Surely it would have been better if there'd been a clause in the tender documents that said "Only companies called Boeing can submit bids"? It would have avoided a lot of wasted time and effort.

What does that have to do with anything... options are always priced using historical figures. And in the US currency has beened weaked consistantly in the last 10 years .. "The sun won't come up tommorow", do you think anyones offering options for that possibility?

Options are always priced based on implied volatility, the current price of the underlying asset and the current interest rate yield curve, and most definitely not on historical figures or on where the underlying asset price might be trending at the moment.Cheers,- jahman.

A 17 year old Airbus was scrapped, because it isn't cost effective to perform a structural heavy check, due to the bonded lap joints. These are throw away airplanes, not ment to last. I worked on C141's that were made in the early 60's, right before they were replaced, and you will never see an airbus that will look that good at that age.

Surely it would have been better if there'd been a clause in the tender documents that said "Only companies called Boeing can submit bids"? It would have avoided a lot of wasted time and effort.

Paradoxically probably yes. But without Airbus participation you could never get absolutely the lowest price from Boeing. But by opening the bidding process to Airbus (to get the best deal) a really paradoxical situation was created - USAF wanted tanker that can operate from 7000 ft runway, that can fit in existing hangars and can refuel MV-22 Ospreys. Airbus doesn't meet those criteria. So to agree to even submit a bid Airbus received waivers for those factors. So here lies the ultimate paradox - you have to compromise some of your essential requirements to get someone else to bid even though you already have a good domestic platform that fully meet all these requirements.

Options are always priced based on implied volatility, the current price of the underlying asset and the current interest rate yield curve, and most definitely not on historical figures or on where the underlying asset price might be trending at the moment.Cheers,- jahman.

Again the interest yeild curve is calculated with historic data... have you even done one?

In the first round of competition they had a complicated formula with many points awarded for this or that but the formula itself was someone's capricious invention. In this last round they simplified the formula and basically reduced everything to the life-cost (which everyone, specially the taxpayer easily understands) provided both products meet war fighting needs. In other words they did away with awarding extra points based on "bells and whistles". I like this approach specially in current situation where really US can't afford to pay for 'bells and whistles'.

I have put together source selection plans for solicitations, and it is not "someone's capricious invention". Obviously there are different approaches to assigning weights to characteristics for determining "best value", and since there is understanding about the basic product that will be offered, it could be tweaked to favor a certain preconceived result. Then there is the additional problem of how the source selection board scores the proposals, both on technical merits and cost. I will be happy if the source selection was conducted in the best possible manner for the Air Force customer, without cheerleading for any particular offeror. scott s..

I will be happy if the source selection was conducted in the best possible manner for the Air Force customer, without cheerleading for any particular offeror.

As this bidding history shows there were two different methods of scoring and they produced different results. Some interpreted the first scoring system as favoring EADS, the second was supposed to be tilted to Boeing (though EADS cheeleaders were assured of the win so they must have perceived that the new scoring system is not titled towards Boeing). As this shows what constitutes "best possible manner" is highly subjective and really undefined. If there was a significant gap (technological/operational/price-point) between both offers then you could argue about the 'best' but since the differences are really tiny the concept of 'best' becomes dubious.

Again the interest yeild curve is calculated with historic data... have you even done one?

No, not at all: The yield curve is calculated based on current repo rates, the current futures curve and current long-term government bond yields. No historic data involved at all. And yes, I do know *exactly* what I'm talking about.This is now way OT, so I will no longer reply to this branch of the original thread.Cheers,- jahman.

A 17 year old Airbus was scrapped, because it isn't cost effective to perform a structural heavy check, due to the bonded lap joints. These are throw away airplanes, not ment to last. I worked on C141's that were made in the early 60's, right before they were replaced, and you will never see an airbus that will look that good at that age.

You bring up an excellent point: It's not just the up-front cost of the aircraft, but also the cost of the mandated inspections and maintenance along the lifespan of the aircraft.Cheers,- jahman.

Hello,Now .. the big question is:Who will make (freeware or payware) the new B-767 tanker model for FS2004 ? :( Regards.Gus.

You bring up an excellent point: It's not just the up-front cost of the aircraft, but also the cost of the mandated inspections and maintenance along the lifespan of the aircraft.

I hope the procurement experts in the USAF and DoD read this thread. I'm sure they've never heard of the concept of whole-life costing.

I hope the procurement experts in the USAF and DoD read this thread. I'm sure they've never heard of the concept of whole-life costing.

Your irony is misspent: The post is for the benefit of other forum participants, not the DoD.Cheers,- jahman.

Your irony is misspent: The post is for the benefit of other forum participants, not the DoD.Cheers,- jahman.

That is indeed true. Judging by their posts I can only hope that some forum participants will benefit - they need it.

No, not at all: The yield curve is calculated based on current repo rates, the current futures curve and current long-term government bond yields. No historic data involved at all. And yes, I do know *exactly* what I'm talking about.This is now way OT, so I will no longer reply to this branch of the original thread.Cheers,- jahman.You bring up an excellent point: It's not just the up-front cost of the aircraft, but also the cost of the mandated inspections and maintenance along the lifespan of the aircraft.Cheers,- jahman.

A Cathay pilot told me the Airbus is a cheaper capital purchase with higher running costs, while the Boeing (777) is expensive capital purchase but with cheaper running costs. ie the Boeing lasts longer. You could say this is true of the 767 (still a great aircraft!) since Qantas have some old ones!!! Very reliable!Daniel

A Cathay pilot told me the Airbus is a cheaper capital purchase with higher running costs, while the Boeing (777) is expensive capital purchase but with cheaper running costs. ie the Boeing lasts longer. You could say this is true of the 767 (still a great aircraft!) since Qantas have some old ones!!! Very reliable!Daniel

In other words, it could be said that Boeing aircraft command a premium for quality! (Same for a car or a pair of shoes...)An interesting excercise would be to, for a given aircraft, subtract Boeing operating costs from the higher Airbus costs over the lifetime of both aircraft, then take the present value of those differences (i.e. adjust each future difference to account for the effect of interest rates), sum them up and compare them to the Boeing price premium: They should be the same amount!Cheers,- jahman.

In other words, it could be said that Boeing aircraft command a premium for quality! (Same for a car or a pair of shoes...)An interesting excercise would be to, for a given aircraft, subtract Boeing operating costs from the higher Airbus costs over the lifetime of both aircraft, then take the present value of those differences (i.e. adjust each future difference to account for the effect of interest rates), sum them up and compare them to the Boeing price premium: They should be the same amount!Cheers,- jahman.

The usual method is to take all the costs ( both capital and operating) over the life of the project and discount them back to present values. This gives directly comparable values for the alternatives.