DUBAI, United Arab Emirates — The U.S. Air Force’s leak of Boeing’s proprietary information to competitor Northrop Grumman was not a major factor in the company’s decision to forgo the Ground Based Strategic Deterrent competition, the head of Boeing’s defense business said on Nov. 16.
“Obviously, in any procurement process, you see instances where data is disclosed. Clearly that occurred during the process,” Leanne Caret, president and CEO of Boeing Defense, Space and Security, said during a news conference ahead of the Dubai Airshow. “I don’t want to leave any impression though that that was the sole reason for why we did not bid. It was more to do with the structure of the source selection, and we do believe there are ways to work through that.”
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Boeing announced in July that it would not bid on the GBSD program’s engineering and manufacturing development phase in December due to what the company believes is an unfair advantage held by Northrop Grumman, the sole company left in the running for the contract. The issue, Caret specified in letters sent to Congress this summer, is that Northrop’s acquisition of Orbital ATK — one of only two potential manufacturers of solid rocket motors — could allow Northrop to offer a more competitively-priced proposal.
But Rep. Adam Smith, the Washington-state Democrat who chairs the House Armed Services Committee, revealed last week that the Air Force had accidentally shared Boeing’s proprietary information with Northrop and that the incident caused Boeing not to bid on the program, according to Aviation Week.
While the transfer of proprietary data from one company to its competitor is rare, it has occurred in several high-stakes programs. For example, as Boeing and EADS — now known as Airbus — battled for the KC-X tanker contact in 2010, an Air Force clerical error resulted in the companies receiving proprietary information from each other’s bid.
Although Caret declined to comment on the nature of the breach, an industry source told Defense News that the information shared with Northrop did not raise deep concerns from Boeing leadership that the company would be disadvantaged going forward with the competition.
“This stuff happens,” the source said. “Nobody likes it, whether it’s the acquisition officials or the companies, but it happens. It’s how you deal when it happens.”
However, the source noted that after Boeing was notified that proprietary information had been accidentally sent to Northrop, the Air Force did not immediately share what data had been transferred and what had been done to mitigate the leak.
Over the past four months, Boeing has mounted a concerted effort in the hopes of persuading the Air Force to either make changes to its current GBSD acquisition strategy or to mandate a joint Boeing-Northrop bid that would allow both companies to have work on the program.
“We’ve continued to make certain that we’ve provided opportunities that if they would make those changes, would allow us to bid. It is my deepest hope that we see those changes made because there is nothing more that I would like than to be able to bid on this program,” Caret said.
However, Caret acknowledged that the Air Force has thus far shown little interest in changing its acquisition plan, citing the service’s recent decision to stop funding Boeing’s participation in the risk-reduction portion of the GBSD program.
“I think that gives you a little insight as to where we stand,” she said.
Valerie Insinna is Defense News' air warfare reporter. She previously worked the Navy/congressional beats for Defense Daily, which followed almost three years as a staff writer for National Defense Magazine. Prior to that, she worked as an editorial assistant for the Tokyo Shimbun’s Washington bureau.