Downfall: The Case Against Boeing.

[Jeff Higgins]

Originally Posted by astrochex

The program was a cash cow for years and a key element of Boeings military portfolio.

Oh, absolutely. Boeing/MD made bank on that program. Easy to do, though, on a guaranteed contract, otherwise know as a "cost plus" contract. No such thing in the commercial world.

Originally Posted by zakthor

I remember reading about the c17 software as one of the great disaster stories.

After airframe was final (after 2B? spent) the plane was found to be unstable at low speed/high angle of attack which apparently how you land on a short runway. People in charge decided it was a... software problem. They designed a system to prevent plane from ever finding itself in that situation. I guess you can say its a success because they sold a lot but why was the plane unstable to begin with?

Sounds a lot like mcas except you can't blame that the airframe design was 50 years old.

Above was in a software book. I'd love to hear the real story.

Interesting. I had no idea that was the case. It does kind of serve to clear up the decisions made on the 737 MAX, where Boeing decided to "fix" inherent aero problems with software. Then not tell customers that is what they did, and subsequently sit back and watch three airplanes go in, all the while denying everything.

Again, highly compensated executives made the decisions that lead to all of that. "Heroes" who get all of the accolades (and money) when they "win", but never have to accept responsibility when they "lose". They should be lined up and shot...

[astrochex]

Originally Posted by Jeff Higgins

Oh, absolutely. Boeing/MD made bank on that program. Easy to do, though, on a guaranteed contract, otherwise know as a "cost plus" contract. No such thing in the commercial world.

Interesting. I had no idea that was the case. It does kind of serve to clear up the decisions made on the 737 MAX, where Boeing decided to "fix" inherent aero problems with software. Then not tell customers that is what they did, and subsequently sit back and watch three airplanes go in, all the while denying everything.

Again, highly compensated executives made the decisions that lead to all of that. "Heroes" who get all of the accolades (and money) when they "win", but never have to accept responsibility when they "lose". They should be lined up and shot...

To your first point, they were bringing down the per plane production cost. $150M, if I recall correctly was the target. I don’t know if they actually reached that.

Totally agree on the last point. My favorite move is when they bring in executives from another division to run the program for a short period of time. They make decisions to benefit their IC then move on to something else before the program feels the impact of their management.

[Superman]

Originally Posted by astrochex

Totally agree on the last point.

Yes. I am held accountable by my deliberately selfish decisions. If by no one else, by me at least. My Pelicanhead friends are as well. Each of us has a conscience, I assume. Apparently, Boeing management is not bothered by such emotional dissonance. Boeing paid around $2.5 billion to "settle" this matter but here's the rest of that story: The vast majority of that was restitution. The actual settlement of the criminal matter was only $243.6 million. That is pretty inexpensive, given what they did. And the best part (from management's perspective: The stockholders paid it.

https://www.justice.gov/opa/pr/boeing-charged-737-max-fraud-conspiracy-and-agrees-pay-over-25-billion

Seriously.....watch the film. "Downfall." I think it is on Netflix. From the moment the flaps re retracted and MCAS was automatically turned on with a single, non-functional and non-redundant Angle of Attack sensor, the pilot would have about ten seconds to figure out what to do. None of them were trained on this. Boeing actively concealed the existence of the system and refused to train pilots on its use. Even when the training was requested.

[john70t]

I recently rode in a 737 and a a330 both behind the wings.
The Airbus was a smoother and quieter ride imo. There were a couple times I thought the engines quit.
The Boeing flap operation created a loud rattling buzz throughout the cockpit while the Airbus was completely silent.

[Jeff Higgins]

Originally Posted by astrochex

To your first point, they were bringing down the per plane production cost. $150M, if I recall correctly was the target. I don’t know if they actually reached that.

From what I recall, it never went below $200m. "Cost plus" contracting - ain't it great? Bringing a management style developed to take advantage of that to the commercial sector is what killed them.

Originally Posted by astrochex

Totally agree on the last point. My favorite move is when they bring in executives from another division to run the program for a short period of time. They make decisions to benefit their IC then move on to something else before the program feels the impact of their management.

In Boeing's case, the former MD management staff brought this to its extreme. They padded the bottom line by selling off assets, like entire manufacturing plants. A company can only "make money" and keep its stock prices up for so long like this, until it simply runs out of properties to sell, and then can no longer manufacture the components it needs. And yes, this was all under MD management, after they had destroyed MD in precisely the same manner.

[IROC]

Originally Posted by Jeff Higgins

Never worked anything but commercial, so I cannot comment on any of this. What years were these?

Regarding ISS...this was mid-90s. Boeing was the lead integrator on ISS. I was working for McDonnell Douglas on the Spacelab program (managed by NASA out of Marshall Space Flight Center). Boeing on was also at MSFC (and the Jetplex). Boeing had lost some critical Space Station equipment (lost it) - and the ensuing investigations shone such a bad light on them in HSV, they were given a zero award fee on their contract (very rare in those days). The merger took place right during that timeframe and the head of our Spacelab program was moved into position as the head of the Boeing ISS contract as a result.

After we merged, all of the McDonnell Douglas personnel in HSV were moved out to the Boeing Jetplex facilities, so I worked elbow-to-elbow with legacy Boeing folks for the next 10 years or so.

[Jeff Higgins]

Geez Mike, what an embarrassing cluster fark. Not surprising, though. It always seemed to me that Boeing sent all of their real "winners" to the government programs. Veritable "island of misfit toys (engineers)". I think that was driven by the nature of the way in which they were compensated by the customer - all government contracts were "guaranteed", also known as "cost plus". In other words, it didn't really matter how much was spent, compensation was a guaranteed amount above whatever that was. The commercial side, of course, didn't have that luxury. The commercial side very much had to perform, in a very competitive market, and against a competitor - Airbus - who had the luxury of significant backing from member nation's governments.

The management practices developed under this "cost plus" model eventually crept into the commercial side at MD. They were firmly entrenched, and had caused MD to fail by the time of the merger. Post merger, those practices replaced the decades old, tried and true (although not very profitable for the "stakeholders") practices employed by Boeing.

[3rd_gear_Ted]

I'm retried Boeing Corporate IT.
When the company instituted software engineering standards in 05, we formed a corporate IT group called SEPG (Software Engineering Process Group)
Defense Systems and Shared Services group adopted the standards.
When we tried to get BCAG to join, they said they didn't need software standards, the rest is history.
Other parts of the company tried to save BCAG from themselves, but it was all for naught.

[rattlsnak]

The pilot near the end said it best … They completely changed a major system and basically didn’t tell anybody. That pi$$es me off just as much as I currently fly a Boeing…. Boeing should have just updated the B757…. Everybody loves that airplane and companies STILL want them.!

[Seahawk]

Originally Posted by Jeff Higgins

Geez Mike, what an embarrassing cluster fark. Not surprising, though. It always seemed to me that Boeing sent all of their real "winners" to the government programs. Veritable "island of misfit toys (engineers)". I think that was driven by the nature of the way in which they were compensated by the customer - all government contracts were "guaranteed", also known as "cost plus". In other words, it didn't really matter how much was spent, compensation was a guaranteed amount above whatever that was. The commercial side, of course, didn't have that luxury. The commercial side very much had to perform, in a very competitive market, and against a competitor - Airbus - who had the luxury of significant backing from member nation's governments.

The management practices developed under this "cost plus" model eventually crept into the commercial side at MD. They were firmly entrenched, and had caused MD to fail by the time of the merger. Post merger, those practices replaced the decades old, tried and true (although not very profitable for the "stakeholders") practices employed by Boeing.

While I have never worked a contract with Boeing I have negotiated Research and Development, Low Rate Initial and Full Rate Production contracts with Bell, LMCO and Sikorsky. I am not a contracting officer and was either the PM or Lead of the negotiation team.

Some of what you wrote above is accurate while other sections, not so much in my experience. I am not arguing that this did not happen at Boeing, it would just not have followed the FAR guidance on contract types.

"Cost Plus" contracts are typically used in R&D contracts and LRIP contracts. Profit on those contracts is capped, generally around 8 to 10%. This is because the government is willing to accept the risk in R&D and LRIP. The reason for that is often the requirements are not well understood by the government, especially in sensors and avionics, and many companies will not accept the risk of a firm fixed price contract in the early stages of development.

I am working through this right now with a contract to design ork on fuel cells in UAS: The government wants FFP, we need cost plus because they have no idea what they really want.

FRP contracts are mostly Firm Fixed Price for what is known as the "Fly Away Price"...also commonly refered to as the "above the Line Price".

FFP contracts are also capped on profit. Where companies make money is in the "below the line" items (the list is long), in G&A and government directed engineering change proposals. Also, constructive changes to the contract are huge profit centers.

I could go on about "forward pricing rate agreements", contract incentives, etc...if any anyone suffers from insomnia, PM me and I will continue. You'll be asleep in minutes

Again, great thread. I had no idea.

[widebody911]

I was hoping this was going to be one of those videos where they add funny caption translations to Hitler's bunker episode.

Edit: Not sure where you were going with this on the Boeing thread, so I deleted the video.

Best.

Sea.

[Jeff Higgins]

Thanks, Paul for chiming in and providing some experienced insight into how these contracts work, and the differences between them. I have no experience in that arena. I'm just passing on what us poor dumb engineers thought we "knew" about all of it. It's obviously more complex than I understand. What we did pick up on, what was absolutely unmistakeable, was the manner in which we were allowed to approach things in our jobs. After the merger, it was very much no longer the "playground" into which I hired, with no one worrying about, nor accountable, for cost. After the merger, that was the only thing that mattered.

I remember one day in particular, post merger, when a bunch of us were attending some training class (we layer began to euphemistically refer to these as "reeducation camps"). The instructor at the front of the room asked the class "what is the Boeing Company in business to do?"

"Make airplanes!!!!" was the jubilant reply from all of us kids in the sandbox. High fives all the way around, "boy, this is going to be easy", etc...

Stern silence, and "that" look from the teacher at the front of the room... "Wrong. The Boeing Company is in business to make money."

It was on that day that we all knew we were doomed...

[IROC]

It's fun to hear these stories from the legacy Boeing side as "the rest of us" watched our heritage be unceremoniously cast aside. I bet the old Rockwell guys cringed when they saw statements like "the Boeing-built Space Shuttles" or the McDonnell Douglas guys when the Blue Angels were flying "Boeing F/A-18s".

No, we all started using Boeing processes and procedures (BAC5009? - wasn't that the fastener installation spec?). The only reeducation I saw was to do things "the Boeing way".

[Seahawk]

Originally Posted by Jeff Higgins

Thanks, Paul for chiming in and providing some experienced insight into how these contracts work, and the differences between them. I have no experience in that arena. I'm just passing on what us poor dumb engineers thought we "knew" about all of it. It's obviously more complex than I understand. What we did pick up on, what was absolutely unmistakeable, was the manner in which we were allowed to approach things in our jobs. After the merger, it was very much no longer the "playground" into which I hired, with no one worrying about, nor accountable, for cost. After the merger, that was the only thing that mattered.

Please, Jeff: If you are a "poor dumb engineer" I'm a sock puppet.

What Boeing did on the military side with the F-18, with a complicit government group, was pretty much genius at the time and is still studied at the Defense Acquisition University, where I have been a guest speaker a number of times.

The genius was once they got the original F-18 in the fleet, got the Navy a "little bit pregnant", subsequent versions of the F-18, including a nearly entire new design with the E/F, were contracted under the "engineering change proposal" clause in the contract...no competition, same rate structure, no detailed contract review, etc.

Again, everyone would nap better than Sleeping Beauty if I went into the details, but they are spectacular from a PM perspective.

[mjohnson]

Originally Posted by Jeff Higgins

...After the merger, it was very much no longer the "playground" into which I hired, with no one worrying about, nor accountable, for cost. After the merger, that was the only thing that mattered.

Not that we're very cost focused even today - the lore here is that, Oppenheimer's succeeding director, Norris Bradbury would go to congress every year and basically say "this is what we did last year, if you give us more we'll do this stuff too" and he backed it up every year. That was about the level of fed program management for us in Los Alamos early in the cold war.

We did awesome stuff! Crazy things. Stupid things. Nucular rockets!

Now we do primavera schedules and powerpoint. Not exactly progress in my mind...

[3rd_gear_Ted]

Originally Posted by IROC

It's fun to hear these stories from the legacy Boeing side as "the rest of us" watched our heritage be unceremoniously cast aside. I bet the old Rockwell guys cringed when they saw statements like "the Boeing-built Space Shuttles" or the McDonnell Douglas guys when the Blue Angels were flying "Boeing F/A-18s".

No, we all started using Boeing processes and procedures (BAC5009? - wasn't that the fastener installation spec?). The only reeducation I saw was to do things "the Boeing way".

As a former Rockwell/Rocketdyne guy, I used to remind the legacy Boeing folks all the time that they couldn't build anything that goes faster than the speed of sound

My Rockwell technical fellowship program disappeared with the merger.
Mention that management concept to a MAC/DAC person and they get a funny look.

[astrochex]

Originally Posted by Seahawk

Please, Jeff: If you are a "poor dumb engineer" I'm a sock puppet.

What Boeing did on the military side with the F-18, with a complicit government group, was pretty much genius at the time and is still studied at the Defense Acquisition University, where I have been a guest speaker a number of times.

The genius was once they got the original F-18 in the fleet, got the Navy a "little bit pregnant", subsequent versions of the F-18, including a nearly entire new design with the E/F, were contracted under the "engineering change proposal" clause in the contract...no competition, same rate structure, no detailed contract review, etc.

Again, everyone would nap better than Sleeping Beauty if I went into the details, but they are spectacular from a PM perspective.

I would like to hear about that actually. I am very surprised to hear that an ECP was the contract vehicle for the E/F.

[juanbenae]

Saw the Boeing doc and was riveted.

Here is another great aviation documentary that shows our government is not always on the up & up too. https://www.vandornmovie.com/

[Jeff Higgins]

This is a great conversation, guys. I love hearing all of the widely varying perspectives on all that happened. Of course us legacy Boeing guys blame MD, MD guys blame Boeing, legacy Douglass guys blamed McDonnell. Loyalties are great, aren't they? None of us will ever have a clear perspective. All of this happened way, way above our pay grades, and much of it was hidden by a lot of guys motivated to hide it.

I think what is most clear, to all of us, is that none of the companies for whom we worked (or still work) are what they once were. They have all lost something over the course of the last couple of decades. The truly pioneering spirit, the real "gee wiz" nature that attracted guys like me is a thing of the past. What a shame...

Alas, there is hope. My oldest son followed me into the profession. He is working for a very small engineering house in Seattle (almost entirely Boeing expats). They are getting contracts from Blue Origin, NASA, Space X, and others. He is working with, for, and around people who are seriously talking about going back to the moon. And he gets to help them do it. There are still dreamers out there, real pioneers, guys willing to risk their fortunes gained elsewhere - the aviation pioneers of old. You just won't find them at Boeing anymore, nor any other corporate conglomerate. My son was lucky enough to find them. I'm happy for him.

[Scott R]

Just about everything in that movie is true, and they sugar coated some parts of it. When I heft last year it was a dumpster fire internally, only the true believers were still defending management,