Public procurement review on Pratt and Whitney tender deal for maintenance of Airbus high quality engines.

1. The Public
Procurement Review
September 2017
Case Review: Pratt and Whitney wins a
tender worth 2.5bn$ from Wizz Air
ti
Wizz Air holding Plc, (the largest low-cost airline in Central
and Eastern Europe) had signed a memorandum of
understanding with Airbus S.A.S. in 2015 during Paris Air
show. According to the agreement the company is seeking to
purchase 110 Airbus A321neo aircraft with deliveries to start
in 2019.
Equipped with advanced technology the new 110 A321neo
Aircraft will be powered by Pratt and Whitney’s single geared
turbofan engine. The Value of the new contracts placed with
Pratt and Whitney is $2.5B and is scheduled for delivery from
2019 on wards.
Case Review: Pratt and
Whitney
What is Social Value in
Public Contracts
what is Variant Bid
Wizz Air is a Hungarian low
cost airlines with its head office
in Budapest. The Airlines
serves many cities across
Europe, Israel and UAE. It has
the largest fleet than any
Hungarian airlines. It has 3
subsidiaries operating in
Ukraine, Bulgaria and Romania
Wizz Air
What's Inside

2. • Wizz Air has the right to
substitute a number of the
A321neo aircraft with the
Airbus A320neo, depending on
its future requirement
Making do with
your materials - 3
Terms of the Agreement: Under the memorandum of
understanding
• Wizz Air has the right to substitute a number of the A321neo
aircraft with the Airbus A320neo, depending on its future
requirements.
• The order includes the latest A321neo Airbus Cabin Flex
configuration with 239 seats in 18 inch comfort standard
• The new aircraft will both, replace the current aircraft when
they are returned to lessors as well as provide additional
capacity for Wizz Air’s further growth.
• Completion of the order will be subject to final approval of the
terms of the memorandum of understanding by Wizz Air’s
Board of Directors, the successful negotiation of a final purchase
agreement and, thereafter, to Wizz Air shareholder approval.
As part of the agreement, Wizz Air entered into a long-term engine fleet management programme with
Pratt & Whitney, ensuring continued high quality maintenance for the new-technology engines. The
new Airbus A321neo aircraft will be powered by Pure Power Geared Turbofan (GTF) engines that
deliver the best value proposition as well as maximum fuel and operational efficiency manufactured
by P&W.
Pratt and Whitney took almost 20 years and 10bn$ huge investment to develop GTF technology.
However the investment has paid off well, as GTF happened to be the game changer making the
company buoyant about its commercial air transport segment. The surge in demand for high
performance turbofan engines has made P&W enjoy the privilege of dominant global provider of jet
engines.
P&W belonged to the kinship of equally large manufacturers like Boeing, GE, Rolls- Royce that have
always remained at the top since the early times adopting the changing dynamics of the market. GTF
technology is in itself a commendable achievement by the P&W. Its competitors GE and Rolls Royce are
still testing the new approach.
Pratt & Whitney, a United Technologies
Corp. is a world leader in the design,
manufacture and service of aircraft
engines and auxiliary power units and
turbojets. The company has produced
more than 80,000 engines of which
there are 50,000 engines in service with
more than 10,000 operators in 200
countries.
Pratt and Whitney

3.
The success of the P&W as a domestic manufacturer is
attributed to its huge investments on technology and training.
The management believes to remain focused on the core
competencies and other business activities to be outsourced to
suppliers that are already world class in what they do. P&W has
450 top tier suppliers all of them located in US
It is to be noted that, the workers who contributed to the
development of the Geared Turbofan are not its own employees,
they are likely to be scattered across US. A roughly 4/5th of the
Pratt’s spending goes to the domestic manufactures. Moreover,
Pratt employees’ specialists that monitors these suppliers to
assure timely delivery. The company puts in huge investments
in technology within the plant as well as outside. Companies’
core strength lies in
• World class Quality
• Hassel free production process
• Just-in-time deliveries and
• Workforce empowerment
Moreover, the company recognizes the importance of being involved in new product, technology
processes that meets customer needs. However, these qualities of P&W make it the first choice of
businesses in aircraft manufacturing.
Following the process of detailed review by Wizz Air Pratt and Whitney was selected as a preferred
manufacturer to equip 110 new Airbus A321neo Aircraft. It has demonstrated its ability to reduce the
fuel consumption by 16%, regulated emissions by 50% and noise foot print by 75%. In one of the press
releases of Financial Review, József Váradi, CEO, Wizz Air stated. “The relationship with P&W is
significant for our growing business, as the efficient metrics of GTF engines offers significantly lower
operating costs and fuel burn reductions that will directly impact our cost base. While we already have
a very low cost base, our focus is to be ever more efficient to offer the lowest fares for our customers
while driving strong returns for shareholders”.
P&W already has a business order of
over 8,000 GTF engines, and is
investing heavily in plant and
equipment to strengthen its lead.
Pratt’s Geared Turbo Fan has already
become a game changer in the
efficient jet engines market. Most of
the aircraft manufactures are
planning to make GTF as sole driving
force into their new aircrafts.

4. The Case Review of Pratt and Whitney winning a contract with Wiz Air to equip the new 110
A321neo with Pratt and Whitney’s single geared turbofan engine. The Review of the case is to
provide an overview of capabilities demonstrated by Prat and Whitney to Win this 2.5bn$
contract. It highlights strenghs and strategies adopted by P&W that helped it in setting a
benchmark for suppliers to bid for high value aviation tenders.
Pratt and Whitney has achieved this success by bringing about the change in the business
culture and its reliance on its supply chain. The Company strongly believed the notion of
minimizing waste and continuous improvement. The company has retained only the functions
that it cannot be surpassed rest all the activities are being outsourced by the company.
Along with this, it has deeply valued its relationship with the suppliers that are world class at
what they do to name a few of them are Whitcraft, Aero Gear, J&L machine and Polamer
Precision. The company recognizes the need for the investment in new products and new
processes that have made it stand at the forefront of the global aerospace industry delivering
continuous success.
End Notes
https://www.forbes.com/sites/lorenthompson/2017/07/17/pratt-and-whitney-surges-u-s-hiring-
investment-as-geared-turbofan-ramps-up/#2740269686a6
http://www.airbus.com/newsroom/press-releases/en/2017/06/wizz-air-signs-contract-for-10-additional-
a321ceo-aircraft.html
https://wizzair.com/en-gb/information-and-services/about-us/news/2016/07/13/wizz-air-strikes-$2-5-
billion-engine-deal-with-pratt-and-whitney#/
https://markets.ft.com/data/announce/full?dockey=1323-12891218-1KP6GSQJ927SQ92041LE7JPQP1
http://www.airbus.com/newsroom/press-releases/en/2017/06/wizz-air-signs-contract-for-10-additional-
a321ceo-aircraft.html

5. What is Social Value in Public
Contracts Social Value
The Social Value act
2012 defines social value
as "improvements to
economic, social and
environmental well-
being of the particular
area."
With Social Value act 2012 coming into force, it is obligatory for all the public bodies and local
authorities to undertake Social value into the procurement process. Through demonstration of Social
Value in the contract, the bidder is expected to show the wider social, economical and environmental
benefits that their services will deliver to the local community if awarded a contract.
Social value is not be confused with added value as the later one means defining value for money
through service delivery and innovations highlighting terms in money value. Whereas, the former ones
expects you to highlight the benefits at the larger scale.
With the Act becoming operational in 2013, the tendering authorities have started including questions
regarding social value. Social Value questions can be extremely broad. Some typical areas where you can
highlight social value can in your proposal can be categorized as follows

6. Economic Benefits: This section may include information regarding
Employment Opportunities
Apprenticeships
Work Experience and Placements
Social Benefits: This section may include information regarding
Corporate social responsibilities
Charitable Initiatives
Support for Community investment Projects
Reducing Environmental Impact
Recycling and reduction of Carbon Footprint
Reduction in use of energy wherever possible
Using environment friendly goods
Environmental Benefits: This section may include information regarding
Social value tender questions mainly revolve around the above mentioned factors. Honestly, this
is one of the smallest areas of the tender document that gives the local bidder an edge over non-
local competitors. By having a well established local presence, giving a general overview of
benefits they can provide to the community gives an additional weight age to their tender
response.
Such areas are looked upon as positive mechanism that helps you to go beyond drafting a
mainstream tender response and showcase your company on a different level by demonstrating
your capabilities as an ideal bidder for the contract. However, different authorities have different
methods of measuring social value.
Companies have adopted social Value calculator that provides a basic assessment of actual
proposed value of your schemes in terms of social impact. Moreover, Social value is all about
buyer gaining a substantial return on investment into your organization.

7. What is Variant Bid?
Variant Bids have become increasingly popular way of presenting your business in a more advantageous
way to the buyer. Variant bids allow businesses to approach the buyer with innovative and effective
solutions to their problem thus enhancing the value for money. Tender responses tailored to the tender
specifications outline efficient solutions to the buyers requirement.
Variant bids can only be submitted if so is mentioned by the implementing agency or the tendering authority
or else the bid will be abandon from acceptance. A public contract will always notify in the tender document
whether a Variant bid will be accepted or not.
Variant Bid is a type of tender
response that involves alternative
approaches to meet the buyer's
requirements, deviating from the
traditional laid specification. Variant
bids are more flexible then the normal
bids therefore, have been increasingly
preferred.
Variant Bid

8. Make sure, your Variant Bid response should not loose the track of convincing
the buyer on how their expectations will be met. It is more likely that the
buyer would want to hear more about your services and will be asking
questions for clarifications. Make sure you have compelling and convincing
answers to all those questions.
You can use this approach to give buyer a choice in case your variant bid is
rejected you are still in the league of wining tender with your regular bid.
Variant bids have increasingly become popular among the bid managers
giving them the freedom to present their business in a more advantageous
way.
Overall your response should be designed what will best suit the buyer. In case
the buyer is accepting multiple bids, you can draft two tender responses; one
drafted like a regular tender response complying with all the mandatory
requirements and other a Variant Bid.
Variant bids can be a great way to make your business stand out by attracting
more attention to your organization's unique selling points. As a supplier
Variant Bids may benefit by allowing you to propose amendments to tender
specifications reflecting how you could deliver the service in a better
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