have 

gone—— 

Mrs. BOYDA. Let me just say in closing, too, as I see that I am 

getting to the yellow, that, you know, the people in Kansas ultimately want the very best value for our fighters and the very best 

value for our tax dollars as well. Ultimately, that is what they all 

want; would never suggest anything else. 

But this has become something that has gotten so much attention. I would just ask that you would consider, if you are going to 

use 25, then also consider if it would do. So that, when this comes 

out, we will be able to say to the good people of America, not just 

Kansas, that you have considered what the consequences are of 

this over the long term in any of these given scenarios and evaluated those and weighted those accordingly. 

So I certainly appreciate your—— 

Secretary YOUNG. As I said in my opening statement—and I had 

to go back and review the record after my discussion with Congressman Dicks—the capability development document, or the requirements document, suggests that the tanker should have a life 

of 40 years. So we are going to consider lifecycle costing for 40 

years, because I told him I would ground myself in the requirements documents. 

Mrs. BOYDA. All right. 

Secretary YOUNG. I also, though, as I said, intend to ground myself in best value and reasonably known costs for the taxpayer. So 

we intend to evaluate the development costs and the procurement 

costs, and have that as a higher-confidence estimate, I believe, 

than the lifecycle costs, but we will evaluate both. 

Mrs. BOYDA. So you will be using the 40 years in the lifecycle 

cost? Is that what you are saying? 

Secretary YOUNG. I said we are going to consider that. I need to 

understand—and I am not going to make changes based on discussions in hearings and with Members of Congress. But I will tell 

you—— 

Mr. DICKS. I think it is in the document that you suggested. 
47 

Secretary YOUNG. Right. It is grounded in the document. And I 

need to understand how I will do that. Because I don’t want either 

of the bidders to perceive there was unfairness or not. But at least 

one grounded number is 40 years. Another grounded number is the 

original competition to 25 years. We need to decide how to handle 

that. But, for sure, I would expect, based upon the requirements 

document, that we will added 40. We may delete 25. I need some 

room to make those decisions. 

Mrs. BOYDA. Thank you very much. 

I yield back. 

Mr. ABERCROMBIE. Thank you. 

Mr. Saxton, to be followed by Mr. Skelton, Mr. Miller and Mr. 

Courtney. 

Mr. SAXTON. Mr. Secretary, thanks for being with us today. 

As you indicated earlier, under your leadership, DOD will now 

assume the responsibility for the completion of this acquisition program. And we know how hard you work and how diligent you are 

about your commitment to these types of matters. And so it gives 

us a good feeling that you are in the position that you are. 

Can you tell us, in as specific a way as you can, how you will 

do this differently going forward? Are there changes that you will 

make in the process? Are there changes that you will make in requirements? How will this process move forward under your leadership? 

Secretary YOUNG. I think it will be hard for me to talk about it 

in specific terms, particularly without the draft RFP. 

To the extent I can talk to you about it, one, I have already mentioned the personnel changes that Secretary Gates directed. 

I think the other major issue we have to do is prioritize the requirements. As has been noted, there were some 808 specific requirements. And I believe it is fair to say the GAO said, if we had 

a prioritization, we needed to indicate that and state that. And so 

the RFP will work to make that clear, so that both the industry 

teams can understand what we value, what the warfighter values, 

grounding ourselves in the requirements document, and then use 

that to let them modify their proposals. And then we will grade 

those proposals. 

We will have the more independent team. And I think we will, 

as I have just discussed, look at costs a little differently. I think 

we will elevate cost in that discussion, so that we are balancing the 

requirements with the cost in trying to get what the warfighter 

needs and what the taxpayer can afford. 

Mr. SAXTON. If you were watching the hearing earlier, you may 

have heard several discussions regarding the size of the aircraft. 

There are those who believe that the intent in replacing the KC– 

135 fleet was to do so with an aircraft that could do the mission 

that the KC–135 does. And there are those, as you probably heard, 

that believe that the larger aircraft cannot do the mission in the 

same manner as efficiently and as safely, perhaps, as the more 

moderate-sized aircraft. 

Any comments? 

Secretary YOUNG. Certainly. I prefer to not talk about the size 

of the aircraft. 
48 

The requirement, the threshold requirement or minimum requirement for fuel offload is the current capability of the KC–135R. 

The capability development document clearly states that exceeding 

the fuel offload or radius threshold—this is how much fuel can be 

offloaded at different distances—is the objective requirement, exceeding it. 

The requirements document record indicates that the objective is 

greater than the threshold, and that there is added value—I 

quote—that there is ‘‘added value to the warfighter for additional 

offload.’’ It was debated in the Defense Department making the 

threshold and the objective the same, and it was determined that 

there was clearly operational value associated with additional fuel 

offload. 

Fuel offload is one of 800 factors. It should be given consideration 

because this is a tanker. While the objective is for more fuel, it 

should be bounded and I think will be bounded by cost. And those 

are how we will approach this going forward, in this and other 

areas. 

Mr. SAXTON. Thank you, Mr. Chairman. 

The CHAIRMAN [presiding]. Mr. Secretary, in the absence of Mr. 

Abercrombie, I am claiming seniority and will take this opportunity 

to ask a few questions, if I may. 

It struck me a few moments ago, you used the phrase ‘‘maintain 

objectivity.’’ And that, of course, is what everyone sees a necessity 

for. There was a necessity for it before. And the good gentlemen 

seated behind you from the GAO said the train came off the tracks 

seven different times. 

Now, as I understand it, you were not personally involved in assisting the Air Force in this decision. Is that correct? 

Secretary YOUNG. As the senior DOD acquisition official, I approved the milestone that let the Air Force award the contract. So 

I don’t want to tell you I was totally uninvolved. But I was not part 

of the source selection process or the—— 

The CHAIRMAN. Right. That is my question. Some of your staff 

was; is that correct? 

Secretary YOUNG. Some of the staff participated in an oversight 

team that I established, as I noted, late in the game. I don’t know 

that any of my staff was on the Source Selection Advisory Committee. 

No, there were no OSD staff members on that committee. 

The CHAIRMAN. Did any of your staff members that were familiar 

with this procedure note any of the seven sustained objections that 

the GAO sustained—— 

Secretary YOUNG. I think the answer is—— 

The CHAIRMAN [continuing]. Before the decision? 

Secretary YOUNG. Right. The answer is, no, we did not. And we 

have talked about that at some length. 

The CHAIRMAN. Well, what assurance do we have, in light of the 

train coming off the tracks seven times in the past, that the objectivity will be maintained in the future process? 

Secretary YOUNG. Mr. Chairman, one thing I think, I don’t want 

to confuse objectivity with the seven findings. I would add to that, 

one, we will start with objectivity. 
49 

Two, I believe the two proposals totaled 11,000 pages. The RFP 

was a thousand pages. And then the record goes well beyond that. 

And I certainly would compliment GAO for combing through that 

record. 

There were some very detailed things found in that record that 

I agree probably should have been seen. But it will be difficult, in 

an enterprise of this scope, to guarantee there will be absolutely no 

error. We will make that effort, going forward. 

That is part of why Secretary Gates believes we should address 

the GAO findings and build on this substantial record and make 

corrections to the record through the amended RFP and the modified proposals, in an effort to hopefully mitigate and avoid any further mistakes or errors or issues. 

The CHAIRMAN. The previous selection was made upon an RFP 

that was made public and available to the contractors. Will that 

same RFP remain in force and effect in the future for a future selection? 

Secretary YOUNG. Well, it won’t be the same RFP. We will 

amend that RFP, put it out in draft form, give industry a chance 

to comment, and obviously the Congress will have a chance to see 

it. 

And then, as you heard in the previous panel, that RFP action 

is a protestable action. Were that to be protested, to Chairman 

Abercrombie’s point, we cannot possibly make a source selection decision this year. 

The CHAIRMAN. The potential contractors have the right to question the RFP. Is that correct? 

Secretary YOUNG. That is correct, sir. They have the right to protest it. They certainly have the right to engage the Government in 

discussions about aspects of the RFP that they are comfortable 

with or uncomfortable with. That is the avenue I hope they will 

take, so that we can get an RFP—you know, obviously, both parties 

will jockey for that RFP to be to their advantage. The Government 

will try to continue to navigate the water of the requirements and 

getting best value for the taxpayer. 

The CHAIRMAN. What is the remedy if one or more of the contractors disagree with the RFP? This is a procedural question. Do they 

have the right to protest that to the GAO, as well? 

Secretary YOUNG. Yes, sir. 

The CHAIRMAN. The RFP? 

Secretary YOUNG. Yes, sir, they can protest the RFP. 

The CHAIRMAN. For a layman such as I, if there is a new RFP— 

which stands for what, Mr. Secretary? 

Secretary YOUNG. We would call it, in the legal terms, it would 

be we will amend the request for proposal, the RFP. 

The CHAIRMAN. All right. So to a country boy like me, we would 

say the criteria will be changed for any future source selection. 

Secretary YOUNG. I am less likely to say the criteria will be 

changed, because we have a capability development document that 

has been modified a time or two, but in existence, I think finalized 

in 2006. It states our requirements. 

What we need to do, and I believe consistent with the GAO findings, is the Government has the right to make clear which of those 

requirements we may place greater or lesser value on. 
50 

There was some concern on the part of the GAO that we—I really don’t want to speak for the GAO, and I want to limit my talking 

about the past. But, in this case, I will give myself a little license 

to answer your question. 

We told the offerors we would like you to meet as many of our 

requirements as possible, and we did not do, I think, an adequate 

job of saying which of those requirements were most important to 

the warfighter. 

We need to, in the new RFP—I don’t think we want to change 

the requirements; there is a long history there—but we do need to 

state for the industry bidders which ones are important, so they 

can address those in their proposals and then we can evaluate 

their efforts. 

The CHAIRMAN. I think I understand you, Mr. Secretary. 

Secretary YOUNG. Okay. 

The CHAIRMAN. A basic question, and I would hope you could answer this. In Title 10, subsection A, part 4, chapter 144, section 

2440, entitled ‘‘Technology and Industrial Base Plans,’’ it states 

that, ‘‘The Secretary of Defense shall prescribe regulations requiring consideration of the national technology and industrial base in 

the development and implementation of acquisition plans for each 

major defense acquisition program.’’ And I would assume that this 

proposed contract is a major defense acquisition program. 

Did the Department prescribe regulations as prescribed by this 

section? 

Secretary YOUNG. I believe we have existing regulations to implement this section. And I would like to get for, if I could borrow your 

words, the country boy that cited the code to me how exactly those 

regulations were applied in this particular solicitation. I think that 

is your question. 

The CHAIRMAN. Would you answer that for the record? 

Secretary YOUNG. Yes, sir. 

The CHAIRMAN. I would appreciate it. 

Well, my objective is the same as yours, Mr. Secretary, is that 

the objectivity be maintained in this whole process. And I wish you 

well. 

Secretary YOUNG. Thank you. 

[The information referred to can be found in the Appendix beginning on page 174.] 

The CHAIRMAN. Mr. Miller. 

Mr. MILLER. Thank you, Mr. Chairman. 

Mr. Secretary, I know you have already said you don’t want to 

go back, but I want to know a couple of things. Because I asked 

some questions to GAO, and we are just trying to find out some 

parameters. 

You used the number 110 in the protest from Boeing, and they 

said they don’t know where that number came from. And I am just 

trying to figure, where did that number come from? Where do you 

come with 110? 

Secretary YOUNG. Because I had the luxury of watching the hearing, the Air Force could answer this question, but I will tell you 

what they told me, because I asked the same question. 

It is my understanding the Air Force, who had to be able to address these issues, counted the number of issues in each filing, and 
51 

that totalled 110 issues. The Air Force has analyzed that, and they 

feel—and this is subject to judgment—that there are 52 discrete 

issues. So there is, as I said, a significant degree of overlap in the 

issues. 

I heard the GAO say a different view of this. So I don’t know. 

We can go do some homework for you on the record on that. But 

the Air Force came up with that number, and I asked them the 

basis for it, and those are the two pieces of information they gave 

me. 

Mr. DICKS. Mr. Chairman? Could we get an answer from the 

GAO on the same subject? 

The CHAIRMAN. Let’s let the gentleman—— 

Mr. MILLER. For the record? 

The CHAIRMAN. For the record. Let the gentleman testify. If we 

need to recall witnesses, we can do that at the proper time. 

Mr. MILLER. Also, to your knowledge, were there any protests to 

the RFP, the original RFP? 

Secretary YOUNG. Not to GAO, sir. That is the only forum for a 

protest. There were—— 

Mr. MILLER. Well, I am sorry, then I misunderstood what you 

said. You said there was a way that contractors could be engaged 

in the process. And you said they try to mold to their specifications. 

Secretary YOUNG. As part of our open and transparent efforts, 

when we issue a draft RFP, we issue it for industry to offer their 

comments. So there is no question industry offered comments to 

that draft RFP. We adjudicated those in some manner. 

I mean, the Government reserves the right to request what it 

seeks to buy. The only avenue beyond that, you know, we try to 

be responsive and listen to industry, but then when we issue a 

final RFP, they would have to protest it. 

And to be clear, neither bidder protested this RFP. They understood the terms and conditions of the RFP and accepted it. 

Mr. MILLER. And, Mr. Secretary, that was my question, did either one protest the final RFP, and your answer is no. 

Secretary YOUNG. No, sir. 

Mr. MILLER. What process—— 

Secretary YOUNG. Can I add another comment, too? 

Mr. MILLER. Please. 

Secretary YOUNG. My team has pointed out the Inspector General was asked to review whether the RFP reflected our requirements document, and the Inspector General did review that and 

did issue a report stating that the RFP reflected our requirements 

document. 

Mr. MILLER. What process is the Department going to employ to 

deal with, again, proprietary information, given the fact that the 

contractor that was selected, much of their information is now 

known, in protecting in this limited rebidding process? 

Secretary YOUNG. We are going to continue to protect proprietary 

information. It is required, as I noted, by law. 

I am not sure I know everything that has been said or discussed. 

Some of the information that is out there is speculation. And some 

of it, though, is not proprietary. It reflects the total cost to the Government. That includes Government costs, Government-furnished 

equipment. 
52 

So I am not sure to what degree very vendor-specific proprietary 

information is out there. It should not be. We will continue to protect it and not release that information. 

Mr. MILLER. This question may have been asked already, but do 

you anticipate giving additional credit in the new RFP for cargo or 

passenger capacity? 

Secretary YOUNG. I believe that cargo and passenger capacity 

were issues that were discussed in the protest. The GAO findings 

do not disagree with how the Government handled those issues. I 

am not seeking to change issues that were not subject to sustained 

protests unless they don’t reflect the requirements document. And, 

again, I believe the RFP reflects the way the Government wanted 

to handle cargo and passengers in the RFP. 

Mr. MILLER. My question surrounds maybe a change in the platform that one of the contractors might offer. Do you anticipate the 

possibility that Boeing may put the 777 in, knowing that there may 

be an opportunity to gain additional points? And if that happens, 

are we going away now from the KC–135 to more like KC–10 requirements in the type of aircraft that we are trying to procure? 

Secretary YOUNG. Well, the requirement will not change. And I 

would again note that the requirements document clearly says the 

threshold is the KC–135R and the objective is to carry more fuel 

than that aircraft. 

Legally, it is my understanding that modified proposals can be 

modified to the degree that they are substantially new proposals. 

You can change the item you initially proposed; you can propose a 

totally new item. The industry bidders have substantial license in 

modifying their proposal to propose a different aircraft. 

Mr. MILLER. My time is running out. I am sorry, Mr. Secretary, 

but if they were to propose the 777, what would that do to the expedited proposal process that you are talking about trying to get 

done by the end of the year? 

Secretary YOUNG. It is one of the issues that I alluded to with 

Chairman Abercrombie. We will take whatever time is necessary to 

properly evaluate that. If a totally new aircraft is proposed, I expect it will take more time than we have allotted in the schedule 

to evaluate that proposal. 

Mr. MILLER. Thank you. 

Mr. ABERCROMBIE. Mr. Miller, I suggest that when we get to the 

following session that we can pursue this in a little more depth. 

Mr. Courtney. 

Mr. COURTNEY. Thank you, Mr. Chairman. 

Secretary Young, I am sure you probably don’t want to keep 

going back to this question of objectivity, but, frankly, for people 

watching this hearing in the public, I think there are still a lot of 

questions about Secretary Gates’s decision to have your office now 

in charge of this, given the fact that your office has a history in 

terms of the prior decision. 

And I am still a little unclear from your testimony so far about 

exactly what the involvement of your office was in the last goaround. You described earlier that it was, sort of, late in the game. 

And I was just wondering if you can help me understand what you 

mean by that. 
53 

Are you saying that your office did an after-the-fact review after 

the Air Force completed its process, or was your office involved at 

an earlier stage? 

Secretary YOUNG. There was an enormous amount of history that 

preceded me. I became acting in July. I was confirmed by the Senate in November. The members of the staff in that office worked 

with the Air Force through this process in the way we work with 

people on every acquisition. 

I took the step in December of asking a small team in my office 

to go observe the source selection process. They had a limited 

amount of time. They did not have the kind of time to comb 

through in the level of detail that the GAO did. And I think that 

is probably the answer as to why we did not find these things, because we had highly-qualified people go and start to observe the 

process, but not do it from the beginning, and they did not spend 

the 120 days in the hearing process that GAO did. 

But, in the end, my team’s primary role was to observe that process. They made suggestions to the Air Force that the Air Force corrected. And I think you would hear that from Secretary Payton. 

But they did not participate in making the source selection decision. I did not participate in making the source selection decision. 

Mr. COURTNEY. So then your testimony is basically that you 

started to get involved with this process in December of 2007, with 

the decision in February. 

Secretary YOUNG. But they were looking at it from the point of 

view of, was the Air Force properly evaluating the proposals? I did 

not want us to make basic mistakes in evaluating the proposals or 

grading. I wanted to be able to ensure fairness. Those are the kinds 

of questions I ask my team, to make sure that everyone was being 

treated equally and fairly. 

Mr. COURTNEY. And in terms of the people who were involved in 

it, I mean, is it your intention to have those individuals continue 

or to take on this task from this point forward? 

Secretary YOUNG. Yes. 

Mr. COURTNEY. Same people? 

Secretary YOUNG. I would expect those same people to, again, 

provide independent oversight. I have not put those people on the— 

or Secretary Gates has not put those people on the Source Selection 

Advisory Committee. That is a new set of people. 

Mr. COURTNEY. So that is a completely different cast of characters? 

Secretary YOUNG. Yes, sir. 

Mr. COURTNEY. Who are not in any way connected to the prior 

decision? 

Secretary YOUNG. That is correct. All of the joint people we are 

putting on the panel were in no way connected. And we are seeking 

to have people—the Air Force people that will be on that panel, we 

are seeking to have people that were not involved in the previous 

source selection decision. 

Mr. COURTNEY. Well, again, as Mr. Skelton said, I think the Secretary’s decision and announcement yesterday certainly gave a lot 

of people the impression that we are starting with a clean, new 

process. But given the fact that people have had contact with the 

prior decision, I think there is a lot of concern that is starting to 
54 

surface now about really whether or not, you know, we are dealing 

with the same umpire making the same call. And—— 

Secretary YOUNG. Sir, all I can tell you is that discussion originates in a point of view that people in the Pentagon, in the acquisition team, have a bias as to what they want to buy. As I said in 

the beginning, and I have issued notes to this effect, the acquisition 

team does not favor any entity or any proposal or any company. 

The acquisition team takes the requirements and goes out and 

takes advantage of what has made America work. We ask companies to propose creative and innovative and competitive ideas. We 

evaluate those ideas and make a source selection decision. 

I have X amount of expertise in the Department to successfully 

pick a tanker. I would tell you the one thing to do is go take people 

that have never touched or seen a tanker and have a source selection through that process. I mean, I have to use some of the expertise that is in the Department to do this. And, mostly, I am using 

expertise in the acquisition team. 

And, indeed, we have made an effort, through the Secretary’s direction, to pick people for the Source Selection Advisory Committee 

that were not party to the first source selection to get the very objectivity you seek. 

Mr. COURTNEY. Well, I hope for your sake and our country’s sake 

that it all, sort of, plays out in a way that the confidence level is 

there. But, to me, I can understand why some people would be concerned. 

But one other question I guess is just, you testified earlier that 

there could be an amendment to the RFP, given—— 

Secretary YOUNG. That is a term of art, that we need to amend 

the RFP to address the GAO findings and make sure the requirements are—well, to address the GAO findings. 

Mr. COURTNEY. And you indicated that would be something that 

would then be—— 

Secretary YOUNG. Issued in draft form for comment. 

Mr. COURTNEY. By Congress, as well? 

Secretary YOUNG. Congress can review that, yes, sir. 

Mr. COURTNEY. And are you envisioning that by the end of September or October? 

Secretary YOUNG. It is my hope that we could issue the draft 

RFP—my team cringes—I say late July, they say early August. 

Every day here—— 

Mr. ABERCROMBIE. Excuse me, Mr. Young. Will you defer for a 

moment? 

Mr. COURTNEY. Absolutely. 

Mr. ABERCROMBIE. If you say July—— 

Secretary YOUNG. Late July. 

Mr. ABERCROMBIE [continuing]. You get a team that says July. 

If somebody says August, show them the door. 

Secretary YOUNG. Yes, sir. 

Mr. ABERCROMBIE. My staff and every staff of every Member 

here works for the public interest . If they don’t want to work for 

the public interest, tell them to get a job that pays wages by the 

hour. 

Thank you, Mr. Courtney. 
55 

Mr. COURTNEY. Thank you, Mr. Chairman. I have no further 

questions. 

Mr. ABERCROMBIE. Mr. Rogers. 

Mr. ROGERS. Thank you, Mr. Chairman. 

I have two questions. 

The amended RFP, are you just going to reopen the eight items 

that GAO addressed when you amend? 

Secretary YOUNG. As a minimum, we are going to seek to address the GAO findings. I want to make sure the requirements are 

reflected in that RFP. 

We obviously have to—one of the findings says that we to indicate any prioritization or weighting the Government wants to assign to those requirements. So I need to address the GAO finding 

by also making sure my requirements are well-reflected and properly reflected in the RFP. And if there are things in the RFP that 

are beneficial to the taxpayer, I will address those. 

Obviously, we have discussed how we evaluate cost. Evaluating 

cost as one giant lifecycle bundle I think is awkward. I think we 

should assign some value to the known cost of developing and buying the aircraft, but we also will likely make an adjustment and 

make sure we properly evaluate the lifecycle costs, but look at 

those two in terms of our relative confidence in the two numbers. 

Mr. ROGERS. Well, to use your phrase, the GAO went through 

this with a fine-toothed comb and they only found these eight areas 

where there seem to be at least the hint of a problem. So why 

would you go outside the four corners of those eight areas? Seems 

like you are inviting more of a problem when you do that. 

Secretary YOUNG. I don’t want to give you the wrong impression. 

It is my intent to try not to go outside the four corners of those 

areas. 

But the GAO—I don’t think there is a specific finding related to 

cost. And I think it is in the interest of the taxpayer to make sure 

we—well, there is a specific finding with regard to the cost model. 

But the totality of the cost evaluation, I think we want to consider 

making sure we properly evaluate that for the benefit of the taxpayer. It overlaps with the GAO finding. So we are going to try and 

stay in that box, sir. 

Mr. ROGERS. Right. Thank you. 

The other thing, it goes back to Chairman Abercrombie’s point. 

I am very concerned about this dragging on too long. We should 

have had this thing being built already. 

And I may be displaying my ignorance here and you may have 

already talked about it, but why would it possibly take more than 

six months to complete this? You talked about getting it done by 

the end of the year. That seems awfully bureaucratic and bogged 

down. Why would it take that long? 

Secretary YOUNG. I ask myself these questions regularly, Congressman. But I would tell you, I have learned—I have been involved, in the far past, with one protested source selection. I have 

been involved in four other source selections that were not protested. There is a substantial—I mean, it takes time to receive 

11,000 pages, review 11,000 pages, and grade it to a level of scrutiny that the GAO will decide is adequate. 
56 

Source selections have become extraordinarily sophisticated endeavors. If we limit the change—I mean, that is what the answer 

would be. And the answer to me is, if we limit the change, and industry is cooperative, and the Congress allows us the opportunity 

to proceed, we may be able to do it in six months and, in that process, create a record that can withstand what may well result in additional GAO scrutiny through another protest. Because it is hard 

to see a situation where either company is going to accept whatever 

outcome of this competition. 

Mr. ROGERS. Okay. 

Thank you, Mr. Chairman. 

Mr. ABERCROMBIE. Mr. Smith. 

Mr. SMITH. Thank you, Mr. Chairman. 

Thank you, Secretary Young, for being here. 

And I am sure you are aware of this, but just for the record, 

there is a lack of confidence at this point in the process because 

of a lot of the mistakes that were made. And I take you at your 

word that there was not a bias on your part or within the Air 

Force. It just seems coincidental that all of the mistakes were made 

in the favor of one company and against another. That many of the 

subjective judgments were made that way as well has given to a 

lack of confidence. 

I mean, at the most fundamental level, you got the math wrong, 

okay? The low bidder that was identified was not the low bidder 

if you added it up correctly. And you can comment on that in a 

minute; I will give you that opportunity. But it does lead to a lack 

of confidence. So this is going to be very well-scrutinized when you 

say you are going to go back and change the RFPs. 

And my first question on changing the RFPs, as I look at what 

the GAO found, I don’t see why it is necessary, off the top, to 

change the RFPs to meet them. 

I mean, just three of the findings: The Air Force did not reasonably evaluate the capability of Northrop Grumman’s proposed aircraft to refuel all current Air Force planes—there is other stuff 

there—that was one of them. The Air Force unreasonably evaluated Boeing’s estimated nonrecurring engineering costs, blah, blah, 

blah. The Air Force did not reasonably evaluate military construction costs associated with the aircraft. 

Why couldn’t you just go back and get it right? Why do you need 

to change the RFP? Couldn’t you go back and reasonably assess 

those things? 

So that is the first question, is the necessity of changing the 

RFP. And, like I said, we are skeptical about the needs to change 

that RFP and what will happen in those changes. 

That is a question. Why are you changing the RFP when you 

could simply go back and do correctly what the GAO identified that 

the Air Force is doing incorrectly? 

Secretary YOUNG. We are going to change the RFP in order to 

address the GAO findings. 

Mr. SMITH. I thought I asked a fairly clear question there. Maybe 

I didn’t. 

Secretary YOUNG. I think the rest of the question is an editorial 

comment based on—— 
57 

Mr. SMITH. The first time part was an editorial comment. I had 

to get that out. I apologize. I will give you perfect time to respond 

to that. The second part of the question was a very specific question. 

You are saying you are going to go back in and change the RFPs 

in response to the GAO. Makes us a little nervous, where the RFPs 

have been shifting, and the whole issue about—I know you don’t 

want to talk about the size of the tanker, but at the end of the day 

that is the issue. The Air Force, back in 2002, laid out a very clear 

set of specifics as to why a larger tanker wouldn’t work, and now 

they have said they are going back to change that on the fly, which 

has created a large number of problems. 

But the question is, specifically, you have said you have to 

change the RFPs in response to the GAO. I just read you three of 

their findings, which simply said that the Air Force did not reasonably evaluate what happened. I don’t see why there is a need to 

change the RFP for that. They could go back in and reasonably 

evaluate those things. 

That is my question. Does that make sense? 

Secretary YOUNG. Yes. And I think, when I say ‘‘change,’’ in some 

areas we may not have to change the RFP. We just may have to 

issue the RFP and let the bidders propose modified proposals and 

make crystal-clear that, in the proposals and through discussions 

with industry, they must provide certain pieces of information required by the RFP. And I think some of the GAO findings demand 

that information. We will make clear that information is required. 

Mr. SMITH. In what areas do you think the GAO does require the 

changing of the RFP? 

Secretary YOUNG. I believe the first two findings of the GAO, 

one—again, I hesitate, but I have studied this. Well—— 

Mr. ABERCROMBIE. Want to take a moment and refer to notes or 

take a look? 

Secretary YOUNG. No, no. It is really an issue—some of this can 

be better discussed in the closed session. I will seek to address it 

in the open session. 

The first finding says that we had 808 requirements and we 

graded them down at the detailed level, and we had not, I think, 

if I can paraphrase—GAO is here, and they can comment in the 

closed session—but we needed to be clear with industry on the relative value of those 800 requirements. And we agree with that. Because everything in those 800 requirements is not equal. In the 

source selection process, we did not make that adequately clear. So 

we need to clarify that in a new RFP so industry can bid accordingly. 

I think the other issue is fuel offload. That is the second finding. 

In that area, as I noted, we accept the GAO finding. I would tell 

you we don’t agree. Because the capability development document 

clearly with a record says that the objective was to provide more 

fuel offload capability than a KC–135R. And I have documents I 

can provide to you that say it was discussed and that there is operational value for the warfighter to carry additional fuel. And so we 

need to clarify that in the RFP and let industry teams bid accordingly. 

Mr. SMITH. Okay. 
58 

I am out of time, Mr. Chairman. Thank you. 

Mr. ABERCROMBIE. Thank you. 

At this juncture, before I move to Mr. Larsen, Mr. Courtney has 

requested that a letter addressed to the committee for today’s hearing from the Honorable M. Jodi Rell, who is the Governor of Connecticut, be submitted for the record, which I will do, without objection. 

[The information referred to can be found in the Appendix on 

page 96.] 

Mr. ABERCROMBIE. And now Mr. Larsen. 

Mr. LARSEN. Thank you, Mr. Chairman. 

Secretary Young, thanks for coming today. 

I want to just clarify some terms. Are you the new source selection authority? 

Secretary YOUNG. Secretary Gates announced at a press conference that I am the new source selection authority. We would 

normally not reveal that information. That is a decision he can 

make. 

Mr. LARSEN. Okay. Okay. All right. 

And the new Source Selection Advisory Committee, is that the 

independent team that you talk about, or is that something separate? 

Secretary YOUNG. No, that is—through the normal source selection procedure, people use different acronyms but we have a source 

selection evaluation team that evaluates and analyzes in technical 

detail the proposal. They provide that data, with possibly some 

judgments, to a Source Selection Advisory Committee, who begins 

to aggregate and evaluate and pass judgment on that data, so that 

committee can make a recommendation or at least provide relative 

values to the final source selection authority. 

Mr. LARSEN. So the independent team that you discuss, then, is 

what? 

Secretary YOUNG. Independent team would be a small team of 

people who will watch the work of the Source Selection Advisory 

Committee and ensure that they fairly judge, fairly use and equitably use tools, if we do an analysis or a model or a review, we do 

it equally between all parties and just make sure all procedures are 

followed. 

And then I hope, given the chance to start from the very beginning, they will have a chance to see whether the process the SSAC 

is taking and make sure they create, as I think you heard from the 

GAO today, an adequate record to explain the Government’s action 

so that we can have a decision supported fully by the record. 

Mr. LARSEN. Okay. 

Mr. Chairman, I will just note that the red light is on. I know 

I haven’t been at this for five minutes. If you could take care of my 

light there, so I don’t use too much of Norm’s time. 

Mr. ABERCROMBIE. I don’t know if you can get a consensus on 

that. Go ahead. Take all the time you want. [Laughter.] 

Mr. LARSEN. If I could, Mr. Smith from Washington brought up 

a point about the GAO’s findings and whether or not you actually 

need to do just a better job of documenting the decision versus actually changing the RFP. 
59 

Can you help me understand, help the committee understand, 

how you will choose to make a decision about does something need 

to change versus we just need to do a better job of documenting a 

decision? 

Secretary YOUNG. Well, that is the process we are going through 

right now. To the extent we need to change it, it will be based on 

the findings that GAO had and then how well those findings are 

grounded in our requirements document, because we are going to 

give that the greatest weight. 

I think in every case, though, we are going to seek to have as 

robust a record as possible, because I have to anticipate another 

protest. 

Mr. LARSEN. You have mentioned a couple of times, used the 

term, that you need to elevate the costs. As I recall in the original 

RFP, the cost price criteria was not the number-one criteria. In 

other words, you weren’t going to necessarily decide on the leastexpensive-per-unit offer. It was going to be a factor, but that 

doesn’t necessarily define best value. 

But now you are discussing more, I have heard several times you 

say ‘‘bounded by costs,’’ ‘‘elevating costs.’’ Are you trying to tell us 

something there? Are you trying to tell us something, that costs 

might have more weight this time around than before? 

Secretary YOUNG. I need to talk with you about that in closed 

session. I can answer that question. 

I can just tell you that cost was significantly further down the 

list and—— 

Mr. LARSEN. In the—— 

Secretary YOUNG. In the major factors. And I believe, across the 

board in the Defense Department, I am being asked by the Congress to make cost a more important factor. 

Mr. LARSEN. I will take that as a general comment, and we can 

explore that maybe a little bit later. 

And then also with regards to costs, you talked about development and procurement. And you sound like you feel much more 

confident in trying to develop development costs and procurement 

costs for the sake of trying to evaluate a decision. But lifecycle 

costs, you are still a little less confident about how to develop 

something that is a little more hard and fast. 

Is that accurate? 

Secretary YOUNG. I think I just want—well, I don’t know. I 

shouldn’t speak for you. There is a greater certainty—— 

Mr. LARSEN. I am asking objectively. I am not trying to—— 

Secretary YOUNG. No, there is a greater certainty—well, for one, 

the day I make a source selection, if I am able to award the contract, the development costs, I am going to sign and start paying 

them tax money. I should know that pretty well. I am going to 

have bid prices for the first five lots of airplanes. 

So those are going to be higher-confidence numbers than 

lifecycle. That does not relieve me of the burden of doing the best 

I can to predict lifecycle costs. I have just tried to tell you I think 

I am going to, under any circumstance, have the most confidence 

in the development and production costs, and I am going to do my 

best to have some level of confidence in the lifecycle costs. 
60 

And then I have to recognize that I can’t predict the price of fuel 

and that the warfighter is going to use this airplane like every 

other airplane and weapon in a different way, no matter how well 

I predict it. 

Mr. LARSEN. I will just conclude with this, because I see the yellow light is on, and I know I am probably over my time in reality; 

certainly now, with the red light. 

But you have mentioned the eight points in the GAO findings, 

you have to address those at a minimum. You are looking at the 

capabilities and requirements document and best value. 

But with regards to fuel costs, that is really fully mentioned and 

more fully discussed in a mere footnote in the GAO report, footnote 

89 on page 66. We have all that memorized over here. 

However, with fuel costs being what they are today, does that 

elevate itself out of a footnote for you and into something much 

more important for you to be looking at? 

Secretary YOUNG. Well, I disagree with the idea that it wasn’t 

important to start with. We evaluated lifecycle costs. But I would 

agree with you that from—we respect even the footnotes. And I 

have already asked the team and we have agreed and made plans 

that we will, as a minimum, re-evaluate our lifecycle process. And 

if we think there are changes to be made to give it higher confidence for everyone participating, we will do that. I accept that 

and respect GAO’s comment in that regard. 

Mr. LARSEN. Great. 

Thank you, Mr. Chairman. 

Thank you, Secretary Young. 

Mr. ABERCROMBIE. Thank you, Mr. Larsen. 

Mr. Marshall is the last member of the committee, so rather than 

go to Mr. Tiahrt right now, we will go to Mr. Marshall and then 

to Mr. Tiahrt. 

Mr. MARSHALL. Thank you, Mr. Chairman. 

I apologize for me being here earlier. We have been in a commodities market hearing all day long, trying to get a handle on these 

prices that people are suffering with. 

I guess I have two questions. 

First, I assume in the source selection process, as it goes forward, 

you will not be taking into account impact on the U.S. economy 

jobs-wise, you won’t be taking into account whether or not the competition is appropriately balanced in light of foreign subsidies, that 

neither of those things will be taken into account. Is that correct? 

Secretary YOUNG. We don’t expect to do that. 

Mr. MARSHALL. So you don’t expect to. You don’t plan to. You are 

legally prohibited from doing that? Have you discussed this? 

Secretary YOUNG. I think we could probably talk further in the 

closed session. But in the open session, as I—competition, innovation and open markets are the principles that guide this country. 

And they are embedded in our laws and rules governing Pentagon 

acquisition. And so we will execute the new procurement within 

those laws and regulations. And those laws and regulations do not 

direct and don’t require and, I think, don’t necessarily yield best 

value for the warfighter if we factor in certain economic aspects of 

the competition. 
61 

Mr. MARSHALL. I think the only way that I can ask the second 

question is by generally referring to an experience that I had in a 

closed session on this matter and then use that to inquire concerning process. 

Shortly after the decision was announced, the acquisition decision was announced, we had a closed briefly at which those making 

the decision explained why the decision was made that way. And 

one of the things that struck me is that there was a particular 

characteristic of the platform that was selected that the decisionmakers found very attractive. That particular characteristic was included in the RFP. And if you could look at me, this would help 

me. Let’s say both parties were required by the RFP to reach a 

standard of 50 percent, let’s say, and then the RFP generally says 

that going beyond that is desirable, you know, that would be great. 

And in the discussion that we had in closed session, classified session, the decision-makers were saying that the platform that was 

chosen went well beyond in this particular characteristic, and we 

really liked that, and here are the reasons we really like that. 

In a subsequent closed session with GAO, I was left with the impression that going beyond in a particular category was not something that was supposed to be given weight unless both parties understood that it was going to be given weight. And I asked GAO 

whether or not a protest had been made about this particular 

thing, and the answer was, no, no protest had been made. And 

then it occurred to me, well, of course no protest would have been 

made, because the other party, the party that lost, Boeing in this 

instance, would not have known that the decision-makers were particularly attracted to this particular characteristic. 

So it concerns me that both parties, as we move forward, have 

to know very clearly what kind of weight is going to be put on all 

these different characteristics. Because it really would be very unfortunate if we get to a point where we are finding out that some 

characteristic became particularly attractive to the decision-makers 

and both parties did not know that, and that characteristic was not 

necessarily decisive but an important one in making the actual decision. 

Secretary YOUNG. Let me try to address that. 

My guess is you are talking about fuel offload. That has been discussed here. The Air Force intended to assign credit for carrying 

more fuel than the KC–135R, consistent with the warfighting requirements. The requirements document makes—— 

Mr. MARSHALL. That is not what I was talking about, but go 

ahead. 

Secretary YOUNG. Okay. Well, I won’t read that statement if you 

are not talking about that. 

Mr. MARSHALL. It is a general inquiry about the process as this 

has evolved. I have kind of been left with the impression that a factor was taken into account that to a degree that one party didn’t 

even appreciate and wouldn’t have known to protest about because 

nobody would have even told the party. Certainly, I wasn’t going 

to go tell the party. 

Secretary YOUNG. Yeah, it is hard. Maybe we could do this in the 

closed session. 
62 

But I think we are in agreement that, in the amended RFP, we 

need to be very clear with industry about any parameters or grouping of parameters that we assign as a priority to get the capability 

that the warfighter wants, so that industry can bid accordingly. 

And so we will make that robust effort to be very clear in the RFP 

about the things we will value and how we will grade them, so that 

industry can respond. 

Mr. MARSHALL. Thank you, Mr. Chairman. 

Mr. ABERCROMBIE. Mr. Tiahrt. 

Mr. TIAHRT. Thank you, Mr. Chairman. And thanks for allowing 

us non-committee members to be involved in the process. 

Mr. ABERCROMBIE. It is a pleasure. 

Mr. TIAHRT. Specifically you were going to read something on the 

fuel offload. And the RFP has a baseline or a threshold of the KC– 

135R, as far as fuel offload. Normally, when an RFP is evaluated, 

you have a threshold and then an objective, and if both parties 

meet the objective they both get scored equally. 

You mentioned that the objective was more fuel offload capability. More fuel offload capability means one more pound. So technically, if that is still in the RFP, then both parties would be scored 

equally by having one more pound of fuel than a KC–135R. Is that 

correct? 

Let me restate this. If the threshold is a KC–135R and objective 

is more fuel offload, then one pound of more fuel to offload at any 

point in, you know, a thousand aeronautical miles or whatever you 

choose, technically then both bidders, in this case, would qualify 

the maximum amount allowable for additional fuel capacity. Is that 

not correct? 

Secretary YOUNG. You are speaking from the perspective of the 

GAO finding—— 

Mr. TIAHRT. No, I am from the perspective of the RFP. 

Secretary YOUNG. The RFP was intended to reflect the requirements document. And the requirements document clearly says that 

the objective is to carry additional fuel. There is a record that says 

there is benefit to the warfighter for having additional fuel offload 

capacity. 

Mr. TIAHRT. It is the key performance parameters—excuse me— 

where this was stated. What I am saying is that additional fuel capability is one pound. So if both bidders—— 

Secretary YOUNG. The GAO interpretation is to assign equal 

value to 1 pound, 1 gallon or 1,000 gallons. But I do not believe 

the requirements document nor the American people believe that 

1 gallon more is the same as 1,000 gallons more. 

Mr. TIAHRT. Well, then what is the expected criteria? Because 

this is very critical, and it can predetermine who wins. And you 

said yourself you don’t want that to happen. 

Secretary YOUNG. That is correct. 

Mr. TIAHRT. So what is the criteria? 

Secretary YOUNG. The criteria is going to be grounded in the requirements document, which says the objective is to carry additional fuel. And that will have to be balanced against the other 800 

requirements. And it will have to be balanced against the costs we 

will have to pay to get that capability. 
63 

Mr. TIAHRT. Well, if you don’t define the objective, then you won’t 

know if both parties have met the objective. Because what you 

have created is a very subjective scenario. And according to the key 

performance parameters, objective means it is a finite level. So I 

think this is something to be looked at very cautiously in the future, and I think you need to keep that in mind. 

Second thing: According to the manufacturing plan, as I understand it, about 90 percent of one of the two bidders will be built 

overseas in foreign countries. So it will be by companies in foreign 

countries. 

The airplane that the Boeing company proposes is subject to five 

regulations that have waived by the DFARs, the Defense Federal 

Acquisitions Regulations, for foreign suppliers in North Atlantic 

Treaty Organization (NATO) countries. I think it is paragraph 225 

in the DFARs. 

Will you waive the Foreign Corrupt Practices Act for EADS of 

Europe? 

Secretary YOUNG. We are buying—the bidders in this competition are—well, I was going to try to not say the company names 

today. We have two bidders in this competition, and they are both 

American companies. They are subject to all the rules and regulations that are in place. 

Mr. TIAHRT. I didn’t ask that. I said, will you require the European companies that are providing parts, which is about 90 percent 

of the parts for one of the two bidders here, will you require that 

they are subject to the Foreign Corrupt Practices Act? Or are you 

going to waive that regulation for 90 percent of one product and 

apply it to 100 percent of the other product? 

Secretary YOUNG. We are not waiving regulations application to 

the industry proposers, either industry—— 

Mr. TIAHRT. Are you going to require cost accounting standards 

for the European companies that are going to provide parts that 

you will have to maintain and service once they have been purchased? 

Secretary YOUNG. We are treating each bidder equally. And that 

is, the U.S. company bidders must comply with all regulations, including cost accounting standards. 

Mr. TIAHRT. So you are going to waive them for the Europeans 

then. You are going to waive these regulations for the Europeans. 

Secretary YOUNG. We are not waiving any regulations, sir. 

Mr. TIAHRT. You are waiving the regulations for the Europeans, 

by the way you just explained it to me. And, in doing so, you have 

created an unlevel playing field and an unfair advantage to one 

bidder over the other. 

Ninety percent of the product is built in Europe. And they don’t 

have to comply with five specific regulations: the cost accounting 

standards, the Foreign Corrupt Practices Act, the international 

trafficking in arms regulations, the Berry amendment, and the 

buy-American provisions. Those are the five regulations that have 

been waived by the Department of Defense—not Congress, by you 

guys. 

Are you going to force them to comply with them, just like you 

do the American companies? Because if you don’t, American workers are put at a disadvantage. 
64 

Secretary YOUNG. Both companies, both bidders, must comply 

with all the regulations and laws you just cited. Both of those bidders are reaching outside of their defense company headquarters to 

get commercial products. Both of those commercial product providers are not subject to some elements of all those regulations you 

talked about. 

But all the commercial products are subject to the same regulations. And the defense companies that are bringing those commercial products into and modifying them to deliver the U.S. Government a tanker are fully subject to all the regulations. And we will 

not be waiving regulations with regard to that. 

Mr. TIAHRT. You will not apply these five regulations to 90 percent of one of the two bids. That is just what you have told me. 

You said the American portion will. Well, fine, we will apply the 

regulations equally for 10 percent of the product. But for 90 percent, we are going to make a disadvantage for American workers 

here by allowing no cost accounting standards, no Foreign Corrupt 

Practices Act, no international trafficking in arms regulations. 

Those are very expensive regulations to implement. And you 

going to implement it entirely on one body, and you are waiving 

it entirely for 90 percent of another body. That is an unfair advantage. 

Secretary YOUNG. We are implementing it uniformly to the two 

bidders. 

Mr. TIAHRT. For all parts that are going to be supplied? 

Secretary YOUNG. Equally. We are applying it equally to the two 

bidders. 

Mr. TIAHRT. Okay. I am glad to hear that. 

And you are going to do an industrial capability assessment that 

was brought up earlier by Mr. Skelton? 

Secretary YOUNG. I would like to answer that for the record. I 

believe we will do that. It is required. 

[The information referred to can be found in the Appendix beginning on page 175.] 

Mr. TIAHRT. I see my time is up, Mr. Chairman, but I have some 

additional questions. 

Mr. ABERCROMBIE. In a manner of speaking only. 

Let’s see. Mr. Dicks, then Mr. Bonner. And if there is no other 

round of questions or commentary sought, then I suggest we will 

move right to the closed session. I think some of this may be able 

to be dealt with a little bit more explicitly at that point. Mr. Saxton 

will have a follow-up, and that will be it. 

So Mr. Dicks is in the barrel right now. 

Mr. DICKS. Thank you, Mr. Chairman. 

In March 2007, the GAO issued a report entitled, ‘‘Air Force Decision to Include a Passenger and Cargo Capability in Its Replacement Refueling Aircraft Was Made Without Required Analysis.’’ 

Has that been corrected? 

If you want to answer that one for the record. 

Secretary YOUNG. I will get you a record document. I believe the 

requirements document does reflect that requirement. 

[The information referred to can be found in the Appendix on 

page 174.] 
65 

Mr. DICKS. They have stated that the proper analysis wasn’t 

done. This was 2007, so maybe we can get that corrected as well. 

Let me just say—and I have great respect for Mr. Young—I am 

very troubled by this whole thing. And I go back to Mr. Saxton and 

his comments about General Handy. I have been in this game for 

30 years up here, okay, and 30 years on the Defense Appropriations Subcommittee. 

And what bothers me here is that we were misled, the Congress 

was misled. Secretary Wynne testified before our committee, and I 

was talking to him, and I asked him, how we are going forward on 

this? And he says, ‘‘Sir, as we look at this, we would tell you that 

our highest motivation is actually medium-sized tankers. Then our 

highest motivation is mixed fleet. Our last thing we want to do is 

to have a whole fleet of large airplanes.’’ The A–330 is larger than 

the KC–10. And so to describe both of these as medium-sized tankers is not accurate. Okay? This is a great, big airplane. 

Now, yesterday, Senator Levin was briefed by Secretary Gates, 

and in that briefing the Secretary told Chairman Levin that we are 

going to give extra credit in the next competition to the bigger size 

of the 330. And this was stated, and I have checked it and verified 

it with the Senator himself. This means that you are predisposed 

here. There has been no consultation with Congress up until today. 

You are going to say that the bigger tanker gets more credit, and 

for these issues, for fuel offload I guess. I don’t know about passengers and aeromedical and cargo. 

But this is the wrong decision, John, the wrong decision, because 

you don’t want this great, big monstrous airplane that is going to 

take up space on the runways. This plane is so big that it is going 

to require billions of dollars in military construction. 

What we want is a replacement for the—Congress was told—a 

replacement for the KC–135. And smaller is better. Because when 

we get down to the calculation of fuel, our analysis is that if you 

have 140 of the bigger airplanes, the airbuses, and they fly for 750 

miles, which is in the RFP, over 40 years, that the difference in 

fuel is $35 billion, an extra $35 billion. This is what we are spending today for these tankers. This is like I have enough money then 

to buy another 179 tankers. 

So I am pleased that you are going to use 40 years in lifecycle 

cost. But I feel that we were misled. I mean, Mr. Miller came up 

day after day with all these charts. ‘‘We want medium-sized tankers, we want medium-sized tankers.’’ This was in the testimony. 

And all of a sudden, lo and behold, we get this great, big monster 

that doesn’t fit into any of our military construction facilities. This 

is going to cost billions of dollars in extra military contruction 

(MILCON) at a time when we don’t have that kind of extra money. 

So lifecycle cost has to be looked at properly. It was just a cursory thing in the first go-around. They just looked at the submissions from both companies and said, ‘‘You know, I guess they are 

okay.’’ No independent analysis was done. And we need to have 

independent analysis. We need to know the truth for the American 

people. 

We cannot afford to squander $35 billion on fuel, and especially 

when we are now supposed to be committed to dealing with greenhouse gasses and we are supposed to be having a conservation 
66 

ethic. You know, the Secretary got up there the other day and 

started complaining about the fuel costs. He said every time the 

cost of fuel goes up $1 a barrel, my bill goes up $130 million. So 

fuel is a big issue. 

And I plead with you, stay with the existing RFP. You know, 

what really bothers me is that the people on the House side were 

not told, we were not told what Secretary Gates told Senator Levin. 

We were not told that they were going to give additional credit in 

the new RFP so that the bigger plane would get more credit. I 

wasn’t told that. You didn’t tell me that when you briefed me. I 

checked with Mr. Murtha; he wasn’t told that. Only one person 

that I can tell was Senator Levin. Now, he happens to confirm people. He confirmed the Secretary of Defense, and I would assume 

that the Secretary would want to be open and candid. Nobody else 

was open and candid. 

Now, I hope you can tell me—and I hope and plead for you to 

take this thing seriously that you cannot change this thing now in 

a way that will be prejudicial. Or you know what is going to happen. You know what is going to happen. There will be another protest, and we won’t get anything done. 

I mean, this is a serious problem. And I say to you, stay with 

the existing RFP. Let’s see where the chips fall. But don’t make a 

modification that is going to look just like you are giving this thing 

to Northrop Grumman and EADS. I plead with you not to do that. 

Mr. ABERCROMBIE. Mr. Young, now that you have that information, Mr. Young, perhaps in the closed session Mr. Dicks will ask 

you a question. But—— 

Secretary YOUNG. Could I please have the chance to comment? 

Mr. ABERCROMBIE. Yes, you can comment, but you can answer at 

length, I think, in the closed session as well. 

Secretary YOUNG. I think these are much more open-session 

issues. 

For one, I have every personal reason to believe that Secretary 

Gates has been extremely open and candid with everyone. And I 

cannot leave that on the record. 

Two, I have had—— 

Mr. DICKS. Well, I checked with the other people, and they were 

not told. I was not told. 

Secretary YOUNG. Can I—— 

Mr. ABERCROMBIE. Go ahead. 

Secretary YOUNG. I have had discussions with Secretary Gates. 

He has expressed an interest in understanding the parameters, but 

he has also given me and the team license to go figure out how the 

requirements should be stacked and not. So I can assure you Secretary Gates, in personal discussions with me, has made no decision about how we would score anything and what we would 

weight. So I do not think he would have said that to Senator Levin, 

Chairman Levin. 

We announced as alternatives, as I have right here, the briefing 

characterizes the 767, the 787, and the 330 as medium-class airplanes. They are viewed in the analysis alternatives as medium 

airplanes. 

We will not give extra credit for additional fuel. We will give 

credit for how much fuel you carry. You must carry the threshold 
67 

amount, and then we intend to give credit, consistent with the requirements document, for the fuel you carry beyond that. And we 

are working those details in the RFP. 

The military construction costs are included in the analysis, and 

they were assessed. Both airplanes are significantly bigger than a 

KC–135 and do drive a certain amount of military construction. 

I disagree with your estimates of the fuel burn. We have data 

and I have seen the data, I can’t comment on the data in public, 

but those are not accurate estimates of the fuel burn. 

We will do exactly what you have said, and that is have an independent team look at how we estimate the lifecycle costs. Because 

I think you have a very good point about that. 

And I think those are the key things I wanted to be sure and discuss with you. 

Mr. ABERCROMBIE. Thank you. 

Mr. Bonner. 

Mr. BONNER. Thank you, Mr. Chairman. 

Any time I am in the same room with my friends and colleagues 

from Washington State and Kansas, I sometimes feel compelled to 

respond to their comments. But I know that is not the purpose of 

this hearing, so I will choose not to do that. 

Mr. Secretary, after the lease scandal that resulted in officials 

from the Air Force and Boeing losing their jobs and, in some instances, going to jail, is it not true that it was Congress that 

charged the Department of Defense and the Air Force with the responsibility—it was a congressional mandate, was it not, to go 

down the path of a competitive source selection process, not a sole 

source contract as was the case in 2001, but a competitive selection 

process, charging you with the responsibility to provide the 

warfighter and the taxpayer with the best-value tanker? 

Secretary YOUNG. That is correct, Congressman. And the one 

thing I would tell you—I was trying to look forward, but in looking 

back, that process yielded some very attractive aircraft from both 

bidders for the Government at very attractive prices. 

Mr. BONNER. And so I guess my question is, do you still feel 

bound by that congressional mandate to go down the path of a competitive source, not a sole source contract? 

Secretary YOUNG. Absolutely, sir. I see no benefit in my experience across the acquisition enterprise, setting this aside—sole 

sources limit our flexibility in negotiating prices. 

And I talked earlier about the fact that, even in a dual source 

process, which some have discussed, we have considered that and 

rejected that, because I believe that will cost the taxpayer more in 

the end. We get best value through a competitive source selection 

of a single source who has bid in a competitive environment and 

offered us, hopefully, an excellent deal. 

Mr. BONNER. If, by chance, someone sitting back home in Wichita, Kansas, or Seattle, Washington, or Mobile, Alabama, were 

watching this hearing this evening, there might be some confusion, 

because it seems that at times some Members have said, ‘‘Stick 

with the RFP,’’ and other times have said, ‘‘Go against the RFP.’’ 

So let me go back to a point that Congresswoman Boyda raised and 

make sure that I am clear in understanding your response. 
68 

I believe you said that the Inspector General looked at the RFP 

and determined in the affirmative that the RFP reflected the requirements document. Yet, in the response to Congresswoman 

Boyda’s question, did I hear you correctly in saying that you would 

consider going to a 40-year lifecycle cost, even though the current 

RFP was for a 25-year lifecycle cost? 

Is that not inconsistent with the requirements document? Because, to my knowledge, the GAO did not bring this up as one of 

the eight issues that was raised. 

Secretary YOUNG. Yes, Congressman, in continuing to research 

this issue, I have learned that the capability development document does require a 40-year life for this aircraft. And so I need to, 

with our team, reconcile the RFP at 25 years but the requirements 

document at 40. That would lead me to conclude that we should 

at least consider lifecycle estimate through 40 years, because I am 

going to continue to try to ground myself in the existing documents 

and buying what the warfighters ask me to buy. 

Mr. BONNER. Just a couple more questions. So much has been 

said today, but probably not enough has been said about yesterday’s announcement that Secretary Gates had and that you participated in. 

Could you give the committee and the American people some 

idea of what type of schedule and process for revealing RFP 

changes to the offerors we might be looking at? 

Secretary YOUNG. Congressman, by necessity, this process has to 

be event-driven. So I can lay out our notional schedule and what 

we would like to do by working aggressively. And that is, we would 

like to issue the draft request for proposals in late July, early August, for industry comment. Hopefully we can finalize that and 

issue the final request for proposals in mid-August. 

We would give industry 45 days to submit their proposals, asking 

them to turn in proposals in early October. They were given 60 

days the first time. We believe this is an adequate amount of time. 

And then we would seek to evaluate the proposals and create 

this record of how we evaluate the proposals, which will be necessary for any future protests, and announce a source selection decision by the end of the year. 

As I have noted, there are any number of factors that can delay 

those events and, therefore, mean I can’t make the schedule. This 

is not going to be a schedule-determined program. It will be a 

event-determined program. We are going to seek to make this decision in a timely manner for the sake of the warfighter. 

Mr. BONNER. And, again, just for the record, my last question, 

I want to make certain we are all clear. To your knowledge, neither 

you nor Secretary Gates have predisposed in terms of a decision 

about which tanker the Department of Defense will end up choosing? Because there has been some allegation that that decision has 

already been made. 

Secretary YOUNG. I can assure you, Congressman, that Secretary 

Gates is indifferent and has absolutely no opinion about which 

tanker we buy. And I also would like to assure you, as I said in 

my discussion, I do not care which tanker we buy. 

I want to get the best deal for the taxpayer. I want this program 

to be successfully executed, so I can tell the chairman we did it. 
69 

And I want to meet the warfighters’ requirements. I could care less 

which airplane does that. 

Mr. BONNER. Thank you, Mr. Chairman. 

Mr. ABERCROMBIE. Thank you very much, Mr. Bonner. 

Mr. Saxton has one brief follow-up question, and then we are 

going to close out this portion and get right to the closed briefing. 

Mr. SAXTON. Mr. Secretary, as you well know, following your receipt and the evaluation of the former proposal and presumably the 

follow-on proposal, there is a review that is called the Milestone B 

Review, which is intended to determine whether or not the next 

phase is ready to start, which would be the development phase. 

And following the Milestone B Review, you issued a Milestone B 

report, or decision. 

I assume that the process will involve Milestone B process again, 

since there will be potentially new proposals? 

Secretary YOUNG. We are reviewing that and whether I would revoke the Milestone B that I granted and have a new Milestone B 

or how we would approach that. 

If I could, I would use that as an opportunity to comment. In the 

Milestone B process, I approve that the program is fully funded. I 

meet some of the criteria that the Congress has levied on the Department, to say the technology is ready, the program is fully funded, et cetera, et cetera. I approve those criteria. 

I have adopted a practice of asking people to talk to me in neutral terms about the multiple bids so that I have some sense that 

the source selection process was done properly and I have grounds 

for approving Milestone B. 

I, in this case, in most cases, do not get the source selection specific information or the specific bidder information. I seek to grant 

the Milestone B in accordance with your certification criteria and 

my reasonable confidence that the process has been executed well. 

Mr. SAXTON. So you are saying that you haven’t made a decision 

about how—— 

Secretary YOUNG. I haven’t made a decision yet about whether 

it is proper to revoke the Milestone B. That would be my inclination, and have a new Milestone B process. 

This is a little bit awkward in that I will be, as Secretary Gates 

announced, both the source selection authority and the Milestone 

B official, which is extremely unusual in the Department. 

Mr. SAXTON. Thank you. 

Mr. ABERCROMBIE. Very good. Thank you, Mr. Young. 

As soon as I adjourn the hearing, I would appreciate everyone except for the members, the witnesses and their staffs and the committee staff—that is to say, the subcommittee and/or full committee 

staff. Personal staff will not be able to stay. So everyone else will 

have to clear the room, including our media friends, as soon as possible. 

The moment that is done, we will proceed to a closed meeting of 

the subcommittee with Mr. Young, our GAO friends and Ms. 

Payton. And everyone will be at the table at the same time. 

[Whereupon, at 7:35 p.m., the subcommittee proceeded in Closed 

Session.] 

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JULY 10, 2008 

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WITNESS RESPONSES TO QUESTIONS ASKED DURING 

THE HEARING 

JULY 10, 2008 

(173) 

RESPONSE TO QUESTION SUBMITTED BY MR. SKELTON 

Secretary YOUNG. It is important to note that industrial policy issues such as the 

health of the overall industrial base supporting defense are broader than individual 

source selections. The primary focus of the source selection process is to select the 

best acquisition option, evaluated on the basis of warfighting capability, cost, and 

schedule. However, the Department also has in place the industrial policies and 

structured procedures necessary to identify, evaluate, and preserve when necessary 

essential industrial and technological capabilities that might otherwise be lost. 

Within these policies and procedures, the Department has the ability to establish, 

and has established, administratively imposed (by DOD policy, not statute) restrictions within the Defense Federal Acquisition Regulations (DFARS) precluding the 

use of foreign products for specific defense applications when necessary to ensure 

military readiness. 

10 U.S.C. 2440 requirements are implemented by Federal Acquisition Regulations 

(FAR) Part 34 and Department of Defense Initiative (DODI) 5000.2, which require 

development of a program acquisition strategy, and the Defense Acquisition Guidebook (Chapter 2.3. Systems Acquisition: Acquisition Strategy), which describes best 

practices. The Industrial Capability section of the Guidebook states that ‘‘to satisfy 

10 U.S.C. 2440, development of the acquisition strategy should include an analysis 

of the industrial base capability to design, develop, produce, support, and, if appropriate, restart an acquisition program.’’ The Guidebook further describes that the 

industrial capability analysis (as summarized in the Acquisition Strategy) should 

consider DOD investments needed to create or enhance certain industrial capabilities; and the risk of industry being unable to provide program design or manufacturing capabilities at planned cost and schedule. 

When the analysis indicates that industrial capabilities needed by the Department of Defense are in danger of being lost, the DOD Components should determine 

whether government action is required to preserve the industrial capability. 

Industrial capability assessments are conducted at Milestones B and C. In addition, earlier in the program—at Milestones A and B or whenever technology opportunities are identified—market surveys are conducted. The market survey is a primary means of determining the availability and suitability of commercial items and 

the extent to which these items have broad market acceptance, standards-organization support, and stability. Market research supports the acquisition planning and 

decision process, supplying technical and business information about commercial 

technology and industrial capabilities. Market research tailored to program needs 

continues throughout the acquisition process and during post-production support. 

FAR Part 10 addresses market research and FAR Subpart 7.1 requires the acquisition plan to include the results of completed market research and plans for future 

market research. 

With respect to the KC–X, the Department has already conducted several industrial capabilities-related assessments and more are planned. It is important to note 

that because the majority of technological and industrial capabilities employed by 

the KC–X are commercial in nature, the Department focused its attention on those 

capabilities that are defense-unique. 

In 2003, the Air Force identified aerial refueling as a ‘‘defense-unique capability’’ 

and evaluated companies that produced boom refueling equipment to determine 

their technical capabilities and financial viability. 

In December 2006, to support source selection, the Air Force completed the official 

KC–X program market analysis required by the Program Acquisition Strategy. The 

result of the market research confirmed the most cost effective solution to the Air 

Force requirement for a new aerial refueling tanker to replace the current tanker 

fleet was a new medium-to-large commercial-derivative aircraft modified to meet 

specific military requirements for refueling, net-centric communication, cargo capacity, and aeromedical evacuation. Two companies indicated a willingness and capability to perform the entire set of tasks. Because the contemplated tanker aircraft 

were to be commercial-derivative aircraft, the Air Force market research team evaluated risks associated with the KC–X program by reviewing industry publications 

and technical studies, attending industry technical symposia, as well as visiting air-
174 

craft manufacturers, potential engine suppliers, companies specializing in aircraft 

modification and overhaul, U.S. and European aircraft certification agencies, current 

and projected future refueling tanker users (i.e., militaries of United Kingdom and 

Australia), airlines, supply chain managers, and other military users of commercialderivative aircraft. During those evaluation visits, the team reviewed the performance characteristics of the proposed commercial items and ability of those items to 

meet user requirements, the extent to which the follow-on support systems were 

unique or common to already-fielded fleets, commercial contracting business practices being employed to date, and how technology insertion was and could be handled. Specifically, the team evaluated contracting, test and evaluation, logistics, program management, and engineering as they applied to ongoing programs and how 

they might apply to the KC–X program. The survey identified no industrial or technological problems that would negatively impact program performance. The Air 

Force summarized the results of the market research in the Milestone B Acquisition 

Strategy. 

In March 2008, following the source selection decision, the Air Force and the Office of the Deputy Under Secretary of Defense for Industrial Policy conducted a post 

source selection industrial capabilities assessment to evaluate the industrial base 

impacts of the KC–45A tanker award, focused on: (1) the extent to which the decision promoted/retarded a competitive marketplace; (2) the viability of any associated 

essential industrial/technological capabilities; and (3) potential economic impacts on 

Boeing as an enduring competitor for defense products. 

All assessments completed to date have concluded that the industrial base is well 

positioned to not only meet the needs of the KC–X program, but also the Department’s future tanker requirements. Moreover, assessments did not identify any 

technological or industrial problems that would negatively impact program performance, nor did they identify any at-risk essential technological or industrial capabilities. 

In accordance with DODI 5000.2 and the Defense Acquisition Guidebook, the KC– 

X program will revisit and update these industrial capability assessments for future 

milestone decisions. System producibility will be addressed in detail at the Milestone C decision. [See page 50.] 

RESPONSE TO QUESTION SUBMITTED BY MR. DICKS 

Secretary YOUNG. In a May 4, 2007 memorandum, the Department of Defense formally non-concurred with the Government Accountability Office (GAO) findings, citing the lack of passenger and cargo analysis as ‘‘contrary to fact.’’ Through the Joint 

Capabilities Integration and Development System (JCIDS) process, the Air Force 

presented analysis and rationale for the passenger and cargo capability required in 

its replacement tanker aircraft. The Joint Requirements Oversight Council (JROC) 

and the Air Force concluded that the analysis was sufficient justification for the capability, and the JROC validated the passenger and cargo requirement (See Capability Development Document for KC–135 Replacement Aircraft (KC–X), December 

27, 2006). Requirements so promulgated are deemed sufficient to initiate an acquisition program. As required by section 2366a of title 10, United States Code, I certified on February 28, 2008 that the JROC had accomplished its duties, including 

an analysis of the operational requirements for the program. [See page 64.] 

RESPONSE TO QUESTION SUBMITTED BY MR. ABERCROMBIE 

Mr. GORDON. GAO prepared a document that identifies the protests of Air Force 

procurements that were sustained during fiscal years 2005 through 2008 and that 

describes the bases for the sustains. GAO has not identified trends beyond what is 

in the document. [See page 11 and document on page 98.] 

RESPONSE TO QUESTION SUBMITTED BY MRS. BOYDA 

Secretary YOUNG. As part of the life cycle cost analysis, the government will use 

$4.07 in Fiscal Year 2008 as the price for a gallon of gas (jet fuel). Fuel cost per 

gallon will be updated at final proposal revision to reflect latest available information at that time. [See page 45.] 
175 

RESPONSE TO QUESTION SUBMITTED BY MR. MILLER 

Mr. GORDON. As we explained at the hearing, the protest was handled by GAO 

attorneys, and no GAO attorneys are within the IFPTE bargaining unit. Since the 

hearing, we have verified, and we can now confirm and expand on a number of 

points that we made at the hearing. During the protest, the attorneys responsible 

for drafting the decision consulted with four other GAO employees who are not attorneys. Specifically, the attorneys consulted with one analyst, who is within the 

IFPTE bargaining unit, and three other employees who are not (two economists and 

an assistant director). These employees provided technical assistance to GAO’s attorneys handling the protest, but did not have any substantive input into GAO’s resolution of the protest. [See page 21.] 

RESPONSE TO QUESTION SUBMITTED BY MR. TIAHRT 

Secretary YOUNG. It is important to note that industrial policy issues such as the 

health of the overall industrial base supporting defense are broader than individual 

source selections. The primary focus of the source selection process is to select the 

best acquisition option, evaluated on the basis of warfighting capability, cost, and 

schedule. However, the Department also has in place the industrial policies and 

structured procedures necessary to identify, evaluate, and preserve when necessary 

essential industrial and technological capabilities that might otherwise be lost. 

Within these policies and procedures, the Department has the ability to establish, 

and has established, administratively imposed (by DOD policy, not statute) restrictions within the Defense Federal Acquisition Regulations (DFARS) precluding the 

use of foreign products for specific defense applications when necessary to ensure 

military readiness. 

10 U.S.C. 2440 requirements are implemented by Federal Acquisition Regulations 

(FAR) Part 34 and Department of Defense Initiative (DODI) 5000.2, which require 

development of a program acquisition strategy, and the Defense Acquisition Guidebook (Chapter 2.3. Systems Acquisition: Acquisition Strategy), which describes best 

practices. The Industrial Capability section of the Guidebook states that ‘‘to satisfy 

10 U.S.C. 2440, development of the acquisition strategy should include an analysis 

of the industrial base capability to design, develop, produce, support, and, if appropriate, restart an acquisition program.’’ The Guidebook further describes that the 

industrial capability analysis (as summarized in the Acquisition Strategy) should 

consider DOD investments needed to create or enhance certain industrial capabilities; and the risk of industry being unable to provide program design or manufacturing capabilities at planned cost and schedule. 

When the analysis indicates that industrial capabilities needed by the Department of Defense are in danger of being lost, the DOD Components should determine 

whether government action is required to preserve the industrial capability. 

Industrial capability assessments are conducted at Milestones B and C. In addition, earlier in the program—at Milestones A and B or whenever technology opportunities are identified—market surveys are conducted. The market survey is a primary means of determining the availability and suitability of commercial items and 

the extent to which these items have broad market acceptance, standards-organization support, and stability. Market research supports the acquisition planning and 

decision process, supplying technical and business information about commercial 

technology and industrial capabilities. Market research tailored to program needs 

continues throughout the acquisition process and during post-production support. 

FAR Part 10 addresses market research and FAR Subpart 7.1 requires the acquisition plan to include the results of completed market research and plans for future 

market research. 

With respect to the KC–X, the Department has already conducted several industrial capabilities-related assessments and more are planned. It is important to note 

that because the majority of technological and industrial capabilities employed by 

the KC–X are commercial in nature, the Department focused its attention on those 

capabilities that are defense-unique. 

In 2003, the Air Force identified aerial refueling as a ‘‘defense-unique capability’’ 

and evaluated companies that produced boom refueling equipment to determine 

their technical capabilities and financial viability. 

In December 2006, to support source selection, the Air Force completed the official 

KC–X program market analysis required by the Program Acquisition Strategy. The 

result of the market research confirmed the most cost effective solution to the Air 

Force requirement for a new aerial refueling tanker to replace the current tanker 

fleet was a new medium-to-large commercial-derivative aircraft modified to meet 

specific military requirements for refueling, net-centric communication, cargo capac-
176 

ity, and aeromedical evacuation. Two companies indicated a willingness and capability to perform the entire set of tasks. Because the contemplated tanker aircraft 

were to be commercial-derivative aircraft, the Air Force market research team evaluated risks associated with the KC–X program by reviewing industry publications 

and technical studies, attending industry technical symposia, as well as visiting aircraft manufacturers, potential engine suppliers, companies specializing in aircraft 

modification and overhaul, U.S. and European aircraft certification agencies, current 

and projected future refueling tanker users (i.e., militaries of United Kingdom and 

Australia), airlines, supply chain managers, and other military users of commercialderivative aircraft. During those evaluation visits, the team reviewed the performance characteristics of the proposed commercial items and ability of those items to 

meet user requirements, the extent to which the follow-on support systems were 

unique or common to already-fielded fleets, commercial contracting business practices being employed to date, and how technology insertion was and could be handled. Specifically, the team evaluated contracting, test and evaluation, logistics, program management, and engineering as they applied to ongoing programs and how 

they might apply to the KC–X program. The survey identified no industrial or technological problems that would negatively impact program performance. The Air 

Force summarized the results of the market research in the Milestone B Acquisition 

Strategy. 

In March 2008, following the source selection decision, the Air Force and the Office of the Deputy Under Secretary of Defense for Industrial Policy conducted a post 

source selection industrial capabilities assessment to evaluate the industrial base 

impacts of the KC–45A tanker award, focused on: (1) the extent to which the decision promoted/retarded a competitive marketplace; (2) the viability of any associated 

essential industrial/technological capabilities; and (3) potential economic impacts on 

Boeing as an enduring competitor for defense products. 

All assessments completed to date have concluded that the industrial base is well 

positioned to not only meet the needs of the KC–X program, but also the Department’s future tanker requirements. Moreover, assessments did not identify any 

technological or industrial problems that would negatively impact program performance, nor did they identify any at-risk essential technological or industrial capabilities. 

In accordance with DODI 5000.2 and the Defense Acquisition Guidebook, the KC– 

X program will revisit and update these industrial capability assessments for future 

milestone decisions. System producibility will be addressed in detail at the Milestone C decision. [See page 64.] 
QUESTIONS SUBMITTED BY MEMBERS POST HEARING 

JULY 10, 2008 

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QUESTIONS SUBMITTED BY MR. ABERCROMBIE 

Mr. ABERCROMBIE. My question is (a) Whether GAO ‘‘believed it would be beneficial for GAO to be involved in DOD’s source selection processes prior to contract 

award to ensure objectivity and process adherence is followed? If so, should it only 

be for Major Defense Acquisition Programs, or all DOD acquisition programs? If not, 

why not’’ and (b) ‘‘Please provide GAO’s views of how protests of the source selection 

process could be changed to significantly reduce extensive delays between events, 

yet remain fair to all parties.’’ 

Mr. GORDON. In response to the direction of the Competition in Contracting Act 

of 1984 (CICA), which directs GAO to provide for the independent, expeditious, and 

inexpensive resolution of protests, 31 U.S.C. § 3554, GAO has developed a protest 

process that balances the need to hold procuring agencies accountable and to protect 

aggrieved offerors’ due process rights with the need to ensure that government procurements are not unduly disrupted. While CICA provides for procurements to be 

suspended pending resolution of protests, CICA also allows for agencies to move forward with a procurement, when a determination is made that the procurement is 

urgent or that it is otherwise in the interest of the United States to proceed, notwithstanding a pending protest. 31 U.S.C. § 3553. 

We do not think that involving GAO in DOD’s source-selection processes prior to 

contract award would be beneficial to the procurement process or consistent with 

our traditional bid protest role. Indeed, involvement by GAO in the source-selection 

process prior to contract award could jeopardize GAO’s ability to later review postaward protests of DOD’s evaluation and source selection decision: such involvement 

prior to award would raise questions regarding GAO’s independence and objectivity. 

Also, to the extent that the Chairman is asking whether it would be helpful for GAO 

to hear protests of source-selection processes prior to award, we think that this 

would be ill advised. Contract awards are rarely protested, and allowing pre-award 

protests of source-selection processes would likely lead to ‘‘defensive’’ protests by 

firms that, in fact, would have been chosen for award of the contract. It is, in our 

view, wiser to allow protests of source-selection processes only by firms that have 

been harmed by those processes—that is, firms that learn that they were not selected for award. 

That said, we constantly review our protest process for ways to make it more efficient and expeditious, and recent figures demonstrate the result. So far in fiscal 

year 2008, GAO has closed over 1,200 protests; the average number of days during 

which a protest is open was only 43 calendar days. We frequently use alternative 

dispute resolution, which results in many protests being resolved early. Even for 

protests for which a decision was issued on the merits (approximately 250 cases), 

GAO decided those cases in an average of 81 calendar days, a substantially shorter 

time than the 100 days permitted under CICA. 

Mr. ABERCROMBIE. Secretary Payton, according to GAO written testimony, the Air 

Force over the last five years has the highest percentage of all the military services 

for sustained source-selection protests. What are the systemic acquisition issues in 

the Air Force and how do these issues get resolved in a timely manner? What 

changes are you planning to make in either personnel or processes within the Air 

Force source-selection and acquisition system? 

Secretary PAYTON. The Air Force did see a marked increase in the protest sustain 

rates in FY05 and subsequent years following investigations into source selections 

potentially influenced by a former Air Force acquisition official. The ten sustained 

protests in FY05 and FY06, as a result of this individual’s actions, skewed the numbers. However, when viewed in the longer historical context, it appears current bid 

protest sustain rates for the Air Force have returned to historical norms. 

In FY08, the Air Force has only 2 out of 89 protested solicitations sustained. This 

number is comparable to the Army (2) and the Navy (4). In some cases, the statistics reported by GAO appear to show a higher number of sustained protests than 

are actually the case. In a protest for a particular procurement, the disappointed 

offeror may submit a number of filings for the same protest. For statistical purposes, the GAO treats each filing as a separate protest. In the KC–X protest, the 
180 

protestor made eight filings, which the GAO counted as eight protests. Protests in 

most high-dollar, complex acquisitions, result in multiple filings. 

In terms of systemic acquisition issues, the Air Force will be assessing many 

areas as part of its September response to the Acting Secretary of the Air Force regarding Air Force acquisition and KC–X GAO lessons learned. We will also be commissioning the Center for Naval Analysis (CNA) to conduct an independent review. 

Some common themes that have already emerged include assessing evaluation 

methodology for Most Probable Life Cycle Cost, proper evaluation of bidder proposals for responsiveness to requests for proposal, assigning more people with contracting experience to the source selection team, employing independent review 

teams beginning with requirements definition and continuing throughout the entire 

source selection process and enhancing the skills and numbers of subject matter experts. 

Following the release of our analysis and the delivery of the CNA report, we will 

study the recommendations and codify, as appropriate, in Air Force Instructions. We 

look forward to discussing more definitive personnel and process improvements 

upon completion of our reviews. 

Mr. ABERCROMBIE. Secretary Payton, were you allowed to review the appropriate 

protest documentation from Boeing to substantiate their 100+ issues? 

Secretary PAYTON. I was allowed to review all of the information that Boeing filed 

with the Government Accountability Office, including the 100+ protest issues contained in eight different filings. However, I was not allowed to review any Boeing 

documentation such as emails or briefing charts that could have substantiated their 

alleged interpretations of the solicitation during the conduct of the source selection 

from January 2007 through early 2008 because the GAO denied the Air Force request for Boeing’s substantiating documentation. Please find attached the public 

version of the Air Force document request and Boeing’s objection to the document 

request that further identifies the specific documents the Air Force requested from 

Boeing. 

Mr. ABERCROMBIE. Secretary Payton, why did your legal team not allow you to 

testify at the GAO protest hearing? 

Secretary PAYTON. In April, in accordance with its bid protest procedures, 4 C.F.R. 

21.7(b), GAO conducted a pre-hearing conference that identified the specific issues 

it would review at the KC–X bid protest hearing. The specific detailed technical 

evaluation issues identified by GAO for testimony at the KC–X bid protest hearing 

could not be answered by me, and were best answered by the Air Force technical 

evaluators who performed the evaluation as members of the Source Selection Evaluation Team. A more complete answer that covers constraints on my hearing participation from early March through the conclusion of the hearing, is under GAO 

protected information and can be provided upon Boeing and Northrop Grumman 

consent. 

Mr. ABERCROMBIE. Secretary Payton, as a source-selection authority that has now 

gone through GAO protest proceedings and hearings, what in your opinion would 

you change about the way GAO conducts the protest and hearing process and are 

there any changes you would suggest to make it equitable for the agency involved? 

Would you consider it fair, equitable, and productive for the agency to have an opportunity to cross-examine or call as witnesses representatives from each competitor 

involved in the source-selection protest? 

Secretary PAYTON. The Air Force is collecting and analyzing lessons learned from 

the KC–X protest. We are carefully considering proposed changes that would make 

the protest process more equitable and efficient for both the agency and the taxpayer. We look forward to sharing these recommendations with the committee after 

we complete this assessment. 

Mr. ABERCROMBIE. Secretary Young, do you agree or disagree with all of GAO’s 

findings and recommendations contained in their protest decision? Why or why not? 

Secretary YOUNG. We have fully accepted the GAO’s findings and recommendations and we are taking the necessary steps to fully implement those findings and 

recommendations. 

Mr. ABERCROMBIE. Secretary Young, given the scrutiny and diligence that the Air 

Force states they used to select the platform for KC–(X) and the subsequent GAO 

findings that resulted during the protest review, what in your opinion needs to be 

corrected within the Air Force acquisition system and can it be corrected in a timely 

manner? 

Secretary YOUNG. Air Force acquisition professionals need to ensure the Request 

for Proposal (RFP) requirements are clearly stated and that the evaluation criteria 

are clearly laid out in the RFP. They also need to ensure the evaluation is consistent with the RFP evaluation criteria. It is essential that well experienced contracting, technical and legal personnel are involved throughout the major system 
181 

competitions. I also think the Air Force, and the rest of the Defense Department, 

will need to exercise greater care and discretion in specifying requirements. I have 

already taken steps to ensure that is the case with regard to the KC–X competition. 

For many DOD programs, the number of requirements (hundreds) and the length 

of requirements documents (hundreds of pages) has become excessive. 

Mr. ABERCROMBIE. Secretary Young, what metrics and evaluation factors will you 

use to determine whether or not the Air Force will regain programmatic control of 

the KC–(X) program after your source-selection decision? 

Secretary YOUNG. What has changed since GAO’s sustainment of portions of the 

protest is the elevation of the Source Selection Authority (SSA) to OSD. In addition, 

a new Source Selection Advisory Council has been identified to assist in source selection. Programmatic and execution authority of the KC–(X) program has not 

changed and remains with the Air Force. As an Acquisition Category (ACAT) - 1D 

program, OSD will serve as the Milestone Decision Authority. In that role, OSD will 

continue to chair Defense Acquisition Boards and program status reviews to continually assess progress. Therefore, following the source-selection, the KC–(X) program 

will receive the same level of oversight as our other ACAT - 1D programs. 

Mr. ABERCROMBIE. Secretary Young, how will you ensure that the future sourceselection processes for Air Force major acquisition programs are in accordance with 

established acquisition policies/procedures and that proposals are evaluated in accordance with requests for proposals? 

Secretary YOUNG. I have directed that the Director of Defense Procurement ensure that a complete review of Air Force policies/procedures takes place and that 

those policies/procedures are in accordance with established acquisition policies/procedures. I have directed that the Director of Defense Procurement issue policy guidance institutionalizing the process of independent reviews of major weapon system 

competitions to ensure that evaluation criteria are reasonable and are adhered to. 

Further, we are using this opportunity to review all Service and Agency source selection procedures to identify differences and best practices. The Department will 

seek greater standardization around a common set of best practice procedures as we 

execute future competitive procurements. 

Mr. ABERCROMBIE. Secretary Young, as the senior acquisition official for DOD, 

what internal mechanisms do you have in place to incorporate acquisition ‘‘lessons 

learned’’ or recommendations that result from outside agency reviews and studies 

of the DOD acquisition system? Can you provide recent examples of changes that 

DOD has incorporated from ‘‘outside experts’’ and what metrics are you using to 

evaluate the changes? 

Secretary YOUNG. As the senior acquisition executive for DOD, I have several internal mechanisms to incorporate acquisition ‘‘lessons learned’’ or recommendations 

that result from outside agency reviews and studies of the DOD acquisition system. 

I have a strong personal interest in this area and have taken specific actions to ensure we learn from our mistakes as well as our successes. First, I would mention 

the guidance that I incorporate with decisions on defense acquisition programs. A 

good example is the implementation of innovative solutions for specific system components, proven through the testing process. In the Mine Resistant Ambush Protected (MRAP) vehicle program, this played a key role enabling future vehicle survivability and performance improvements. In this example, testing demonstrated a 

need to revise our requirement for vehicle gun ports. We shared this information 

among all vendors, and changes were immediately made. The MRAP Joint Program 

Office (JPO) encouraged the vehicle contractors to share information on lessons 

learned and technology enhancements. We made every effort to leverage commercial 

vehicle technologies and determined the program would, to the extent consistent 

with meeting Warfighter needs, procure MRAP vehicles with only the technical data 

and computer software license rights absolutely necessary to satisfy our requirement to procure the vehicles rapidly and in quantity. From the first pre-solicitation 

MRAP conference, the leadership of the MRAP program emphasized to all offerors, 

government offices, and supporting organizations that sharing of best practices is 

both expected and encouraged. There are also many instances where Government 

Accountability Office (GAO) recommendations were implemented by the Department. One example, GAO report 07–675R, ‘‘Defense Transportation Coordination 

Initiative (DTCI),’’ illustrated how DOD took numerous actions to incorporate lessons learned from the prototype program in its planning for DTCI. Specifically, GAO 

identified 36 lessons learned including successes and problems from the prototype, 

and determined that DOD had taken actions that were responsive to each of these. 

As part of my Strategic Goals Implementation Plan, Strategic Thrust 3, we established a Defense Acquisition University (DAU) Living Library to host a collection 

of video presentations of program managers sharing lessons learned with the acquisition workforce. In Fiscal Year 2008, we set a goal to populate the library with 10 
182 

interviews and 20 lessons documents by June 2008. We exceeded the goal with examples that include: ‘‘JSF Lessons Learned from the PEO,’’ RADM Enewold, 

NAVAIR; ‘‘Uniqueness of Shipbuilding Acquisition Process,’’ RADM (ret) Hamilton, 

PEO for Ships; ‘‘Implementing Lean Six Sigma,’’ Michael Joyce, Lockheed-Martin; 

and ‘‘Structuring Programs for Success,’’ Major General Riemer, PEO F–22. Numerous lessons documents are also available at the web site (www.dau.mil). My weekly 

e-mail notes to our Component Acquisition Executives, Program Executive Officers 

and major program managers provide leadership guidance on procedures, processes, 

behaviors and sharing of lessons learned with the acquisition workforce. Feedback 

indicates the workforce is vigilantly tuned into the weekly notes as they are widely 

considered a powerful leadership message directly from the Defense Acquisition Executive. While these are just several highlights, the Department continues to emphasize sharing of lessons learned and partnerships through technical performance 

reviews, information exchange meetings and various outreach and communications 

media such as WebCasts, and conferences. We also host the DOD Acquisition Best 

Practices Clearinghouse (BPCh), which facilitates the selection and implementation 

of systems engineering and software acquisition practices appropriate to the needs 

of individual acquisition programs. 

Mr. ABERCROMBIE. Secretary Young, are there any statutory barriers preventing 

DOD from regaining the required acquisition expertise to successfully perform a 

source-selection? 

Secretary YOUNG. Generally, no. Specifically, there are, the Congressional caps of 

management headquarters personnel, the inflexibility of hiring processes, the limited flexibility of the budget process, and constraints on salaries make timely hiring 

of highly qualified acquisition expertise extremely difficult if not impossible. 

Mr. ABERCROMBIE. Secretary Young, do you believe it would be beneficial for GAO 

to be involved in DOD’s source-selection processes prior to contract award to ensure 

objectivity and process adherence is followed? If so, should it only be for Major Defense Acquisition Programs, or all DOD acquisition programs? If not, why not? 

Secretary YOUNG. The Government Accountability Office (GAO) absolutely should 

not be involved in the source selection process. GAO needs to be impartial in the 

protest process and having them engaged in the actual source selection will make 

it extremely difficult for the GAO to be independent and impartial when hearing 

protests. Further, the issue in most cases is not process adherence but flaws in establishment of the process, flaws with varying degrees of importance. GAO takes an 

extremely literal view of process adherence without regard to the importance and 

likely impact or relevance of flaws. Under this construct, given the complex nature 

of defense procurements and the propensity of industry to protest, there is a great 

risk that the Defense Department will lose significant time and money on procurements in the future. 

Mr. ABERCROMBIE. Secretary Young, the Air Force requested approximately 

$832.0 million for the KC–(X) program in the fiscal year 2009 budget request. Do 

you anticipate a reduced funding requirement for fiscal year 2009? If so, what is 

your estimate? 

Secretary YOUNG. We do not anticipate a reduced funding requirement for fiscal 

year 2009. In the 2009 budget request, the Department requested $894.5M for the 

KC–X program. This requirement remains valid based on contract award in late December 2008. The funding provided in the amended RFP will be based on full support of this budget request. 

Mr. ABERCROMBIE. Secretary Young, as a previous source-selection authority that 

has gone through GAO protest proceedings and hearings, what in your opinion 

would you change about the way GAO conducts the protest and hearing process? 

Would you consider it fair, equitable, and productive for the agency to have an opportunity to cross-examine or call as witnesses representatives from each competitor 

involved in the source-selection protest? 

Secretary YOUNG. The Government Accountability Office (GAO) adjudicates the 

protest issues brought forward by the protesting offeror. Generally, a protest addresses an issue where the protestor believes the DOD did not follow the required 

Request for Proposal (RFP) evaluation processes. If the protestor has information 

appropriate to the issue under protest, it should be made available during the GAO 

protest process. I do believe that, depending on the nature of the protest issue, it 

may be appropriate for representatives to be witnesses at the GAO hearing. 

Mr. ABERCROMBIE. Secretary Young, what is the Department’s record in being 

able to estimate the life cycle—years in inventory—of various major programs of 

record? 

Secretary YOUNG. To estimate the life cycle of a major program, the Department 

makes assumptions about certain aspects of a program, using engineering studies 

and a variety of factors such as the anticipated operational concepts, expected usage 
183 

rates, etc., which are used to inform estimates at program decision points. Other 

factors such as in-service modifications, actual usage, maintenance strategies, and 

upgrades also affect the life cycle after program initiation. We do not retroactively 

go back and make detailed comparisons of how all these factors played out over the 

life cycle of the systems, and any estimate we would produce would be specific to 

the weapons systems we would sample. In my experience, we frequently use systems in manners different than originally postulated, ensuring that the true life 

cycle costs are different. Further, I have seen a number of programs promise significant life cycle savings through hardware design, technology or new maintenance 

practices. Again, these savings are not always realized for a variety of reasons. 

These realities about estimation of lifecycle costs suggest to me that DOD should 

not overly weigh life cycle costs in program decisions and program competitions. 

Mr. ABERCROMBIE. Secretary Young, what is the Department’s record in being 

able to estimate the life cycle costs (LCC) of various major programs of record? 

Secretary YOUNG. To estimate life cycle costs, the Department makes assumptions 

about certain aspects of a program, using engineering studies and a variety of factors such as the anticipated operational concepts, expected usage rates, etc., which 

are used to inform estimates at program decision points. Other factors such as inservice modifications, actual usage, maintenance strategies, and upgrades also affect 

the life cycle after program initiation. We do not retroactively go back and make 

detailed comparisons of how all these factors played out over the life cycle of the 

systems, and any estimate we would produce would be specific to the weapons systems we would sample. 

I believe a review of the record would reveal that DOD makes reasonable, informed projections of life cycle costs and frequently finds that the projections, assumptions and promised results all change. 

Mr. ABERCROMBIE. Secretary Young, is it of value and how much value to include 

LCC as a discriminator in source selections for major acquisition programs? 

Secretary YOUNG. In general, Government ownership Life Cycle Costing (LCC) 

should be included as a technical factor in the evaluation process. LCC should not 

be a cost/price factor because of the uncertainty associated with estimating costs out 

for 20–40 years which is typically the range of service life for our systems. In my 

opinion, Life Cycle cost certainly should not be an equal factor to the development 

and acquisition cost. While Operation and Support (O&S) cost represent a significant portion of the life cycle costs, these costs should not be over weighted in this 

or other source selections for several reasons. First, it is impossible to predict life 

cycle costs over 15–40 with accuracy. Second, all systems have significant life cycle 

costs—it is only the relative difference which is of interest, and this relative difference has a high degree of uncertainty. Third, most DOD programs have historically optimistically underestimated life cycle costs. Finally, DOD frequently uses 

platforms in very different ways than originally planned, significantly altering the 

life cycle costs. For these and other reasons, I believe it is a disservice to the taxpayer to give substantial weight to O&S cost in a source selection. O&S cost should 

be considered, but generally not on an equal basis with the development and acquisition costs. 

Mr. ABERCROMBIE. Secretary Young, is it not better practice to provide a range 

of most probable life cycle costs estimates, plus or minus 10 or twenty percent of 

the best estimate of LCC, to preclude inferring greater fidelity in LCC than experience or cost estimating tools allow? 

Secretary YOUNG. I believe Government Ownership Life Cycle Costing (LCC) estimates are just that; estimates, especially since we generally project the costs out 

20 to 40 or more years. I believe LCC should be done in discounted constant dollars. 

It is appropriate for the estimators to discuss the confidence they have in their estimates and use a range where appropriate. 

Mr. ABERCROMBIE. Secretary Young, please provide the Department’s views of 

how the source selection protest process could be changed to significantly reduce the 

extensive delays between events, yet remain fair to all parties. 

Secretary YOUNG. The Government Accountability Office (GAO) protest process 

has been developed over time. There is an ‘‘express option’’ that results in a GAO 

finding within 65 days. To my knowledge, the GAO has always honored the Department’s requests to use the express option. Whether or not the GAO can further 

streamline the process is a question that would be more appropriate for GAO to answer. 

Mr. ABERCROMBIE. Secretary Young, please provide the amount reimbursed by the 

Department to Boeing for its costs associated with its tanker contract award protest. 

Secretary YOUNG. The Air Force estimates that it will reach an agreement with 

Boeing on legal fees near the end of calendar year 2008. We will then inform Congress. 
184 

QUESTIONS SUBMITTED BY MR. DICKS 

Mr. DICKS. Under Secretary Young testified to the Air and Land Forces Subcommittee that DOD ‘‘will conduct a new source selection.’’ Does DOD agree that 

a future source selection process for the KC–X Tanker will be a totally new process 

that is free from information and conclusions that were part of the previous source 

selection? If not, why not? 

Secretary YOUNG. The current solicitation will be amended with appropriate 

changes taking into account the Government Accountability Office (GAO) findings 

and recommendations and to allow the Department to make a new source selection. 

The offerors will be able to make an entirely new proposal or update the proposal 

they previously submitted. The Source Selection official and the Source Selection 

Advisory Committee will be staffed with an entirely new set of individuals. The 

Source Selection Evaluation Team factor or subfactor leads who were involved in 

sustained GAO findings are also being replaced. 

Mr. DICKS. Under Secretary Young testified to the Air and Land Forces Subcommittee that DOD ‘‘will conduct a new source selection.’’ What measures will be 

taken to ensure that a future source selection evaluation process is totally new and 

free from ‘‘carry-over’’ effects of the previous evaluation? Will all evaluation data, 

notes, correspondence and records from the previous source selection process be removed and sequestered so that they are not accessible to personnel at all levels of 

a new source selection process? 

Secretary YOUNG. The Department intends to amend the Request for Proposal 

(RFP), as appropriate, request revised proposals, engage in negotiations to resolve 

any issues found as a result of the evaluation of revised proposals, and conduct a 

new source selection on the basis of those revised proposals. In areas where the 

offerors make no changes, the prior evaluation materials will be available for use 

by the Source Selection Evaluation Team (SSET). In those areas involving sustained 

Government Accountability Office (GAO) findings, if the offerors updated proposal 

does not resolve the issue to the satisfaction of the Department, then negotiations 

will be conducted. The technical evaluation of proposals is a technical evaluation of 

facts and data. Despite representations to the contrary, these technical evaluations 

are not subject to ‘‘carryover’’ effects. 

Mr. DICKS. Under Secretary Young testified to the Air and Land Forces Subcommittee that DOD ‘‘will conduct a new source selection.’’ What guidance will the 

SSET and the SSAC be given with respect to using or ignoring past evaluation information, materials and conclusions? 

Secretary YOUNG. Offerors will be asked to update their proposals. The Source Selection Evaluation Team (SSET) will reevaluate the complete updated proposal and 

provide their findings to the Source Selection Advisory Council (SSAC) and Source 

Selection Authority (SSA). The SSET will be permitted to utilize previous evaluation 

materials and analyses if an Offeror’s proposal remains unchanged in the area being 

evaluated. The new SSAC, since it is an entirely new set of individuals, will do a 

new comparative analysis of the offers and make an award recommendation to the 

SSA. 

Mr. DICKS. Under Secretary Young testified to the Air and Land Forces Subcommittee that DOD ‘‘will conduct a new source selection.’’ Does DOD agree that 

it is a leadership imperative to give extra attention to ensuring that a new source 

selection be conducted in a manner that is free of any ‘‘carry-over’’ from the previous 

evaluation and bias of the existing situation? 

Secretary YOUNG. Yes. The Department assigned a new Source Selection Authority (SSA) and a new Source Selection Advisory Council (SSAC) with no members 

from the prior SSAC being included. Further, the Department assigned advisors to 

both the SSA and the SSAC to ensure the process is conducted in accordance with 

the Federal Acquisition Regulation/DOD Federal Acquisition Regulations (FAR/ 

DFARS) and the Request for Proposal (RFP). A peer review process has been established to review the source selection process at key points and provide their findings 

to the SSA. However, in some cases where offeror proposals haven’t changed, the 

Source Selection Evaluation Team (SSET) will be allowed to utilize the relevant 

evaluations and analysis previously performed to support the SSET evaluation. 

Mr. DICKS. Under Secretary Young testified to the Air and Land Forces Subcommittee that DOD ‘‘will conduct a new source selection.’’ The previous solicitation 

process entailed a period of 9 months from time of release of the Request for Information (RFI) and the release of the final Request for Proposals (RFP). The time 

from initial draft RFP to final RFP was 4 months. If the future amended KC–X 

Tanker RFP leads either industry bidder to conclude that it must offer a substantially different solution and proposal, will DOD allow sufficient time for the bidder 

to develop the new proposal if industry requests additional time? 
185 

Secretary YOUNG. It is important to note that the requirements will not change 

in the revised RFP. Indeed the requirements to be used were validated in 2005 and 

have been consistently used in the tanker acquisition process. Thus, it is a matter 

of fact that all bidders have literally had years to understand DOD requirements 

and develop an appropriate, competitive proposal. Nonetheless, the Department will 

allow sufficient time to the offerors. If a legitimate basis for additional time is made 

by one or both of the offerors, we will give that request careful consideration recognizing that we must be fair to both offerors. 

Mr. DICKS. The GAO decision of the Boeing protest to the KC–X Tanker source 

selection concludes that the Air Force did not properly evaluate the relative value 

of the two proposals as it considered the many requirements that they offered to 

satisfy. In summing up this point, GAO concluded that ‘‘our review of the record 

indicates that & the Air Force failed to evaluate proposals in accordance with the 

RFP’s evaluation criteria. That is, the record evidences that the Air Force failed to 

assess the relative merits of the offerors’ proposals based upon the importance assigned to the various SRD requirements by the RFP or to account for the fact that 

Boeing proposed to satisfy far more SRD requirements than did Northrop Grumman.’’ (page 33) The RFP reflects requirements that have been established in the 

Capability Development Document, and the prior ‘‘RFP provided that KPP requirements were more important than KSA requirements, which were in turn more important than non-KPP/KSA requirements.’’ Will a future RFP and source selection 

evaluation maintain the same weighting valuation of all requirements in which KPP 

requirements are more important than KSA requirements, which are more important than non-KPP/KSA requirements? 

Secretary YOUNG. Yes. 

Mr. DICKS. The GAO decision of the Boeing protest to the KC–X Tanker source 

selection concludes that the Air Force did not properly evaluate the relative value 

of the two proposals as it considered the many requirements that they offered to 

satisfy. In summing up this point, GAO concluded that ‘‘our review of the record 

indicates that & the Air Force failed to evaluate proposals in accordance with the 

RFP’s evaluation criteria. That is, the record evidences that the Air Force failed to 

assess the relative merits of the offerors’ proposals based upon the importance assigned to the various SRD requirements by the RFP or to account for the fact that 

Boeing proposed to satisfy far more SRD requirements than did Northrop Grumman.’’ (page 33) Will a follow-on source selection evaluation process document the 

use of those weighted requirements at all stages of the source selection, including 

the SSAC and SSA? 

Secretary YOUNG. We have clearly articulated the relative importance of the evaluation factors, sub-factors, elements and sub-elements to both Offerors. We will document the use of those weighted requirements at all stages of the source selection. 

Mr. DICKS. In the prior source selection, the System Requirements Document 

(SRD) for the KC–X Tanker is clear that ‘‘the Primary mission of the KC–X is to 

provide worldwide, day/night, adverse weather aerial refueling (AR) on the same 

sortie to receiver capable United States, allied and coalition military aircraft.’’ That 

SRD established the requirement for refueling in paragraph 3.2.1.1.1 (Fuel Offload 

and Radius Range (KPP #2)), which defined a threshold level of fuel offload vs. radius range. The objective for this was to be ‘‘capable of exceeding the fuel offload 

versus unrefueled radius range’’ threshold. In his July 10th testimony to the Air and 

Land Forces Subcommittee, Under Secretary Young testified that the ‘‘capability 

document record indicates that the objective is greater than the threshold and that 

there is added value, I quote, ‘that—there is added value to the war fighter for additional offload.’ ’’ Other than paragraph 3.2.1.1.1 of the previous SRD, where else in 

the RFP documents was it clear to bidders that added value would be given for additional offload capacity? 

Secretary YOUNG. I referred to the CDD which is the Capability Development 

Document. That document is clear that the Warfighter’s requirement was and is 

that there is added value to providing fuel above the threshold amount. We have 

modified section 3.2.1.1.1 to reflect that exact intent. 

Mr. DICKS. In the prior source selection, the System Requirements Document 

(SRD) for the KC–X Tanker is clear that ‘‘the Primary mission of the KC–X is to 

provide worldwide, day/night, adverse weather aerial refueling (AR) on the same 

sortie to receiver capable United States, allied and coalition military aircraft.’’ That 

SRD established the requirement for refueling in paragraph 3.2.1.1.1 (Fuel Offload 

and Radius Range (KPP #2)), which defined a threshold level of fuel offload vs. radius range. The objective for this was to be ‘‘capable of exceeding the fuel offload 

versus unrefueled radius range’’ threshold. In his July 10th testimony to the Air and 

Land Forces Subcommittee, Under Secretary Young testified that the ‘‘capability 

document record indicates that the objective is greater than the threshold and that 
186 

there is added value, I quote, ‘that—there is added value to the war fighter for additional offload.’ ’’ In a future RFP, will there be an explicit numerically bounded objective level? 

Secretary YOUNG. No. 

Mr. DICKS. In the prior source selection, the System Requirements Document 

(SRD) for the KC–X Tanker is clear that ‘‘the Primary mission of the KC–X is to 

provide worldwide, day/night, adverse weather aerial refueling (AR) on the same 

sortie to receiver capable United States, allied and coalition military aircraft.’’ That 

SRD established the requirement for refueling in paragraph 3.2.1.1.1 (Fuel Offload 

and Radius Range (KPP #2)), which defined a threshold level of fuel offload vs. radius range. The objective for this was to be ‘‘capable of exceeding the fuel offload 

versus unrefueled radius range’’ threshold. Under Secretary Young testified to the 

Air and Land Forces Subcommittee that ‘‘While the objective is for more fuel, it 

should be bounded and I think will be bounded by cost.’’ Does DOD agree that the 

objective for fuel offload also should be bounded by other significant factors such as 

the major operational negative impacts resulting from larger aircraft being able to 

operate out of fewer airfields and the congestion that large aircraft create on the 

ground at airfields? 

Secretary YOUNG. No. The objective will only be bounded by the amount that an 

Offeror proposes above threshold. 

Mr. DICKS. Under Secretary Young testified to the Air and Land Forces Subcommittee that ‘‘While the objective is for more fuel, it should be bounded and I 

think will be bounded by cost.’’ Does DOD agree that the objective for fuel offload 

also should be bounded by other significant factors such as the major operational 

negative impacts resulting from larger aircraft being able to operate out of fewer 

airfields and the congestion that large aircraft create on the ground at airfields? In 

the context of statements that there is great value in additional fuel offload capacity, respond to the following: 

What are the average fuel offload per sortie figures for the KC–135 fleet and the 

KC–10 fleet? What are the average offload per sortie figures for the KC–135 fleet 

and for the KC–10 fleet in recent combat theater environments? If, as has been reported, the average combat scenario fuel offload is 60,000-65,000 pounds of fuel per 

sortie, what is the basis for putting great emphasis on much larger fuel offload capacity? Has either DOD or the Air Force established and documented a changed 

operational construct for aerial refueling such that it is clear that additional refueling capacity will be used? 

Secretary YOUNG. In recent combat theater environments, the average scheduled 

offloads for the KC–135 and KC–10 in 2007 were 62,000 and 84,000 pounds respectively. For January through March of 2008 the average scheduled offload for the 

KC–135 was 68,000 pounds while for the KC–10, it was 105,000 pounds. 

Smaller offloads may be reflected if training sorties and other peace time activities are included. Figure 1 below reflects inclusion of all sorties flown by KC–10 and 

KC–135 aircraft from 1 October 2006 through 30 Sep 2007. 

Figure 1. Average fuel offloaded by AMC tankers FY2007. Fuel offloaded in pounds, 

one gallon JP–8 equals approximately 6.7 pounds. Source: 618 TACC/XOND Data 

Division 

The requirement does not put greater emphasis on much larger fuel offload capacity. The requirement recognizes the benefit of increased fuel offload capacity in effectively accomplishing a range of warfighting scenarios. The requirement is defined 

by analyzing and integrating the tanker capacity required to meet various DOD 

warfighting plans. The average peacetime fuel offload does not define the 

warfighting requirement and purchasing a tanker which only meets peacetime demand would result in a tanker fleet that was totally inadequate to meet any DOD 

war plans. 
187 

The need for additional refueling capacity is not based on a changed operational 

construct. These capabilities are derived from validated operational requirements 

resident in the current construct that has for years defined the number of tanker 

and airlift platforms necessary to meet the National Military Strategy. The last Mobility Capabilities Study provided a range of aircraft numbers that could meet operational objectives based on the acceptance of different levels of risk. When combined 

together, fiscal realities and acceptable risk have resulted in the acquisition and 

sustainment of a fleet of mobility aircraft at or near the lower end of that scale. 

As we recapitalize aging aircraft in the mobility fleet, the primary objective is to 

maintain existing air refueling and airlift capabilities along with the associated 

level of risk. A secondary objective is to expand capabilities in refueling capacity 

when fiscally and operationally feasible; thus reducing overall risk and increasing 

the ability/certainty to fully meet all objectives (wartime and peace time) in an effective and efficient manner. 

Mr. DICKS. As a percentage of available capacity, what is the average cargo transport that has been performed by the KC–135 fleet and the KC–10 fleet? 

Secretary YOUNG. Air Mobility Command (AMC) does not track percentage of 

available capacity in relationship to average cargo movements on the tanker fleet 

as a metric. However, overall cargo movement is tracked and is provided below for 

fiscal year 2007. 

Figure 1: Table displaying the percentage of refueling, airlift and dual role tanker 

sorties. Source of data: 618 TACC/XOND Data Division. 

Mr. DICKS. What has been the average cargo transport performed by the KC–135 

fleet and the KC–10 fleet in recent combat theater environments? 

Secretary YOUNG. Figure 1 displays fiscal year 2007 collected data with regard to 

cargo movement on GWOT tanker missions. 

Figure 1: Table displaying the percentage of refueling, airlift and dual role tanker 

sorties. Source of data: 618 TACC/XOND Data Division. 

Mr. DICKS. Has the DOD/Air Force established and documented a changed operational construct for how refueling tankers will be used such that a significantly 

larger cargo capacity is anticipated? If so, what is it? 

Secretary YOUNG. The DOD/Air Force has not changed the operational construct 

for employing air refueling assets. Mobility requirements have always remained 

grounded in the National Military Strategy, providing a range of tanker and airlift 

capability that can meet operational objectives based on the acceptance of different 

levels of risk. When combined together, fiscal realities and acceptable risk have resulted in the acquisition and sustainment of a fleet of mobility aircraft at or near 

the lower end of that scale. As we recapitalize aging aircraft in the mobility fleet, 

the primary objective is to maintain existing capabilities along with the associated 

level of risk. A secondary objective is to expand capabilities when fiscally and oper-
188 

ationally feasible; thus reducing overall risk and increasing the ability/certainty to 

fully meet all objectives (wartime and peace time) in an effective and efficient manner. 

Mr. DICKS. As a percentage of available capacity, what is the average passenger 

transport that has been performed by the KC–135 fleet and the KC–10 fleet? 

Secretary YOUNG. Air Mobility Command (AMC) does not track percentage of 

available capacity in relationship to average passenger movements on the tanker 

fleet as a metric. As specified by current mission planning guidance (AFPAM 10– 

1403), AMC uses planning factors of 68 passengers/23 pallet positions for the KC– 

10 and 46 passengers/6 pallet positions for the KC–135. 

A good example of mission data that is tracked and useful in response to this 

question is in figure 1. Figure 1 shows fiscal year 2007 data with regard to cargo 

movement on AMC tanker missions. This data is driven by mission requirements 

versus aircraft capacities. 

Figure 1: Table displaying the percentage of passengers (pax) on refueling, airlift 

and dual role tanker sorties. Source of data: 618 TACC/XOND Data Division. 

Mr. DICKS. What has been the average passenger transport performed by the KC– 

135 fleet and the KC–10 fleet in recent combat theater environments? 

Secretary YOUNG. Figure 1 displays fiscal year 2007 data with regard to passenger movement on GWOT tanker missions. This data is driven by mission requirements versus aircraft capacities. 

Figure 1: Table displaying the percentage of refueling, airlift and dual role tanker 

sorties. Source of data: 618 TACC/XOND Data Division. 

Mr. DICKS. Has the DOD/Air Force established and documented a changed operational construct for how refueling tankers will be used such that a significantly 

larger passenger capacity is anticipated? If so, what is it? 

Secretary YOUNG. The DOD has not changed its construct for passenger capacity 

within its air refueling fleet. The inherent capability for self deployment and opportune cargo provides the warfighter flexibility in meeting today’s and tomorrow’s 

fight. Maintaining this capability is one of the DOD’s primary considerations while 

expanding this capability is desired, if fiscally and operationally feasible. 

Mr. DICKS. Under Secretary Young testified to the Air and Land Forces Subcommittee that there will be a new Source Selection Authority (SSA) and Source Selection Advisory Council (SSAC) for a future KC–X Tanker source selection process. 

Will the membership of the Source Selection Evaluation Team (SSET) be entirely 

different from the previous SSET? 

Secretary YOUNG. No. The SSET factor and sub factor leads who were involved 

in a sustained Government Accountability Office (GAO) finding are being replaced. 
189 

Some 150 individuals were involved in the SSET evaluation. Much of the prior evaluation was not a subject of the protest. 

Mr. DICKS. Under Secretary Young testified to the Air and Land Forces Subcommittee that there will be a new Source Selection Authority (SSA) and Source Selection Advisory Council (SSAC) for a future KC–X Tanker source selection process. 

Who will determine the membership of the SSET for the re-competition of the KC– 

X program? 

Secretary YOUNG. As the Under Secretary of Defense for Acquisitions, Technology 

and Logistics, I will approve the SSET membership. 

Mr. DICKS. Under Secretary Young testified to the Air and Land Forces Subcommittee that there will be a new Source Selection Authority (SSA) and Source Selection Advisory Council (SSAC) for a future KC–X Tanker source selection process. 

The GAO decision on the KC–X Tanker protest highlighted gaps in knowledge and 

expertise of some key personnel on the SSET (pages 44 and 63 of the GAO report). 

In staffing a future SSET, what steps will DOD take to ensure that it is staffed with 

personnel with the necessary background, expertise and judgment? 

Secretary YOUNG. Source Selection Evaluation Team (SSET) membership is being 

reviewed to ensure the personnel have the appropriate background, expertise and 

judgment. Where appropriate, new members, including functional area leads, will 

be appointed. 

Mr. DICKS. Under Secretary Young testified to the Air and Land Forces Subcommittee that there will be a new Source Selection Authority (SSA) and Source Selection Advisory Council (SSAC) for a future KC–X Tanker source selection process. 

Will the membership of the SSAC be entirely different from the previous SSAC? 

Secretary YOUNG. Yes. 

Mr. DICKS. Under Secretary Young testified to the Air and Land Forces Subcommittee that there will be a new Source Selection Authority (SSA) and Source Selection Advisory Council (SSAC) for a future KC–X Tanker source selection process. 

Who will determine the membership of the SSAC for the re-competition of the KC– 

X program? 

Secretary YOUNG. As the Under Secretary of Defense for Acquisition, Technology 

and Logistics, I will make recommendations for SSAC membership to the Deputy 

Secretary of Defense. The Deputy Secretary of Defense will appoint the new SSAC 

members. 

Mr. DICKS. Under Secretary Young testified to the Air and Land Forces Subcommittee that there will be a new Source Selection Authority (SSA) and Source Selection Advisory Council (SSAC) for a future KC–X Tanker source selection process. 

Will the SSAC include senior military personnel with operational experience in air 

mobility (refueling and airlift)? 

Secretary YOUNG. Yes. 

Mr. DICKS. In testimony to the Air and Land Forces Subcommittee, Under Secretary Young stated that DOD will ‘‘have an independent team look at how we estimate the life-cycle cost’’ in the source selection. Does Secretary Young’s statement 

mean that an independent team will develop a life-cycle cost estimate? Or does the 

statement mean that an independent team will review the approach that a DOD 

team takes? 

Secretary YOUNG. An independent team will review the methodology that the 

Source Selection Evaluation Team (SSET) uses. They will also review whether the 

SSET follows that methodology in their evaluation. 

Mr. DICKS. In testimony to the Air and Land Forces Subcommittee, Under Secretary Young stated that DOD will ‘‘have an independent team look at how we estimate the life-cycle cost’’ in the source selection. Will the independent cost analysis 

team be from an organization outside of DOD? How will the team be selected? 

Secretary YOUNG. A Federally Funded Research & Development Center (FFRDC) 

will review the work of the Source Selection Evaluation Team (SSET) to ensure the 

evaluation was done in accordance with the Request for Proposal (RFP) requirements. The FFRDC was selected on the basis of its experience and the fact that it 

has no relationship with either of the offerors. 

Mr. DICKS. Under Secretary Young’s testimony to the Air and Land Forces Subcommittee included the statement that ‘‘Evaluating cost as one giant bundle, I 

think, is awkward. I think we should assign some value to the known cost of developing and buying the aircraft, but we also will likely make an adjustment and make 

sure we properly evaluate the life cycle costs, but look at those two in terms of our 

relative confidence in the two numbers.’’ Under Secretary Young’s comments clearly 

show intent to more strongly weight near-term program costs over longer term operation and support (O&S) costs. Historical data shows that O&S costs for Air Force 

programs represent approximately 70% of total ownership costs (GAO letter report 

to Sen. Inhofe, August 2000). Historical data also shows that development costs are 
190 

not well known as evidenced in GAO’s July 2008 report (GAO–08–619) that found 

that ‘‘eight of the 20 programs [studied] have reported development cost growth of 

more than 35 percent, resulting in the need for nearly $19 billion in additional funding.’’ Since development costs and O&S costs both have significant uncertainty, but 

O&S costs represent the high burden on the taxpayer, does DOD agree that O&S 

costs should be given very substantial weight in evaluating total life-cycle costs of 

proposals? If not, why not? 

Secretary YOUNG. O&S costs will be evaluated as part of the Most Probable Government Ownership Life Cycle Costs (MPGOLCC). We will be estimating these costs 

over a 40 year period. As with any estimate that is projected out beyond 40 years, 

there will be a high degree of uncertainty and approximation associated with this 

MPGOLCC estimate. 

On the other hand, we are confident that we can more accurately evaluate the 

Contractor’s proposed Acquisition costs. The government is seeking to buy a commercial derivative product and this effort contains significantly less risk than other 

weapon systems development efforts which are developing new capability and relying on unproven technology. Hence, acquisition will have more weight than Government Ownership Costs in the Cost/Price factor. 

While Operation and Support (O&S) cost represent a significant portion of the life 

cycle costs, these costs should not be over weighted in this or other source selections 

for several reasons. First, it is impossible to predict life cycle costs over 15–40 with 

accuracy. Second, all systems have significant life cycle costs—it is only the relative 

difference which is of interest, and this relative difference has a high degree of uncertainty. Third, most DOD programs have historically optimistically underestimated life cycle costs. Finally, DOD frequently uses platforms in very different ways 

than originally planned, significantly altering the life cycle costs. For these and 

other reasons, I believe it is a disservice to the taxpayer to give substantial weight 

to O&S cost in a source selection. O&S cost should be considered, but generally not 

on an equal basis with the development and acquisition costs. 

Mr. DICKS. At the Air and Land Forces Subcommittee hearing, Congressman 

Norm Dicks submitted for the record a fuel consumption chart published by Conklin 

& de Decker Aviation Information. The chart estimates and compares life-cycle fuel 

consumption and fuel costs for the Airbus A–330 commercial aircraft and the Boeing 

767–200 aircraft, based on actual usage. In his testimony at the hearing, Under Secretary Young told Congressman Dicks, ‘‘I disagree with your estimates of the fuel 

burn. We have data, and I have seen the data, I can’t comment on the data in public, but those are not accurate estimates of the fuel burn.’’ 

What is the basis for DOD’s data for fuel consumption? Are DOD’s data based on 

actual usage experience for aircraft? Are they based on bidders’ proposals? Are they 

based on an independent estimate? 

Secretary YOUNG. The offerors provided fuel burn rates for computing life cycle 

costs. The source selection evaluation team did independent estimates of fuel burn 

rates to cross check the offerors’ data. The estimates were based on flight profiles 

that allowed the assessment of average fuel burn rates over a wide range of operating conditions. The cross check demonstrated that both offerors’ proposed fuel 

burn rates were reasonable. therefore the offerors’ burn rates were used in the life 

cycle cost calculations. 

Mr. DICKS. The data that Congressman Dicks submitted for the record is based 

on commercial aircraft. It would be reasonable to expect that a commercial aircraft 

that is modified for use as a tanker would have different fuel consumption, but that 

both competing aircraft would be affected in the same manner and approximately 

to the same extent. Does DOD agree with this? What unit cost for aviation fuel was 

used in the previous life-cycle cost estimation that was used in developing Most 

Probable Life Cycle Cost? What unit cost for aviation fuel will be used as the basis 

for a future life cycle cost calculation in a new source selection evaluation and how 

was the figure derived? 

Secretary YOUNG. The previous evaluation priced fuel at $2.35/gal. It was the established price used across the Department at the time the Request for Proposal 

(RFP) was issued (or time of Final Proposal Revision (FPR)). The current Department price is $4.07/gal. The evaluation will be done using whatever price the Department has in place at time of FPR. 

It is reasonable to assume two commercial aircrafts fuel consumption would be 

affected in the same manner and to reasonably the same extent if both are modified 

to a tanker role in a similar fashion. We note that in the data Congressman Dicks 

submitted for the record, one aircraft is significantly different than the baseline aircraft proposed to the Air Force. As such, it is not reasonable to conclude that the 

results presented in the Congressman Dicks submitted data can be used to draw 

inferences about the KC–X program. Fuel consumption by commercial and commer-
191 

cial-derivative aircraft is very mission profile dependent and generally highly proprietary information. The Defense Department will evaluate all proposed air craft 

using data. 

Mr. DICKS. The GAO decision on the KC–X Tanker protest identified some significant issues concerning the evaluation of military construction costs. Not only were 

there computational errors, but the evaluation also neglected to consider unique 

costs of the specific proposals, and neglected to use representative costs for basing 

at Fairchild AFB from the bidders. Will a future source selection evaluation consider 

the unique MILCON costs of each bidder’s proposal by conducting site surveys after 

receipt of the proposals? Will bidders again be asked to submit estimated cost for 

basing at Fairchild AFB, and will those costs be used in the source selection evaluation? 

Secretary YOUNG. No. 

Mr. DICKS. Will a future source selection evaluation consider construction costs 

that would be incurred at bases around the world in fighting the wartime scenarios 

that are part of the Integrated Fleet Aerial Refueling Assessment? 

Secretary YOUNG. No. 

Mr. DICKS. Personnel costs are a significant portion of the O&S costs for any 

weapon system. How did the Air Force evaluate personnel costs in estimating Most 

Probable Life Cycle Cost (MPLCC) for the previous KC–X source selection? 

Secretary YOUNG. The costs of Air Force, Air National Guard, and Air Force Reserve personnel were based on the number of personnel in the KC–X Manpower Estimate Report (MER) provided by Air Mobility Command and salary rates taken 

from Air Force Instruction (AFI) 65–503. The numbers of Air Force, Air National 

Guard, and Air Force Reserve personnel were multiplied by the appropriate salary 

rates from AFI 65–503 to yield the cost of personnel for KC–X. Identical manpower 

estimates were used for all offerors. 

Mr. DICKS. Personnel costs are a significant portion of the O&S costs for any 

weapon system. Did the cost estimating models account for system-specific or industry-standard differences? For example, is it common to evaluate personnel costs for 

aircraft weapon systems based on the weight of an aircraft or the addition of 

OBOGGS? 

Secretary YOUNG. No. Personnel manning is based on wartime conditions and 

typically do not vary based on peacetime conditions. Adjustments to manning can 

only be made after extensive use of the aircraft in the operational environment. 

Mr. DICKS. Personnel costs are a significant portion of the O&S costs for any 

weapon system. Were personnel costs for organizational- and depot-levels developed 

using current Air Force organizational constructs? If not, did the model assume that 

all 179 aircraft were going to be stationed at one base? 

Secretary YOUNG. Personnel costs were estimated in accordance with Air Force 

personnel methodologies which considered Air Force organizational constructs for 

both organizational and depot level maintenance. 

Mr. DICKS. Maintenance costs are a significant portion of the O&S costs for a 

weapon system. How did the Air Force evaluate maintenance costs in estimating 

Most Probable Life Cycle Cost (MPLCC) for the previous KC–X source selection? 

Secretary YOUNG. The Air Force asked offerors to provide both unscheduled and 

scheduled maintenance costs for KC–X as part of the Request for Proposal (RFP). 

Offeror inputs were evaluated by source selection team members with backgrounds 

in cost, logistics, and depot operations. Based on the source selection team’s analysis, maintenance costs were adjusted as appropriate. Resulting maintenance costs 

were included as part of the MPLCC and offerors were briefed on all adjustments. 

Mr. DICKS. Maintenance costs are a significant portion of the O&S costs for a 

weapon system. Were supply costs considered at the organizational and depot levels? 

Secretary YOUNG. Yes. 

Mr. DICKS. Maintenance costs are a significant portion of the O&S costs for a 

weapon system. Does the cost estimating model used for the KC–X Tanker source 

selection consider the frequency of planned depot visits, i.e., a 6-year depot cycle 

versus an 8-year depot cycle? 

Secretary YOUNG. The Operation and Support (O&S) evaluation will consider the 

frequency of planned depot visits. The original source selection and cost estimates 

considered these factors. 

Mr. DICKS. In performing the KC–X source selection, are relative environmental 

impacts of proposals a part of the evaluation? Will DOD consider the relative contributions to green house gases of the aircraft that are proposed? 

Secretary YOUNG. No. 
192 

QUESTION SUBMITTED BY MR. MILLER AND MR. DICKS 

Mr. MILLER and Mr. DICKS. Did GAO count the total number of issues raised by 

The Boeing Company in the protest, where the Air Force represented that there 

were a total of 110 issues? 

Mr. GORDON. We did not count the total number of issues raised by Boeing in its 

protests, and we have no position on what the ‘‘correct’’ number would be. From our 

review of these pleadings, we identified, after issuance of our decision, 22 main protest issues, many of which had sub-issues. We recognize that different parties can 

count issues, and sub-issues, differently, and counting issues is not germane to our 

protest process. More importantly, as we stated in our decision and in our testimony, we considered all of Boeing’s protest allegations. 

QUESTION SUBMITTED BY MR. BONNER 

Mr. BONNER. Did GAO find that the Air Force had properly calculated that Northrop Grumman’s proposed aircraft could offload more fuel over distance and had 

a better air refueling efficiency than Boeing’s? 

Mr. GORDON. GAO did not make such a finding. 

QUESTIONS SUBMITTED BY MRS. MCMORRIS RODGERS 

Mrs. MCMORRIS RODGERS. Representing eastern Washington which is home to 

Fairchild AFB, one of the Air Force’s largest tanker hubs, I understand first-hand 

the importance of the American Tanker to not only military operations, but humanitarian efforts around the world. I consider myself, and I hope others do too, a strong 

supporter of the Air Force and all the good things the Service does each and every 

day. I know each Airman embodies the core values of Integrity First, Service before 

Self and Excellence In All We Do&..Throughout this entire award process, we’ve 

heard the Air Force boast about making the KC–X contract award an ‘‘open and 

transparent’’ process&that the Air Force wanted to make sure they ‘‘got this one 

right.’’ Although Boeing submitted a laundry list of concerns in their GAO protest, 

I’m surprised by how basic the 7 items the GAO based their decision on seem to 

be, and I quote: The agency did not assess the relative merits of the proposals in 

accordance with the evaluation criteria. The agency violated evaluation provisions 

for giving consideration for exceeding KPP objects when it said it wouldn’t Awarding 

the contract without being able to show that the Northrop Grumman submission 

meets all stated requirements Using ‘‘notional’’ (or hypothetical) reasoning and modeling when calculating Boeing’s life cycle costs and non-recurring engineering 

costs—These seem like basic acquisition concepts—My question is simply WHAT 

HAPPENED? How could these issues have been overlooked? Were the wrong people 

assigned key oversight responsibilities, is proficiency lacking in the acquisition career field, was the process too cumbersome&what? And what needs to be done to 

fix the problems? 

Secretary PAYTON. Your reputation as a strong supporter of the Air Force is well 

known and I appreciate that support for the mission. The Air Force is collecting and 

analyzing lessons learned from the KC–X source selection. We are reviewing every 

step of the process from requirements definition, to RFP development and release, 

to proposal evaluation and documentation of the source selection record, to the Most 

Probable Life Cycle Cost calculations with a focus on personnel, procedures, processes, schedule pressures and complexity levels. These lessons learned will map the 

GAO sustained items with a root cause assessment and resulting recommendations 

for source selection improvements. While it is important to note that the GAO did 

not find any intentional wrong doing or bias on the part of the Air Force, we must 

take adequate time and apply rigor as we discover and institutionalize the KC–X 

lessons learned. We will provide our initial findings to Acting Secretary of the Air 

Force Donley in September. Also in September, we will ask the Center for Naval 

Analysis to initiate an independent review of the KC–X source selection with findings reported out to Acting Secretary Donley in December. I look forward to discussing the findings of our internal review of lessons learned with you as soon as 

they are complete. Again, thank you for your strong support of the Air Force. 

Mrs. MCMORRIS RODGERS. I’ve heard Sectary Gates is considering moving other 

Air Force acquisition programs under OSD oversight. Can you provide a brief summary of those programs? 

Secretary PAYTON. The Air Force is not aware of any programs being considered 

for OSD oversight. 
193 

Mrs. MCMORRIS RODGERS. The GAO report included a recommendation that Boeing be ‘‘reimbursed the reasonable costs of filing and pursuing their protest, including reasonable attorneys’ fees.’’ Do you have an estimate of how much these ‘‘reasonable costs’’ are? 

Secretary PAYTON. The amount of bid protest costs incurred by Boeing is proprietary data and was submitted by Boeing under the GAO protective order, preventing the release of the details publicly. At this time, it is inappropriate for the 

Air Force to comment on what are Boeing’s ‘‘reasonable costs.’’ Pursuant to the GAO 

bid protest rules, 4 C.F.R. § 21.8(f), the Air Force contracting officer will negotiate 

with Boeing to resolve the claim or otherwise issue a decision on the claim. 

Mrs. MCMORRIS RODGERS. If the re-bid process results in Boeing receiving the 

contract award, is the Air Force liable to pay Northrop Grumman a penalty for terminating the contract award? If so, how much? 

Secretary PAYTON. The Northrop Grumman contract contained a standard contract provision from the Federal Acquisition Regulation (‘‘FAR’’) that allowed the Air 

Force to issue a proper stop work order to Northrop Grumman when Boeing filed 

its protest. 48 C.F.R. § 52.233–3, FAR contract clause entitled ‘‘Protest After Award 

(Aug 1996).’’ The Northrop Grumman contract also contains a FAR provision that 

allows the Air Force to terminate the contract for its convenience. 48 C.F.R. 

§ 52.249–6, FAR contract clause entitled Termination (Cost Reimbursement) (May 

2004). This FAR contract provision governs the general termination proceedings and 

establishes costs that are payable by the Air Force to Northrop Grumman upon a 

contract termination. Generally, the costs reimbursable are those incurred for performance of the contract before the effective date of the termination, a portion of 

the contract fee, costs to terminate subcontracts, and reasonable settlement costs of 

the work terminated. The termination costs would not be known until a termination 

decision is made and a settlement is negotiated. 

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