Mar-19-2008

The Air Force Tanker We Should Have Had

(topic overview)
CONTENTS:

Boeing lodged a complaint against the U.S. Air Force decision to award a $35 billion contract for new flying tankers to a joint project from Northrop Grumman and Airbus parent EADS. Boeing argues that its tanker is less risky and costly than its rival's and that the Air Force's evaluation process was flawed. (More...)
The two big factors were superior performance (fewer of the AirBus aircraft were needed to get the job done) and more reliable performance of the suppliers. (More...)
Boeing is formally protesting the U.S. Air Force's'surprise decision' in favor of the Northrop Grumman/EADS Airbus A330 Multi-Role Tanker Transport (MRTT) for the KC-X tanker requirement. (More...)
Boeing and Airbus (i.e. EADS) are engaged in a tough competition to sell large, commercial jet aircraft globally. (More...)
If Congress tries to keep European firms out of the U.S. defense market, it will invite retaliation. (More...)
There was Boeing's 52-year record in having a lock on the USAF's air tanker business. (More...)
Where previously it had outsourced parts for planes but completed assembly in Washington, with the 787 it contracted out design and sub-assembly responsibilities as well. (More...)
Search, wherever you can, for information about whether the deal is good for the Air Force, and for the taxpayers who support it. (More...)
"The simpler and cheaper probe-and-drogue system is used by many other military organizations including the U.S. Navy and Marine Corps and many non-US forces and can be more easily fitted to existing tanker and receiver aircraft than the flying boom system." (More...)
Finmeccanica also partners with Airbus on the A380, with BAE and EADS on the Eurofighter and missiles, and with France's Alcatel on satellite and space products. (More...)
Lockheed Martin is famous for the Patriot anti-ballistic missile for which it is the prime contractor. (More...)
The contract to build 179 KC-45As is worth about $35 billion (about $196 million per aircraft). (More...)
By all appearances, Airbus working with primary contractor Northrop Grumman offered the better deal for taxpayers and the military. (More...)
Since the U.S. is using Guam and Diego Garcia as launching points into the world's key strategic fronts, the kind of service the Boeing plane would have offered just would have been flat compared to what we have now. (More...)
Rep. John Murtha, D-Pa., chairman of the House defense appropriations subcommittee, which oversees defense-related budgets, has threatened to hold up funds for the tanker following the Airbus victory. (More...)
Rep. Todd Tiahrt, R-Kan., said "we should have an American tanker built by an American company with American workers," and Rep. Duncan Hunter, a Republican from California, argued that the decision would hurt "national security interests." (More...)
Northrop says some $360 million will be generated for the U.S. economy. (More...)

SOURCES

Boeing lodged a complaint against the U.S. Air Force decision to award a $35 billion contract for new flying tankers to a joint project from Northrop Grumman and Airbus parent EADS. Boeing argues that its tanker is less risky and costly than its rival's and that the Air Force's evaluation process was flawed. Some American politicians are angry that EADS, a European company, should be given a slice of such a big defense deal. EADS reported its first annual net loss in five years -- $588 million -- on the back of production delays at Airbus, its largest subsidiary. The weak dollar, in which aircraft are bought and sold, also hurt Airbus, cutting $1.1 billion off its revenue. The deal solidifies Google's lead in online advertising; rivals, such as Microsoft, had raised objections. America's regulators gave the merger their blessing three months ago. [1] Some politicians, speaking out of either partisan or geographical affiliations, are teed off that the Pentagon has chosen a partnership led by the European aerospace giant EADS hooked up with U.S. aircraft maker Northrup Grumman to make perhaps $100 billion worth of new tanker aircraft over the next few decades. It had long been expected that the deal would go to Boeing, the U.S. corporation that has made such tankers since about forever. When it didn't, some of the blame fell on McCain, longtime U.S. senator from Arizona, longtime critic of what he sees as dirty deals in defense contracting and, in all but name, the Republican nominee for president. Four years ago it was McCain who, in asking some very proper questions about cozy dealings between the buyers at the Air Force and the sellers at Boeing, touched off investigations that led to one of the former and one of the latter going to prison. It has also been McCain who has, more recently, cozied up to some high-powered (are there any other kind?) lobbyists who do, or did, represent EADS. Boeing is protesting its loss of the contract. It raises what may be some good points, alleging contract specs were changed on the fly in ways that favored EADS. There are also concerns that EADS, parent company of Airbus, is able to underbid U.S. companies because of subsidies it gets from European governments and because it may not have to live up to the same labor or environmental standards that American firms do.[2]

WASHINGTON (Reuters) - Boeing Co's (BA.N: Quote, Profile, Research ) program manager for tanker aircraft voiced great confidence on Tuesday about winning back a $35 billion aerial-refueling deal from a team that includes European archrival Airbus. Mark McGraw, a company vice president, said he was "as confident as I can be" that congressional auditors would find fault with the U.S. Air Force's February 29 choice of the rival team of Northrop Grumman Corp (NOC.N: Quote, Profile, Research ) and Airbus parent EADS (EAD.PA: Quote, Profile, Research ) to build 179 planes.[3] The Air Force changed the rules of the competition to replace 179 tankers -- a deal worth $35 billion and as much as $100 billion over the next 30 years --to keep Northrop Grumman and Airbus parent European Aeronautic Defence and Space Co. in the deal, Boeing said. Mark McGraw, head of Boeing's tanker program, said he was confident auditors would find fault with the selection. "We know it's an uphill battle," he said. "But it's not like we had to search for reasons to protest.[4]

WASHINGTON U.S. Rep. Todd Tiahrt (R-KS) today along with Rep. Norm Dicks (D-WA) sent the following letter to President George W. Bush requesting he reconsider the competition and re-compete the $35 billion U.S. Air Force contract decision awarded to (EADS) European Aeronautic Defence and Space/ Northrop Grumman over Boeing to build the next generation of aerial refueling tankers with a consistent U.S. policy on illegal subsidies.[5] The fight for the right to build $40 billion worth of Air Force aerial refueling tankers escalated once more Tuesday. Boeing Co. issued a 22-page summary of its complaints over losing the high-profile contract, leading with the argument that the Air Force tweaked requirements for the tanker to help Boeing's rival stay in the competition. That rival the team of Northrop Grumman and European Aeronautic Defence and Space Co. won the job last month, and Tuesday a Northrop exec said Boeing's complaining now, instead of at the time of the changes, is "a little ridiculous."[6]

The tanker PR war continues. Boeing Co. today released an executive summary of the protest it filed last week with the Government Accountability Office over its loss to Northrop Grumman and EADS North America of the Air Force's $40 billion contract to build aerial refueling tankers. The 22-page document details Boeing's claim that the Air Force, in the interest of creating competition, changed its requirements to keep Northrop in the hunt, then changed its''view of what''kind of tanker it wanted midstream, violating various''policies of military procurement.''[7] Government contracting documents show that the U.S. Air Force preferred the size and capability of aerial refueling tankers offered by Northrop Grumman Corp. and the parent of Airbus, giving the two an edge in winning a high-profile $40 billion contract over Boeing Co. The Air Force also had concerns about Boeing's costs for early development work and about its past program management, according to Air Force documents reviewed by The Wall Street Journal. "I am confident that Northrop Grumman will deliver within the cost, schedule and performance requirements of the contract because of their past performance and the lower risk.[8] Although the U.S. Air Force's $35 billion aerial refueling tanker contract went to European EADS, in conjunction with Los Angeles-based Northrop Grumman, and not Boeing, the U.S. economy can console itself with the fact EADS and Northrop will spend $600 million on their Mobile, Ala., plant to assemble the tankers, RF Design Magazine reports.[9] During the March 12 edition of Fox News' Special Report, host Brit Hume and a panel that included The Beltway Boys co-host and Weekly Standard executive editor Fred Barnes discussed the controversy over the awarding of a $35 billion Air Force tanker contract to Los Angeles-based Northrop Grumman and European Aeronautic Defence and Space Co. (EADS), the parent company of Airbus, over the American company Boeing.[10] BOEING: Boeing Co. said Monday that the U.S. Air Force might pay $30 billion more for fuel over four decades because of its decision to buy aerial tankers from the parent of rival Airbus SAS. The cost analysis was based on a Conklin & de Decker Aviation Information analysis that Chicago-based Boeing funded, the company said. Boeing's offering was based on its smaller 767 commercial aircraft and that of Northrop Grumman Corp. and European Aeronautic and Space Defense Co. on a derivative of the Airbus A330.[11] Boeing Co. is hanging its effort to win back a massive $40 billion aerial-tanker contract on a handful of small criteria changes made by the U.S. government. Those small but crucial changes shifted the competition in favor of rivals Northrop Grumman Corp. and European Aeronautic Defence & Space Co., the company asserted in its formal protest filing last week. A summary of its protest, reviewed by The Wall Street Journal, says the Air Force shifted its stance on a request for data that significantly threw off cost estimates.[12] When is globalization a bad word? To Boeing (BA) backers, it's when the competition -- a consortium led by European Aeronautic Defence & Space and Northrop Grumman (NOC) -- wins the battle for a lucrative U.S. Air Force contract for airborne-refueling planes. Ever since the Air Force announced its decision on Feb. 29, Americans from Seattle to Capitol Hill have railed about lost jobs and the risks of foreign-made military assets. What about when Boeing wins a big contract? You don't hear many complaints then, despite the fact that large portions of the parts and labor in its commercial planes come from overseas -- 70% of Boeing's new 787 Dreamliner and 60% of other models are made outside the U.S. Even many of Boeing's military planes have many foreign parts in them.[13]

Last week, Boeing Co. formally protested the $35 billion Air Force contract it lost to the team of European Aeronautic Defence and Space Co. and Northrop Grumman Corp. Now the Government Accountability Office will review the selection process and issue its ruling on the contract award. From their corner, Northrop and EADS said even more jobs will be created (48,000 in 49 states) than the 25,000 jobs they predicted earlier.[14] Two of the country's biggest defense contractors, The Boeing Co. and Northrop Grumman, exchanged salvos Tuesday over the controversial Air Force tanker decision. In what has turned into a public relations battle by both sides, one that is being watched closely in Congress, Boeing issued an executive summary of the 133-page protest it filed with the Government Accountability Office to overturn the award, valued at around $35 billion, to Northrop for 179 aerial refueling tankers.[15] Boeing Co., the second-largest U.S. defense company, will have a tough time convincing the government to overturn the U.S. Air Force award of a $35 billion refueling tanker contract to a rival, an executive said. 'We know it's an uphill battle, no doubt,' Mark McGraw, Boeing's vice president and manager of its tanker program, said on a conference call today. 'But it's not like we had to search for reasons to protest.[16] Over the last 30 years, EADS has pursued a trade war against U.S. aerospace manufacturers, using some 100 billion in government subsidies to win market share and siphon off thousands of American jobs. EADS has laughed in the face of American workers by turbocharging their tanker bid with billions of these illegal subsidies, which the U.S. Trade Representative has condemned in an historic WTO lawsuit. By awarding the largest defense contract in generations to this anti-American company, the DoD has dealt our manufacturing industry a double blow, sanctioning EADS' illegal subsidies program and outsourcing tens of thousands of U.S. aerospace jobs. Shocked defense analysts across the country, which nearly all predicted that Boeing would win the contract because their design seemed to perfectly match the Air Force's criteria, are asking why the DoD would go out of its way to reward an outlaw foreign manufacturer, with such disastrous results for the U.S. economy. Congress needs to get to bottom of this by holding immediate hearings.[17] A large military contract raises entirely different issues of nationality, of course. Foreign contractors have long complained they face long odds of landing the most lucrative and prestigious awards. Similar issues of U.S. jobs and national security were raised in 2005 when a contract for 28 helicopters for the President was awarded to a team consisting of Lockheed Martin (LMT) and the Italian company AgustaWestland, a unit of Finmeccanica (SIFI.MI), instead of the U.S. favorite, Sikorsky, a division of United Technologies (UTX). Today, Boeing's champions are crying foul that the Air Force awarded a $40 billion-plus contract for aerial refueling tankers to a foreign rival, EADS (EAD.PA), albeit in partnership with the domestic Northrop. Some of them argue the Pentagon should have considered the cost in U.S. jobs during an economic downturn, not just military capability and cost.[13] The U.S. Air Force's stunning decision to award a $40 billion refueling tanker contract to a foreign company is a bitter blow to Boeing Co. --and to Wichita, which stood to gain hundreds of jobs from the project. If this decision is truly in the best interests of the country, Kansans can live with it.[18]

Early last week, Boeing announced it was formally protesting the U.S. Air Forces decision to award the 40 billion aerial refueling tanker contract to Northrop Grumman.[19] WASHINGTON (AP) - A manager of the company that won a $35 billion Air Force tanker contract says Chicago-based Boeing is protesting the award. Northrop Grumman manager Paul Meyer says he doens't understand Boeing's claims that the Air Force "repeatedly made fundamental but often unstated changes to the bid requirements and evaluation process" to keep the Northrop Grumman/EADS proposal alive. Northrop has hired former Senators Trent Lott of Mississippi and John Breaux of Louisiana to keep its contract with the Air Force.[20] WASHINGTON, March 18 (Reuters) - Boeing Co (BA.N: Quote, Profile, Research ) acknowledged on Tuesday the difficulty of overturning a U.S. Air Force decision to award a $35 billion aerial tanker program to Northrop Grumman (NOC.N: Quote, Profile, Research ) and Europe's EADS (EAD.PA: Quote, Profile, Research ). "We know it's an uphill battle," Mark McGraw, Boeing's tanker manager, said in a conference call with reporters. He said "I think we'll end up winning the day."[21] EADS, the European defence company, and Northrop Grumman have shifted their lobbying and public relations machine up a gear after Boeing'''s decision to protest against the U.S. Air Force decision to award the US-European consortium a $35bn deal to supply refuelling tankers.[22] Boeing would not be interested in splitting a deal with EADS to supply refuelling tankers to the U.S. Air Force, the company said yesterday. This month, the air force awarded EADS, the European aerospace group, and Northrop Grumman, its U.S. partner, a $35bn deal to provide 179 air-to-air refuelling tankers.[23]

Boeing and Airbus are currently locked in a bitter row embroiling the U.S. government and the European Union over the European governments' massive subsidies to Airbus trying to make it more competitive than Boeing in the world market. This enormous level of government subsidy and support is a significant reason why EADS was able to undercut Boeing on projected costs of the sale. Boeing also claims that the U.S. Air Force found that operational costs will be much higher on operating the KC-45A. And since the KC-45A is a much larger aircraft than the KC-767, its fuel operating costs will be much higher too. The KC-45A's larger size will give it a longer range and enable it to carry much more fuel than the KC-767, though Boeing argues that this was not in the Air Force's original specifications for the aircraft it said it wanted. Where Northrop Grumman and EADS clearly beat Boeing hands down was in their hunger for the contract and the efficiency and aggressiveness with which they went after it.[24] McCain pressured the Air Force to open the new tanker contest to competition and to disregard concern over European Union subsidies to Airbus, which are at the heart of a U.S. Trade Representative complaint against the EU before the World Trade Organization. That history is the backdrop of a key complaint in the protest namely that "the process became driven by the Air Forces determination to create the possibility for competition between two planes that offered dramatically different capabilities." In its filing, Boeing said that pressure from Capitol Hill and the Northrop Grumman/EADS team ultimately led the Air Force to pick the larger plane offered by Northrop and EADS even though it had originally asked for a medium-sized tanker. Air Force officials have said they choose the EADS/Northrop tanker, which is based on the Airbus 330 commercial plane, in large part because its size will enable it to carry more fuel, cargo and passengers.[25] Los Angeles Times staff writer Peter Pae, in a March 10 article, wrote that experts believe "three key moves by the Northrop-Airbus consortium may help explain how it won." Among the moves were the proposing of tankers that "could also be used to carry cargo and troops," which Barnes mentioned during Special Report, and that "Northrop executives made sure there would be no language in the Air Force's competition documents that would hinder their bid and undermine 'a fair and open competition,' " such as language inquiring about the "lingering World Trade Organization dispute between the U.S. and the European Union" over subsidies. Agence France-Presse reported on March 11 that "Gates assured Senator John McCain last year that the tender process for a billion-dollar aircraft tanker contract had been changed in line with his concerns, the Pentagon said Tuesday." A January 26, 2007, letter released by the Pentagon "allude to changes made in a draft of the request for proposal, but does not say what they were or specify what concerns McCain had raised."[10]

There was a large menu to pick from. There were lot of flaws in the process, and I think we'll end up winning the day in terms of the protest.' The Air Force contrived 'to create the possibility of competition' between Boeing's 767 aircraft and the A330 tanker from the winning bidder Northrop Grumman Corp. and its overseas partner European Aeronautic, Defence & Space Co., Boeing said in its protest to the Government Accountability Office.[16] WASHINGTON, March 18 (Reuters) - Northrop Grumman Corp (NOC.N: Quote, Profile, Research ) has halted work for now on a $35 billion U.S. Air Force refueling aircraft deal amid a formal challenge from Boeing Co (BA.N: Quote, Profile, Research ), the losing bidder, Northrop's program manager said on Tuesday. Paul Meyer, vice president for air mobility systems, said he considered as "low" Boeing's chance of prevailing in its protest lodged last week with the Government Accountability Office, Congress's audit and investigative arm.[26] Boeing last week lodged a formal protest over its loss of a $35 billion contract for U.S. Air Force refueling tankers. If the company wants to anger a big customer by further delaying what the Pentagon considers its highest-priority procurement program, it has that right.[27] Just a few days before, on Feb. 29, the Air Force announced that it was awarding a $40 billion contract to the European maker of Airbus for new aerial refueling tankers. Hearts dropped in the state of Washington where losing competitor Boeing, the American aircraft manufacturer, was to build its air tanker.[28] Awarding a $35 billion Air Force refueling tanker contract to the parent of Airbus carries risks that will ripple far beyond the economic effect of sending tax dollars and jobs overseas; it also compromises national security, and gives away U.S. technology and capability, a gathering of aerospace suppliers told Sen. Patty Murray on Tuesday. Murray, D-Wash., said she would consider pursuing legislation aimed at changing procurement laws to keep production of military equipment within the U.S., and she asked for help in making her case to Congress. Her colleagues, she said, see the issue mainly in economic terms. "If the laws need changing, how do we do that, and how do we sell it in a global market?" she asked.[29] WASHINGTON ' No one wants to bring back freedom fries, but the French are under attack again. This time politicians from Kansas and Washington state are leading the charge. They're irked that they're losing thousands of jobs after the Air Force awarded a $35 billion contract to the parent company of French-based Airbus to replace an aging fleet of aerial tankers.[30]

"I have talked about the dismay Boeing workers felt in my home state of Washington," Senator Patty Murray said in a speech on the Senate floor on Mar. 7. She added that she also worries about "the ability to control our national security once we've effectively turned over control of our military capability and technology to a foreign government." Boeing officials have been careful not to say that the Pentagon should have favored their "American" plane. They have kept their criticism focused on the terms the Air Force set for the competition and the quality of the two offerings. They may still try to get the tanker decision overturned. On Mar. 7, after getting briefed by the Pentagon about its reasons for giving the contract to EADS/Northrop, Boeing executives said they will give serious consideration to filing a protest with the Government Accountability Office, the investigative arm of Congress. They are sure to get plenty of support. "It's an irresistible issue during an election year," says Richard Aboulafia, vice-president of analysis for Teal Group. To some observers, such protests ignore the realities of modern aerospace contracting, for both commercial and military projects. The aerospace giants increasingly look to suppliers with expertise, wherever they may be.[13] On March 10, Chicago-based Boeing, in a protest to the Government Accountability Office, said the Air Force had gone overboard to keep Northrop and EADS from withdrawing and to preserve the "possibility of competition." In an edited summary of its complaint provided to reporters on Tuesday, Boeing said the winning plane, a modified Airbus A330, was a much riskier choice than Boeing's proposed tanker based on its smaller 767 airliner. In picking the A330, the Air Force misapplied its own selection criteria, disregarded its bidding specifications and breached federal acquisition rules, Boeing told the GAO.[3] All that's in the hands of the Government Accountability Office, which will review Boeing's complaints and make a recommendation by mid-June. Mindful of the political dogfight that's erupted around the contract and may yet torpedo it, both sides threw out some red meat Tuesday. It began with Boeing, which sent out an edited summary of the complaint it filed last week with the GAO. In the document, Boeing accused the Air Force of skewing the competition in favor of Northrop/EADS in the ways it measured cost, risk, past performance and other key criteria. In a conference call, Boeing tanker programs chief Mark McGraw said many of the categories were so close that a small shift in criteria may have thrown them Northrop's way. "I still don't understand why the Air Force made the choice they did," he said. "That was not even explained in the debriefing."[6]

Boeing had several opportunities to complain or even file a protest during a long process that saw the Air Force go through three drafts before the final request for proposals, or RFP, was issued, Meyer said. The Air Force also held one industry day when such concerns could have been raised, Meyer said. "If it was that important, why didn't Boeing bring it up during the pre-RFP process when they had four opportunities -- three drafts and one industry day?" Meyer said. The GAO, the investigative arm of Congress, must issue its findings within 100 days. That would be around mid-June. Meyer disclosed that the Air Force issued a tanker "stop work" order to Northrop on Friday, pending a decision by the GAO. He said the company is still deciding what tanker-related work it might continue to do on its own in the meantime, though Northrop would risk not getting paid by the Air Force should the GAO uphold Boeing's protest and another tanker competition be held.[15] Boeing's goal in filing the protest is to have a shot at "some level of competition," McGraw said. Boeing said its competition threatened to withdraw from the bidding process unless revisions were made allowing it to better compete. Paul Meyer, Northrop Grumman's manager for the tanker program, said the company raised some issues and advised the Air Force of its concerns. He said nothing changed. Both sides had opportunities in the process to correct any deficiencies they saw, Meyer said.[4]

WASHINGTON, Kansas, March 18, 2008 (AP) - Boeing says the Air Force tilted the playing field in a tanker contract competition toward Northrop Grumman and the French owner of Airbus to keep the two in the game.[31] I think there were a lot of flaws in the process." With pressure placed on the Air Force from Capitol Hill, Northrop Grumman and EADS, Boeing said the process was skewed against its bid. The Air Force awarded a contract for a plane -- using the Airbus A330 -- that did not satisfy its own bid requirements, Boeing said.[4] The Air Force made changes to the bid requirements to accommodate Northrop-EADS and 'this distortion of the procurement process' led to Northrop winning the contract. Boeing said it would have offered its 777 aircraft as the basis for the tanker had the company known the Air Force wanted a larger plane, McGraw said. 'Nothing in the requirements said the 767 was the wrong choice,' he said.[16] In a formal protest of the contract made public on Tuesday, Boeing said the Air Force "repeatedly made fundamental but often unstated changes to the bid requirements and evaluation process" to keep the Northrop Grumman/EADS proposal alive. The release of the executive summary of the protest is Boeings latest public relations salvo in its attempt to overturn the Air Force award of the tanker deal to the Northrop/EADS team.[25] Since the Air Force announced in February that it had chosen the Northrop Grumman-EADS team to build a fleet of midair refueling tankers, a growing chorus of legislators have vowed to scuttle the deal and ensure that the contract is awarded to Boeing Co., the losing firm.[32] The Air Force stunned the aerospace industry last month by announcing that a team of the European Aeronautic Defense and Space Co. and Northrop Grumman would get the contract to build the refueling tankers.[29] Boeing ( BA ) executives filed their formal bid to overturn a $35 billion contract for air refueling tankers that was awarded to the team of Northrop Grumman ( NOC ) and European Aeronautic Defence & Space, or EADS ( EADSF ).[33] 'As a result the A330-200 consumes 24 percent more fuel per trip than the 767- 200ER.' Boeing, which has supplied refueling tankers to the Pentagon since 1956, last week filed a protest with the Government Accountability Office to dispute the awarding of a $35 billion contract to Los Angeles-based Northrop Grumman Corp. and its overseas partner European Aeronautic, Defence & Space Co. EADS is the parent of Airbus, the largest commercial planemaker and Boeing's chief rival.[34]

WASHINGTON -- The U.S. Air Force said Monday it won't fight a temporary freeze on a recently awarded aerial refueling tanker contract, a move that could delay construction of a $600 million aircraft assembly plant in Mobile. The Air Force's decision not to seek a waiver raises questions about whether Northrop Grumman Corp. will slow an ambitious timetable for building its share of the 1,500-worker facility at Brookley Field Industrial Complex.[35] Stallworth has spent time at a couple of Web sites -- www.house.gov/tiahrt and Mobile's www.keepourtanker.com -- registering his support for the U.S. Air Force's decision to let Northrop Grumman Corp. and EADS North America build its new aerial refueling tanker.[36]

WASHINGTON - Northrop Grumman Corp. has hired a lobbying firm headed by two former U.S. senators to defend the Air Force decision awarding the company and Airbus a lucrative contract to build a new fleet of tanker planes.[37]

Boeing Co., the second-largest U.S. defense contractor, said the U.S. Air Force may pay $30 billion more for fuel over four decades because of its decision to buy aerial tankers from the parent of rival Airbus SAS. The cost analysis was based on a Conklin & de Decker Aviation Information analysis that Chicago-based Boeing funded, the company said in a statement today. Boeing's offering was based on its smaller 767 commercial aircraft.[34]

The U.S. Air Force Tuesday cleared the way for European aerospace company EADS to bid against Boeing Co. for a lucrative contract to supply a new generation of refueling tankers.[10] Then a new process was begun, and Boeing appeared to be the only qualified bidder. That was when McCain weighed in and said, "Wait a minute, you gotta at least have a competitive bid here." They did. The Air Force then awarded the contract to a consortium, partly it's Grumman, an American company, and the parent company of Airbus is part of that. It is a European company. Now the Democrats, on Capitol Hill in particular, are screaming that this was unfair, improper, a national security issue, and so forth.[10] MORTON KONDRACKE ( Roll Call executive editor): Well, there are a lot of moving parts, and I am glad that the GAO, the Government Accountability Office, is investigating to see which is the best plane at the price, and so on. KONDRACKE: Well, the Air Force said one thing, the Boeing Company is saying that they started out with a request for a bid for a smaller plane, and it got changed. In the case of McCain, the question is, politically the case is, one, were he surrounded by some lobbyists who worked for this Airbus contract -- what about them? I think that that's not gonna be a real problem.[10]

The Post-Intelligencer reported that "Boeing advocates say McCain was a major force behind the Air Force decision to ignore the issue of government subsidies to Airbus when the tanker contract was put up for competitive bidding last year." The AP reported that "Rep. Norm Dicks, D-Wash., said the field was 'tilted to Airbus' because the Pentagon did not weigh European subsidies for Airbus in its deliberations -- a decision he blamed on McCain."[10] McCain reportedly asked for more than what Barnes said. His request was reportedly not merely for what the Air Force should take into consideration, but what he reportedly said it should not take into consideration. McCain reportedly urged the Defense Department to -- in the words of The New York Times -- "not proceed with a plan to consider" the potential effects of a World Trade Organization (WTO) dispute between the United States and the European Union over whether Airbus and Boeing received illegal subsidies for commercial airliners from their respective governments, and those effects were dropped from consideration.[10]

The "Europeans countersued, saying the United States had granted indirect subsidies to Boeing, including tax breaks." The Associated Press reported that in initial drafts of the Air Force's request for proposals for the tanker contract in 2006, "bidders would have been required to explain how financial penalties or other sanctions stemming from the subsidy dispute might affect their ability to execute the contract."[10]

"Top advisers to Senator John McCain's presidential campaign last year lobbied for a European airplane maker that bested Boeing Co. to win a $35 billion Air Force tanker contract, taking sides in a fight that McCain has tried to referee for more than five years.[38] Wynne defended the Air Force's controversial decision last month to award a $35 billion contract to Northrop-EADS instead of Boeing, the aircraft manufacturer that was heavily favored to win the contract.[39]

As part of the contract, the Air Force's Eisenhower-era air refueling tanker fleet will be replaced with Northrop's European-made Airbus A330 tankers instead of Boeing's 767, built in Everett, Wash. Boeing is currently appealing the decision.[39] McCain, a senior member of the Senate Armed Services Committee, sent the letter to Gates Dec. 1; Gates' confirmation hearing took place Dec. 5. One of McCain's concerns is whether the Air Force plans to make its decisions based on the hypothetical impacts of a pending trade dispute between Boeing and Airbus on pricing of their offerings for a refueling tanker. "I remain troubled that, without clarity on how answers to this provision will be evaluated, this element. may risk eliminating competition before bids are submitted," McCain says.[10] According to the Times, in September 2006, McCain wrote two letters to Deputy Defense Secretary Gordon England "urging that the Air Force not proceed with a plan to consider the trade dispute in evaluating tanker bids." McCain reportedly wrote: "I am concerned that if the Air Force proceeds down its chosen path regarding the W.T.O. issue, the Air Force will risk eliminating competition before bids are submitted I respectfully suggest that Air Force remove any W.T.O. element from its procurement evaluation." On December 1, 2006, according to Aerospace Daily & Defense Report, McCain sent a letter to then-Defense Secretary nominee Robert Gates urging him "to withhold release of a controversial request for proposals for the Air Force's tanker replacement program until providing assurance that a number of competitive issues are addressed."[10]

"I'm a little bit shocked at the assertion," Paul Meyer, Northrop's manager of the tanker program, told reporters when asked about Boeing's charges that a number of changes were made by the Air Force during the competition that favored the bigger Airbus A330-based tanker over Boeing's 767-based tanker. He said Northrop failed to persuade the Air Force to change criteria that it believed were unfair. Nothing was changed once the final request for proposals was issued by the Air Force, he said. "We saw nothing that changed in our regard," he said.[15] In a conference call with reporters to discuss the executive summary, Mark McGraw, vice president of Boeing's tanker program, acknowledged the company faces an "uphill battle" to get the GAO to uphold the protest. McGraw said he is confident that Boeing will "win the day" and the Air Force will rebid the tanker competition. "The best we can hope for is another shot, with better clarity on requirements and evaluation criteria," he said. A couple of hours after that teleconference ended, Northrop fired back at a hastily arranged teleconference of its own.[15] In FY2007, out of 1,411 protests only 91, or 6% of the protests, were sustained. By all accounts, this competition was the most rigorous, fair and transparent acquisition process in the history of the U.S. Department of Defense, and the Air Force made what it determined to be the best choice for the warfighter. The suggestion that this competition a competition that was the second attempt by the Air Force to procure a tanker after the first deal with Boeing ultimately imploded as a result of illegal dealings was anything but fair and transparent is laughable. Boeing is also charging that it was somehow disadvantaged in this competition that they did not understand what the Air Force wanted. This charge strains credibility.[19] To the editor: Your article on Boeing's shocking loss to French manufacturer EADS in the Air Force's tanker competition ("Air Force made in France?," Mar. 8) missed some key information that puts this upset in critical perspective: the Department of Defense (DoD) has effectively outsourced some 44,000 manufacturing jobs to a foreign company that routinely flouts American institutions and international law.[17] Boeing said the tanker contest "was not a fair and open competition, but a skewed process that unfairly compromised Boeing's proposal." There's also some indication Boeing may not have done an adequate job of staying informed during the evaluation process or of selling the attributes of its tanker. The company may have taken its competitive edge for granted. According to Boeing's own filing, an Air Force pricing evaluator told the company that it had provided insufficient information on its proposed tanker other than "marketing materials" and some "graphs with lines on them."[33]

Boeing said the original request for proposal "did not call for a jumbo-sized tanker." The company proposed a tanker based on its 767 commercial aircraft, but said it would have used a larger 777 platform if it had known the Air Force wanted a larger plane. The protest also charges that the Air Force changed its requirements to accommodate the bigger tanker assuming maximum runway strength and ignoring estimates on tarmac sizes, for instance, to make it appear that more air bases would be able to handle the larger plane.[25] Boeing said it was unfairly penalized for not providing adequate commercial cost and pricing data for the underlying 767 plane even though the Air Force had told Boeing officials that it was satisfied with the data it had supplied. The company argued that the Air Force ignored Boeings lengthy track record of producing aerial refueling tankers for the military and "the inherent manufacturing genius of its bid."[25]

Despite Boeing Corp.' s protest of the U.S. Air Force's decision to buy aerial refueling tankers assembled in Mobile, the Mobile Airport Authority on Monday continued to lay the groundwork for a new $600 million complex.[40] The Air Force's decision to give a lucrative aerial refueling contract to a Northrop Grumman/EADS team was not a fair or open process, Boeing said in its protest.[4] Boeing has now embarked on a two-part strategy to overturn the decision. It will file a formal protest with the Government Accountability Office alleging procedural and analytical errors in the awarding of the contract. Since any GAO determination in its favor would be advisory rather than binding -- the Air Force can ignore the finding -- Boeing will not oppose legislative efforts by its backers in Congress to nullify the Northrop win.[41] Mark McGraw, manager of Boeings tanker program, said reversing the Air Forces decision will be "an uphill battle," but hes confident the company will prevail. Last week, the Chicago-based company filed its protest with the Government Accountability Office, which has 100 days from the date of the filing to rule.[25] The release of the proposal is Boeing's latest public relations salvo in the tanker battle. Last week, the company filed its protest asking the Government Accountability Office to overturn the Air Force award. It has also enlisted several big lobbying firms to press its case.[42] As for Boeing's actual protest, the company alleges that Air Force requirements for the new flying gas stations were modified along the way to keep Northrop/EADS in the competition. Boeing says this ended up tilting the field in its rivals' favor. This complaint is a technical, rules-based one that the Government Accountability Office, Congress's investigative arm, will presumably examine on the merits. Whatever those merits, this long-running matter needs to be concluded quickly.[27]

"The process became driven by the Air Force's determination to create the possibility for competition between two planes that offered dramatically different capabilities, only one of which matched what the Air Force said it wanted. The Air Force changed its direction, skewed the competition against Boeing and in favor of Northrop Grumman/EADS, and awarded a contract for a plane that did not satisfy its own bid requirements. The Air Force has repeatedly defended its process.[7] The result was a contract "that is fundamentally unfair not only to Boeing, but to the warfighter and the American people," the protest summary said. Despite his stated confidence in reversing the outcome, McGraw, in a teleconference with reporters, said Boeing faced an "uphill battle" to persuade the GAO, which has up to 100 days to make a recommendation to the Air Force. "I think the best we can hope for is another shot" at the competition, he said, referring to a possible rerun of all or part of the contest to correct alleged flaws in the process.[3] Boeing has built every tanker the Air Force has ever flown. While I am disappointed Boeing has chosen to protest this contract, we must let the process run its course. Let us not forget, these aircraft are 47 years old, and they are getting older by the day. Our American airmen, soldiers, sailors, and Marines need these tankers today.[19]

If Boeing didn't like the criteria or felt the Air Force was changing the rules in midstream, said Northrop tanker program manager Paul Meyer, it had plenty of chances to complain before the contract was awarded. It didn't. "This process has been open all along," Meyer said.[6] The Air Force is even talking with EADS about using a militarized version of the A380 Cargo to replace the workhorse C-5 Galaxy when it is phased out in about 10 years. Boeing's saving grace will probably be the Future Strike Bomber program that was inserted into the budget this year (and will slowly ramp up through 2012) for a next generation manned / unmanned stealth bomber superior to the B-2 Spirit in stealthiness, supersonic (so it could replace the B-1 Lancer fleet eventually), and able to launch ALCMs and heavy payloads (so it could succeed the B-52). Such a contract would be just as big, if not bigger than the Tanker program, considering the Air Force is dedicated to a 200-250 plane bomber fleet, with the B-52s probably flying unil they are 80 years old, and the B-1 Lancers in their sunset decades. Boeing has the advantage in that it has the market advantage for both UAVs and bombers at the moment, so it should be okay, so long as it doesn't submit another lazy plan. Another recent idea is the "B-1R Regional Lancer" that would retrofit four of the F-22A raptor's engines on retired B-1 air frames. They would have less range, but be more efficient at loitering and carrying heavy loads.[43] Third: Past performance compared the success of the two teams on programs similar to the future tanker. The Northrop Grumman team was rated higher, but Boeing says its competitor has faltered on programs such as a new Australian tanker and the A-400M cargo plane. This measure was originally scored by Air Force evaluators as a tie and then adjusted to favor Northrop Grumman for reasons Boeing finds questionable.[41] ARLINGTON, Va., March 18 (UPI) -- When Boeing executives heard earlier this month they had failed to beat Northrop Grumman in any of the five selection criteria for the U.S. Air Force's future aerial-refueling tanker, they were incredulous.[9] WASHINGTON, March 18 (UPI) -- The continuing conflict between Northrop Grumman and Boeing over the U.S. Air Force's gigantic air tanker is unique in the recent history of U.S. military procurement.[9]

Boeing's big was smaller and less ambitious for a tanker fleet that will probably be built to last until most posters here are old men. I think most substantial (and attractive to the Air Force) was the EADS's tanker ability to support both Navy and Air Force planes and be far superior in the long haul over the specific. Since the U.S., with undependable European allies is probably going to be forced to stage more and more military operations from American soil (infact, the Air Force's global strike doctrine specifically calls for this), this tanker simply made the most sense. Its ability to simply carry more of everything matters too, from cargo to people.[43]

Northrop is merely the shadow company to play the U.S. front. Boeing has been criticized in the past, and lost contracts because we came in with planes with two engines instead of one, which would cost more to operate, etc. Now, we come in with one that is cheaper to operate, will save the American taxpayer $30 billion a year and we lose the contract? John McCain and his cronies, with his politically connected lobbyists who are now running his campaign pulled strings to get the competition unfairly slanted toward the Europeans, who I might add have massive government subsidies to keep their aircraft production afloat. This whole thing is about jobs! We used to require that military hardware which is critical to our defense be made by U.S. workers.[7] Northrop-Grumman has appeared defensive in recent days. The Los Angeles company released its own justifications for winning the contract, plus estimates of the U.S. jobs gained from building the tankers, and warned that overturning the deal would weaken arguments that government contracts are awarded impartially. On the campaign trail and in Congress during this period of economic insecurity, politicians have played on perceptions of jobs lost to an overseas consortium (EADS is the European parent of Airbus, Boeing's competitor in commercial jets). In fact Boeing, too, depends on non-U.S. content for its planes, including the 767 tanker (BusinessWeek.com, 3/10/07).[33]

The initial value of the Air Force tanker deal is about $35 Billion, with 44,000 U.S. jobs in America at stake. According to Rep. Todd Tiahrt (R-Kansas), a strong critic of U.S. outsourcing, "the federal government has done much to prevent us from creating and keeping jobs___ "it's not just companies that are making decisions to go overseas. There's costs they can't control. Costs that are driven by the federal government, and we're doing nothing to eliminate or reduce those costs. 1.[38] The tanker fight is tumbling through Capitol Hill, where lawmakers from Washington, Kansas and other states that would have gained jobs from a Boeing win are demanding the Air Force explain why it gave the deal to a foreign company.[25] And, obviously, the record is very clear of me having saved billions and billions of dollars for the taxpayers. NANCY PELOSI (D-CA): Senator McCain intervened, and now we have a situation where contract may be -- this work may be outsourced. HUME: What Nancy Pelosi and John McCain are both talking about is a contract to build the Air Force's new and much-needed supertanker. It was originally awarded to Boeing under a deal so corrupt, as John McCain described it, that people went to jail and the CEO of Boeing lost his job.[10] Rather than keep the billions of dollars and thousands of the jobs that will come with the contract here in the United States, the Air Force gave the work to foreign-based EADS' Airbus unit and its partner Northrop Grumman.[44] The Air Force's invitation for bidding also appeared to take account of objections lodged by Northrop Grumman, the U.S. partner of EADS for the massive mid-air refueling plane contract.[10] The Air Force shocked the aerospace industry Feb. 29, by choosing a team of Airbus and Northrop Grumman to build the new midair refueling tankers.[37] The EADS-Northrop Grumman team was selected over Boeing to supply the Air Force with 179 aerial refueling tankers the second-largest Pentagon contract ever.[45]

One key factor: The KC-30 design was able to carry 23 percent more fuel or cargo, giving it a clear advantage in refueling missions. It probably didn't help that Boeing in 2005 lost a $100 million tanker-lease contract after Congress uncovered a conflict of interest involving Air Force buyer Darleen Druyun, who helped seal the deal before being hired by Boeing. The scandal undermined confidence in the procurement process and might have pushed the Air Force to prove its independence.[18] I stand with a broad, bipartisan coalition in Congress that is supporting Boeing's decision to challenge the Air Force's contract award. Members of the Connecticut congressional delegation joined me in requesting a debriefing from the Air Force on its process for awarding this contract, which we were given.[44] "We've all known for a long time now that foreign companies and workers and domestic companies and workers don't compete on a level playing field. This drove that point home." If this goes down, I then ask, why even have contracting experts in each of the services? Why not just let Congress make all the decision for us? Oh yeah, b/c THEY ARE NOT EXPERTS ON CONTRACTING (despite what they think). If you give folks a job to do, let them do it! It might be different if something illegal was done, but that doesn't seem to be the problem. If we let Congress get away with this, what is next? Talk about big government. since when does Congress just get to void contracts whenever they want to? Does anyone else see a HUGE problem with this? I'm all for buying American, so if that's what Congress wants, then maybe they should enact some acquisition rules that say so. Otherwise, if the Air Force has followed the current rules, then Congress has no place changing anything. It's about time congress woke up to the fact that our domestic sustaining base is being devistated by purchasing our war materiel from foreign entities.[32] Lawmakers accepted that the service was hampered by prohibitive acquisition restrictions. The Federal Acquisition Regulation prohibits the government from considering job growth or a reliance on foreign subsidiaries during their evaluation. "I look to the legislative branch to write the laws of this country, and I am sworn to enforce the laws," said Sue Payton, the Air Force's assistant secretary for acquisition at the Defense Appropriations Subcommittee hearing. Those familiar with the FAR's complex guidelines said Congress would be wise to leave contracting decisions to the experts.[32]

The two big factors were superior performance (fewer of the AirBus aircraft were needed to get the job done) and more reliable performance of the suppliers. It's AirBus's U.S. partner, Northrop, that provided an edge. The air force examined recent project performance by Boeing and AirBus/Northrop, and found that the latter team was more likely to deliver the aircraft on time and at the agreed upon price. [46] EADS, the European defence company, has beaten Boeing to win a huge U.S. Air Force order. And, as of May, Unilever will not have a British or Dutch member of its top executive team for the first time since the company was formed by an Anglo-Dutch merger in 1930. It would be comforting to view this as a sign that commerce has dissolved national differences.[47] Give it time. With the award going to a US-European consortium, it's a good bet that we're in for yet another round of know-nothing nativism - and right in the middle of campaign season. Both the loser, Boeing, and the winner, Northrop Grumman/EADS (short for European Aeronautic Defence and Space, a multinational company based in the Netherlands), submitted excellent proposals for the Air Force's next-generation in-flight refuelling plane, the KC-X. Both met the required criteria. Both have solid track records in aerospace and defence.[43] The plane maker said the Air Force "repeatedly made fundamental but often unstated changes to the bid requirements and evaluation process" to keep the Northrop Grumman-Airbus proposal alive. The release of the executive summary of the protest is Boeing's latest salvo in its attempt to overturn the Air Force decision.[31]

In a Sept. 25 draft request for proposals, the Air Force asked for information from competitors on how an adverse ruling from the WTO over the affect of subsidies on commercial airliner costs could impact the price of proposals from Boeing and a Northrop Grumman/EADS North America team. Both competitors have had questions about how the Air Force's position on the WTO issue could impact the outcome of the competition.[10] "The Air Force twice made changes relaxing key mission scenario assumptions to eliminate real-world constraints with which the KC-30 (the Northrop-EADS tanker) could not comply," Boeing said in the executive summary. Meyer responded that it was "shocking" to him that Boeing would claim Northrop "could force or demand changes in the competition.[15] When the Air Force selected the European-based Airbus over American-made Boeing in the competition to build the next generation aerial refueling tanker, Boeing officials cried foul.[48] Boeing has protested the Air Force's recent move giving Airbus a big stake in construction of a fleet of aerial refueling tankers.[49]

Nothing lasts forever, and over the past decade the KC-135s have been more in demand than ever, serving the Air Force's proliferating new military commitments from Kosovo to Afghanistan to Iraq. The time for their replacement was long overdue. Boeing understandably was confident -- and even complacent -- that it would get the order to replace them with its new KC-767 air tanker. No other corporation in the world knew as much about air refueling tankers, had built so many of them or had operated them efficiently for so long as Boeing.[24]

The recent U.S. Air Force decision to buy a new generation of aerial tankers from a European firm (AirBus), rather than U.S. aircraft builder Boeing, shocked many observers.[46] "In addition to the U.S. Air Force, the boom system is in use by the Netherlands (KDC-10), Israel (modified Boeing 707) and Turkey (ex-USAF KC-135R). Possibly the largest tanker aircraft, Iran took delivery of Boeing 747 tankers equipped with a single boom and three drogues in early 1976, but the current status of these aircraft is unknown. Both Japan and Italy have contracted with Boeing for tankers based on the B767."[43]

Now Boeing has suffered the same fate in the air tanker market. It has provided the U.S. air force with its fleet of KC-135 air tankers -- originally versions of the Boeing 707 -- for more than half a century. The KC-135s have been flying since the Eisenhower administration and Boeing has done a superlative job of keeping them reliable and efficient for decades longer than their original projected operational life.[24] The Air Force had planned to lease tankers from Boeing until a 2004 ethics scandal in which a senior Air Force official pushed the deal while holding job talks with Boeing. It took until late last month to finish the rebidding.[27] A year ago, it was re-opened after a procurement scandal sank an initial Air Force deal to buy Boeing tankers without a competitive bidding process.[10]

The presumptive Republican candidate, Sen. John McCain, played a key role in exposing Boeing procurement scandal in 2003 that sent a top Air Force acquisition official to prison and led to the collapse of an earlier tanker contract.[25] Boeing's chief financial officer, Michael Sear and a senior Air Force official pleaded guilty to conspiracy to violate federal conflict-of-interest rules and were sentenced to prison. Boeing's chief executive officer at the time, Phil Condit, was forced to resign, and Boeing paid out a record $615 million fine for its role in the scandal and other procurement infractions. Darleen Druyun, then the second-highest acquisition executive in the Air Force, who admitted steering huge, multibillion-dollar contracts to Boeing in return for post-government employment for herself, her daughter and her son-in-law.[43]

The Air Force halted activity on the contract last Tuesday after the loser, Chicago-based Boeing Co., formally protested the award to the Government Accountability Office, or GAO, a congressional agency charged with deciding contract appeals. Although the "stay" was automatic under federal regulations, those same rules gave the Air Force leeway to resume work if it made a written determination that "contract performance" was in the national interest or that "urgent and compelling" circumstances didn't permit delay until the GAO's ruling, due June 19.[35] The Air Force plans to award two more related tanker contracts. Boeing is still in the running (although EADS/Northrop now has the advantage on these, too).[18] Successful protests are rare. While McGraw said he's confident Boeing will "win the day," he also said the best he could hope for is a re-bid of the contract and some "clarity" on what kind of tanker the Air Force wants. "It's an uphill battle, no doubt," he said. "But it's not like we had to search for reasons to protest.[6]

According to the Air Force, the keenly fought award is worth $35 billion for up to 179 KC-45As'the new, officially approved designation. In a story on the KC-X published in AIN last June, it was reported that'size matters' while Boeing maintained its conviction that the Air Force wanted a KC-135 replacement that was not much bigger. It seems Boeing failed to appreciate that sentiment among KC-X acquisition officials was shifting toward the longer range, greater fuel offload and bigger cargo capacity offered by the A330, compared with the KC-767 Advanced Tanker (AT) on offer from Boeing.[50] Airbus estimates that China alone will need 2,929 large aircraft worth $349 billion between 2006 and 2025. Given these figures, China is destined to be a major market for both Boeing and Airbus, so the rivalry to win China is likely to be extremely intense. Airbus has already agreed to build an assembly plant in Tianjin for the A320, and it is almost certain that both companies will produce more in China in an effort to sell more there. Given the multinational nature of all of these aerospace companies, the outrage over the air tanker deal is clearly misplaced. Members of Congress are being hypocritical when, on the one hand, they fume over general government waste of taxpayer dollars while, on the other hand, they are furious that the Pentagon made a decision that it believes offers the best value for money.[45]

Sure, we'd like to keep flying Boeing." Kemp noted, that decision isn't up to him and his colleagues. Kemp is hardly xenophobic when it comes to such matters - he spent two years pursuing his master's degree in France in the early 1990s. He's happy for Airbus and said he's confident that the Air Force - cognizant that the next generation of tankers may have to last another 50 years - has put plenty of thought into its decision.[51] Boeing might still file a formal complaint against the selection process at which it was pipped by Airbus despite being the heavy favorite and producer of the Air Force's current tanker fleet.[9]

Northrop Grumman won overall due to greater fuel and cargo carrying capacity, but Boeing says that deviated from Air Force assertions that the service was seeking a medium-sized tanker.[41] Mobile, a port city in lower Alabama, has been celebrating since the U.S. air force last month unexpectedly chose EADS and Northrop Grumman to supply refuelling tankers, which will be assembled there.[52] Northrop Grumman CEO Ronald Sugar went on the offensive too last week, warning that reversing the tanker award would undermine the entire procurement and defending the Air Force competition as evenhanded.[25]

Second: Proposal risk assessed the degree of danger that the two teams would fail to execute as promised. They tied on that measure after Boeing lengthened its original development schedule. Boeing argues the Air Force failed to accurately assess the risk of Northrop Grumman's plan, which involves building major assemblies in several countries and then integrating them in a new facility in Alabama.[41]

"The Boeing study does not compute fuel efficiency of tankers based upon operational metrics used by the Air Force," said a spokesman for Northrop. ITW: Illinois Tool Works Inc. cut its first-quarter and full-year profit forecasts, citing one-time charges that will deduct 22 cents a share from earnings.[11] The Air Force had the option of awarding the aerial tanker program to a team led by Boeing that would have included Connecticut's Pratt & Whitney and Hamilton Sundstrand. It is astonishing and outrageous that in the midst of a recession and at a time when our nation is at war, the Bush administration has chosen to outsource our national security. Our national security and economy are at a crossroads, each affecting the other and both facing major hurdles over the years to come. When given the opportunity to provide a significant boost to both our national security and our economy, we should seize it. It was squandered.[44] Almost all of this has been stirred up by the Democrats Reid and Pelosi. They have been blaiming McCain because he got the first contract disavoed because of collusion between Boing and the Air Force and those people are now in jail. The second time McCain complained that with only Boeing bidding there was no way to have a competitive bid. Now they get competitive bids and Beoing loses. You can see it's McCains problem. Can't blaim this one on anyone but the Democrats. They been scqueeling load and long.[43] Via e-mail Monday. Lt. Col. Jennifer Cassidy, an Air Force spokeswoman, said the military "has no plans at this time" to restart contract activity before then. In general, she added, "because the entire GAO bid protest resolution process takes, at most, only 100 days, the (Air Force) does not override stays, absent some particular urgency to initiating or continuing performance." If the Air Force did so in this case, it would be seen as "pro-Northrop," said Nick Schwellenbach, defense investigator at the Project on Government Oversight, a Washington, D.C., watchdog group.[35]

Air Force contract officers "repeatedly made fundamental but often unstated changes to the bid requirements and evaluation process," Boeing complained. Specifically, Boeing argues that the Air Force changed its selection criteria without informing Boeing.[33]

The contract has become the latest cause celebre on Capitol Hill, with lawmakers from the two states arguing that the Air Force erred by not giving the contract to The Boeing Co., the local favorite and Airbus' rival.[30] According to Reuters, the contract was described as a "surprise blow" to Boeing, which had previously been the "Pentagon's sole supplier of aerial tankers." In purporting to explain Sen. John McCain's role in the controversy, Barnes stated, " ere's what he asked for: He asked for the Air Force to take into consideration, which he thought the Air Force regulations required, aircraft -- taking into consideration maximizing cargo and passenger capacity, which are important in a supertanker. Well, they did.[10] Summary: On Fox News' Special Report, Fred Barnes said of Sen. John McCain's role in a controversial Air Force tanker contract: "He asked for the Air Force to take into consideration, which he thought the Air Force regulations required, aircraft -- taking into consideration maximizing cargo and passenger capacity, which are important in a supertanker. Well, they did.[10]

Each company accuses the other of unfair pricing based on government subsidies. Aerospace Daily & Defense Report reported that four days after McCain's letter, the Air Force showed "signs of reversing its position" and quoted an Air Force special assistant stating: "The Air Force has revisited its position on WTO on the tanker replacement program based upon discussions with the offerors and will in the next update add a clause that hold all harmless to any future WTO claims."[10] By all accounts, Air Force officials conducted a scrupulously transparent competition for the new tanker. They invited the Defense Department's inspector general and the Government Accountability Office (GAO), the investigative arm of Congress, to oversee the process.[48]

The best irony is unintended. I was reminded of that this week, while reading a well-argued op-ed piece in the Financial Times by Richard Shelby. The Alabama senator makes a good case that purchasing an Airbus tanker for the Air Force is a sound decision, both in military effectiveness and fiscal management. I think he is right. It is hard not to laugh when he piously asserts that "Politics should have no place in the Department of Defense's acquisition process." I doubt the good senator would be writing such op-ed pieces if the Airbus-Northrop Grumman-European Aeronautic Defense and Space Co. consortium had not strategically chosen his home state for the plant to assemble the new tanker. Nor is his plea for keeping politics out of procurement supported by his noting that 230 different suppliers in 49 different states will make components for the tanker.[53] Now consider whether it will still be around in five years. Or 10. Or 50. When the U.S. Air Force announced it would be purchasing its newest line of air tankers from the parent company of France-based Airbus, many Americans reacted with hostility, complaining, as did Sen. Patty Murray, D-Wash., that the Air Force had led thousands of American jobs "to the guillotine."[51] The county launched a Web site (keepourtanker.com) so backers can sign an online petition supporting the Air Force's selection of the Northrop Grumman-EADS KC-45 refueling tanker. "This tanker is as American as apple pie," County Commission President Stephen Nodine said to critics of the European involvement in the winning - so far - partnership.[14] Prepare, wherever you go, to hear a lot of blather about whether the deal to buy a new generation of air refueling tankers the Air Force wants is good or bad for the presidential aspirations of John McCain.[2] The deal is the first of three Air Force awards worth as much $100 billion (63.41 billion) to replace the entire fleet of nearly 600 tankers over the next 30 years.[25] The Pentagon said it was committed to an open bidding for the checkered "KC-X" project, which aims to replace the Air Force's aging mid-air tankers under a deal that could be worth up to 200 billion dollars.[10]

The air force crunched the numbers of the two proposals and determined that, while 49 of the AirBus tankers would be available by 2013, only 19 of the Boeing version would be ready.[46] The first few Air Force tankers will be built in Toulouse, France, where the A330 is now assembled. They would then be flown to Germany, Spain or Florida for modification. That approach, Boeing said, is an "evolving plan" in which Northrop-EADS would "hopscotch through Europe to develop some of the planes, send others to Florida for modification, and ultimately aspire to produce the KC-30 in Alabama at a plant that does not yet exist with a production line that has yet to be identified."[15] "Due to continuing pressure from Capitol Hill and (Northrop-EADS),. the bid process became driven by the Air Force's determination to keep (Northrop-EADS) in the competition," Boeing said in the executive summary.[15] In the protest, Boeing maintains that the Air Force review "was not a fair and open competition, but a skewed process that unfairly compromised Boeings proposal."[25]

Boeing claimed that after Northrop threatened to pull out of the competition, the Air Force made several changes that helped Northrop.[15]

Meyer agreed that the actual scores the two proposals received in the five key criteria may have showed a close contest. He also said the Air Force told Northrop that in four of those five categories, "we won hands down." He also questioned why Boeing is only now raising these issues -- after it lost.[15] The A330F has out-sold the 767-300F by two-to-one since it was launched, and the A330 MRTT has beaten the KC-767 in the last four international evaluations of refueling tankers'in Australia, Saudi Arabia, the UAE and UK.The Air Force said the A330 MRTT offered overall 'best value' for the KC-X requirement based on the following five considerations: mission capability, proposal risk, past performance, cost/price, and an integrated fleet air refueling (IFAR) assessment. Boeing said the Air Force unfairly adjusted the KC-767's most probable life cycle costs during the cost/price evaluation, and also broke its promise to adjust the result of the IFAR assessment for 'real-world constraints,' such as the runway lengths and ramp space available during overseas deployments.[50] Boeing has performed with the U.S. Air Force for decades providing a safe, reliable, cost effective air refueling capability. This is a franchise decision.[54] This is not about instituting an isolationist policy. It is the responsibility of Congress and the U.S. military to consider what is in the national security interest of our country. It is undeniably in our interest to sustain the critical mass of highly trained and highly skilled workers in the aerospace industry. Congress has a constitutional obligation to intervene on behalf of this vital security question. The Air Force defends its decision by saying that it was based on providing the best "value" to American taxpayers and the U.S. military. Ignoring the effect of this award on our workers and critical supply chain, however, is not in the best interest of our country.[44] Senate majority leader Harry Reid has called for hearings. House speaker Nancy Pelosi concurred : "Given the ramifications of this decision for the United States, the Air Force must explain to Congress how it meets the long-term needs of our military and the American people." Both Democrat John Murtha, chair of the defence appropriations subcommittee, and Republican Duncan Hunter, ranking minority member of the House armed services committee, are threatening to withhold funds if the deal goes through.[43] In recent weeks, U.S. Air Force Secretary Michael W. Wynne has been urging Congress to increase funding for the Air Force so the public can continue to receive the level of service it expects from the military's high-flying branch. Wynne told about 300 guests at the Ronald Reagan Library and Museum in Simi Valley that the money must be used for technological advances and upgrades so the United States can continue to be the dominant military power Reagan demanded when he was president.[39]

Behind all the hue and cry over the Air Force giving away U.S. manufacturing jobs and military secrets to foreigners is a fundamental misunderstanding of how global production and multinational deals work.[43] Mobile has a lot of things in common with Corpus Christi. It has a port on the Gulf of Mexico. It needs well-paying jobs just like Corpus Christi does. Corpus Christi has no history of being in the aircraft industry, but neither does Mobile, so there is no large work force trained in the skills or engineering background that the industry needs. It does have an old Air Force base which is used as a civilian airport now, which, combined with the port, was a key to local leaders making their pitch to EADS to bring their business to them. That's not why it seems that Mobile is now on the verge of entering the aerospace industry.[28]

The contract, valued at up to $40 billion, was awarded to the Northrop Grumman Corp. -EADS North America team Feb. 29. Should it be upheld, the companies have said they will assemble the tankers in Mobile, creating 1,500 direct jobs. Another 300 jobs are promised as EADS subsidiary Airbus also moves commercial freighter aircraft assembly to the Brookley Field Industrial Complex.[40] Northrop Grumman/EADS's winning proposal for the KC-X Next Generation Air-fueling Tanker contract is completely dependent upon the heavily subsidized Airbus A-330 aircraft. Without these subsidies, EADS/Airbus would not have been able to develop the A-330 or a refueling tanker. Without these subsidies, Northrop Grumman's proposal would not have been competitive. Even given the clear illegality and unfairness of the Airbus subsidies, however, the Department of Defense refused to consider the impact of subsidies in this competition. This decision allowed a heavily subsidized foreign competitor to win a major Department of Defense contract.[5] Mr. President, the award of the KC-X Tanker contract to a subsidized foreign competitor has rightfully outraged Americans across our nation. This competition was clearly unfair and heavily weighted in favor of a foreign manufacturer due in large part to the subsidies deemed illegal by your own USTR. I would like an explanation as to how the USTR contends that Airbus gains an unfair competitive advantage through illegal subsidies, yet the Department of Defense awards this same company a major contract without taking these concerns into account. Mr. President, I ask that you reconsider this competition and re-compete the contract with a consistent U.S. policy on illegal subsidies.[5]

The contract, which is the second-largest Pentagon program in history, was awarded to Northrop Grumman Corp., which teamed up with European Aeronautic Defense and Space Co., the parent company of Airbus. 'I feel sorry to (hear) such comments,' said Emmanuel Lenain, spokesman and press counselor for the French Embassy in Washington, D.C., adding that the competition was won by 'a European company, not a French one.' EADS is based in the Netherlands. 'For the bigger picture, keep in mind that there are 2,400 branches of French companies in the United States, employing about 450,000 people,' he said.[30] In a speech on the Senate floor, Democrat Patty Murray of Washington noted that if Boeing had won the contract, it would have created 44,000 jobs in the United States. The U.S. plan is tantamount to 'outsourcing' its military work, Murray said. She said U.S. taxpayers would be financing 'a European jobs program' that gave control of U.S. military technology to a foreign-owned company during a time of war.[30]

EADS's involvement does not mean EADS's dominance, particularly on the manufacturing end. 60% of the Northrop Grumman/EADS plane will be US-made and create between 24,000 and 48,000 jobs in this country. That, however, is less the result of foreign partnership than the reality of global sourcing, something all companies do these days, even Boeing (its proposal would be 85% American-made and create 44,000 jobs). Precisely because there is so little substantive difference between the two bids, it is all the more likely that Boeing backers will ramp up their pro-American, anti-European sentiments. They might just win - just ask Dubai Ports World or China National Offshore Oil Corporation how effective nativist politics can be. In winning the battle, though, they might lose the war. How well would Boeing do the next time it tries to sell planes in Europe - or Asia, or the Middle East, for that matter? Ultimately, they risk not only giving another data point to the grassroots, hard-right sentiment brewing below the American political radar, but also to those parts of the world that have not yet written off the United States as a positive force on the global stage.[43]

About 100,000 U.S. workers make parts for the Airbus A380 superjumbo, and the company will build a new plant in Alabama to assemble the tankers, resulting in 2,500 new jobs and supporting 25,000 around the United States. Other European aerospace and defense companies are adopting similar strategies. BAE Systems, a U.K. -based company, has made more than a dozen acquisitions in the United States since 2000. The company's 45,000 U.S. workers make up almost half of its global workforce, and BAE sells more to the U.S. government than any other non-U.S. company.[45] Fear that Europeans will gain from the Pentagon's largesse ignores the fact that U.S. companies have dominated the global arms trade since the end of the Cold War, and that European defense ministries buy far more from U.S. firms than European companies sell to the Pentagon. More important, Americans should be concerned about the extent to which the United States offers a business environment that supports high-skilled jobs in the aerospace sector, regardless of the nationality of the company providing them. Ensuring a pool of well-trained engineers, technicians and production workers is far more important than who is paying them.[45]

The award sends offshore several billions in U.S. taxpayer-funded research-and-development dollars. This award, over its life cycle, I estimate to be worth $100 billion-plus, considering follow-ons, maintenance and support, and international sales. A business base of this size will support billions in independent research and development. The award to Northrop/EADS will result in a net loss of these research-and-development dollars from the United States to Europe. We should care about this because R&D; fuels innovation; innovation attracts capital; capital creates jobs (in this case high-paying, high-quality jobs), and these jobs fuel growth in the gross national product. This award will fuel European, not U.S., growth, and American taxpayers should be outraged. This is especially true at a time when Congress and the White House are appropriating billions of dollars in stimulus to get our economy going.[54]

The European business public chafes at travel restrictions, one of the many reasons London has caught up with New York as a financial hub. The Arab business world watches agog as we prevent modern, legitimate businesses from buying American port properties simply because they are based in the Persian Gulf - even as we demand access to their own markets and corporate properties. The same sort of America-Firstism is bubbling up over the tanker deal. Frank Gaffney, president of the Center for Security Policy, warned in the Washington Times that EADS, owned in part by the perfidious French government, could pepper the planes with "built-in defects such as computer code 'trap doors' that may not become obvious until the proverbial 'balloon goes up' and disabling of U.S. military capabilities becomes a strategic priority to foreign adversaries, or those sympathetic with them." Inexplicably, he even called out EADS for employing unionised workers, and so presumably leftists, and so presumably anti-Americans - as if the quality of an airframe joint were determined by the political views of the welder who built it. The Christian Science Monitor, while endorsing the deal on its merits, raised alarm over "the question of what a project like this means for America's ability to quickly ramp up in a crisis", even though the planes and all their key components will be American designed and American built. (If anything, the deal is a net positive for us technologically, since working with EADS will give our insular aerospace industry exposure to new ideas.) Such talk has caught on fast in Congress.[43]

Northrop had threatened to pull out unless the terms were altered to give priority to more than just cost in the Pentagon's decision-making, which would have favored a cheaper offering from Boeing. Northrop said it was "deferring comment" until its project team has completed a "thorough review" of the RFP. Any withdrawal by Northrop would leave EADS without a U.S. partner and so unable to proceed with the bid, which the European company sees as pivotal to its ambitions to take on the world's biggest military market.[10] The decision flies in the face of Boeing's five decades of dominance and proven excellence in building military tankers. Questions remain, too, about the propriety of awarding such a sensitive military contract to a team that includes a France-based company, EADS, the parent of Boeing's heavily subsidized rival, Airbus. Sen. Pat Roberts, R-Kan., and Rep. Todd Tiahrt, R-Goddard, rightly vowed Friday to thoroughly review this decision and try to reverse it.[18]

For Boeing, which won a similar contract in 2003 and then saw it rescinded when it came to light that an Air Force procurement official landed a plum position with the aerospace company, the new award is a serious blow.[45] The Air Force faced 'continuing pressure from Capitol Hill' to let Northrop-EADS compete for the contract, the Boeing protest said.[16]

Boeing released an edited executive summary of the protest filed last week with the Government Accountability Office in an attempt to overturn the Air Force's award.[4] Last week, Boeing protested the decision, asking the Government Accountability Office to review the Air Force's decision, likely heading off any congressional intervention until the watchdog rules on the case.[32]

Boeing has appealed the Air Force decision, but Mobile remains a prime example of what a community can do when it can focus on the big stuff and put aside the petty bickering.[28]

Boeing says if it had known of the Air Force's desires it would have offered a tanker based on the larger 777 aircraft.[33] Boeing also complained that the Air Force turned a "blind eye" to the "ill-conceived, unstable and highly risky" approach that Northrop-EADS will use to make tankers for the Air Force. Boeing's 767 tanker would have been built at its Everett factory, on the same line as the commercial 767 has been assembled since the early 1980s.[15] Air Force tanker pilots have been staring at the Boeing logo at the center of the KC-135 Stratotanker's steering controls for more than 50 years.[51] The Air Force selected the Northrop/EADS proposed tanker, which could carry more fuel a longer distance, rather than Boeing's 767-based tanker.[33]

Key portions of the fuselage and tail on the airborne-refueling plane Boeing wanted to build for the Air Force would have involved non-U.S. companies. That far-flung supplier network is necessary to stay competitive, Boeing says. It can create headaches for the manufacturer, too. Boeing has been struggling to reassess its 787 delivery schedule since January, an effort that the company reaffirmed on Mar. 7 is ongoing.[13] Boeing's offer provided the best value and performance for the mission at the lowest risk, McGraw said. Had it been clear the Air Force wanted a larger plane, Boeing would have offered its larger 777, Boeing said.[4] Boeing wants more clarity in the Air Force's requirements and the opportunity to clarify some of the misunderstandings. Among its protest grounds, Boeing said the Air Force improperly evaluated its offering of a 767 commercial platform and its mission capability, risk, cost and price and past performance.[4]

The GAO will have until June to review the full protest, and make a recommendation to the Air Force. Aviation analyst Scott Hamilton has an interesting piece here?? on Boeing's protest, a move he originally opposed but now says should be "pursued aggressively."[7] 'For EADS, that included the A330 and A340 platforms.' After looking at the Air Force's interest in cargo and aero-medical evacuation needs, Northrop decided the 'A330 was the spot-on aircraft,' Belote added. 'We believe it's the most capable and best value for the American taxpayers.' The Air Force is 'carefully' considering the protest and will present its position to the GAO after the agency completes its evaluation, Air Force spokeswoman Lt. Col. Jennifer Cassidy said in an e-mail.[16] I'm not sure exactly why the Air Force used the boom. It wouldn't surprise me if it was, at this point, for historic/continuity reasons (i.e. they had the boom decades ago, and are "stuck with it" as they have to design new planes to use the boom because older planes did). Maybe the EADS design is a necessary transition step in this regard so future Air Force aircraft can be designed to use either. The Iranian Air Force's equipment is all left overs from when the U.S. was building up the Shah's forces in the 1970s, and as such, all its U.S. assets is frozen in 1970s technolgy, and hasn't received upgrades or maintienence since then. Even if their F-14s are flying (and they probably aren't), they are of the F-15A variety have have no way to do ground attack or all weather / night attack like the just-retired F-14Ds could (the U.S. Navy doesn't fly F-14s anymore, it replaced the last ones with F-18E and F-18F two years ago).[43] In the Air Force's final RFP, according to a January 30, 2007, Agence France-Presse article (retrieved from the Nexis database), "the Department of Defense dropped any link between the bidding and a legal tussle over aircraft subsidies being waged by the U.S. and European Union at the World Trade Organization.[10] Payton stressed: "We don't really want to go to a hypothetical situation relative to only having one provider here, one proposal (from Boeing)." In its "request for proposals" (RFP), the Department of Defense dropped any link between the bidding and a legal tussle over aircraft subsidies being waged by the U.S. and European Union at the World Trade Organization.[10]

Boeing and EADS have been at the center of a WTO dispute after the U.S. filed a complaint -- still pending -- alleging that, according to a March 12 New York Times article, the European Union "provided illegal subsidies to design and develop aircraft, including preferential loans, debt relief and loans and research and development grants" for Airbus.[10]

The AP then wrote that the provision "was widely viewed as hurting the EADS-Northrop Grumman bid." A March 7 Seattle Post-Intelligencer article reported that the "issue of European government subsidies for Airbus has been raised for years by Boeing supporters who claim that those financial breaks have allowed the Toulouse, France-based company to undercut Boeing's prices and thus gain market share in the global competition between the two aircraft manufacturers."[10] Airbus now sells more large civil aircraft than Boeing." It is clear that the U.S. government believes that Airbus receives illegal subsidies resulting in unfair competition. It is clear that these illegal subsidies are costing American jobs.[5] Boeing, (without improper restrictions) can do the job cheaper. On top of this, the U.S. government is sueing Airbus in the WTO for unfair subsidies.[38]

Boeing is formally protesting the U.S. Air Force's'surprise decision' in favor of the Northrop Grumman/EADS Airbus A330 Multi-Role Tanker Transport (MRTT) for the KC-X tanker requirement. [50] Northrop Grumman joined forces with the German and French run European Aeronautics Defence and Space Co. on a proposal to adapt the European A-330 Airbus into the KC-45A air tanker.[24] "The main project now for the short term is going to be the tanker project and making sure that the right message gets out." One of those messages will respond to charges by Boeing supporters that the Airbus and Northrop Grumman aircraft is a foreign-made plane.[37] Having built the current tanker, the KC-135, for decades, Boeing seemed to assume it would build the successor, too. The Northrop Grumman/EADS pitch, on the other hand, exceeded the criteria by making their plane larger and easily convertible for troop and equipment transport. Unlike Boeing, the pair based their plan on an existing model, which they demonstrated over the skies of Madrid earlier this year. Neither Northrop Grumman nor EADS is a David, but in this fight they were certainly the scrappy underdog taking down the giant.[43] Fifth: Integrated Assessment rated the competing planes in a war fighting scenario using a complex analytic model. Boeing believes Northrop Grumman won this measure because the model was originally developed by Northrop Grumman and was not an accurate reflection of real-world conditions. It also contends changes were made in the model to permit Northrop Grumman's participation in the competition but that little effort was made to look at actual operational experience in assessing the planes.[41] The other message that Breaux and Lott are making: that Airbus and Northrop Grumman won the deal fair and square and that Boeing supporters have no cause to try to reverse it. "Our argument is, look, everybody knew the rules before they got into the competition," he said.[37] The question that should be examined is whether Boeing actually had a better bid than the one presented by a partnership that includes Northrop Grumman and Airbus' parent European company.[48] Airbus, in conjunction with Northrop Grumman Corp., won the contract over Boeing Co., which has filed a protest alleging "irregularities" in the process."[38] The Italian company also has a contract to supply parts of the fuselage for the Boeing 787 Dreamliner, and works with Lockheed Martin and Northrop Grumman on the Joint Strike Fighter.[45] The team led by Northrop Grumman must suspend work on the initial contract worth $1.5 billion for four system design and development KC-45As that was awarded on February 29.[50]

The Air Force struck a major blow to the heart of our democracy's arsenal in its recent decision to outsource a $35 billion defense contract to Europe.[44] We're (the U.S. Air Force) giving the 2nd biggest contract in defense history to a company we're sueing for unfair trade practices.[38] The company has supplied fueling tankers to the Air Force for nearly 50 years and was considered the heavy favorite to win the new contract to replace 179 tankers.[25] The conference kicked off two days after the Air Force announcement that the Northrop-EADS team had won the tanker contract. He predicted the possibility of new service in the near future.[40] The fight over an Air Force tanker contract will go before a national audience tonight.[5] Even without a sex scandal in Albany or the latest back-and-forth between Barack Obama and Hillary Clinton, news of the Air Force's recent tanker contract probably wouldn't be the first thing on America's mind.[43]

Over the 40 year-life of the new fleet of 179 tankers, the Air Force would pay $25 billion more if the price is $100 a barrel, including refining, transportation, storage, handling and fueling the aircraft, the study said.[34] Sen. John McCain (R-Ariz.) is asking Robert Gates, the nominee to take over as Defense Secretary, to withhold release of a controversial request for proposals for the Air Force's tanker replacement program until providing assurance that a number of competitive issues are addressed.[10] The Air Force's Sept. 25 draft RFP was the first from the Pentagon to consider how an international trade dispute could impact a procurement there, and it drew criticism from some in industry as well as McCain. Lt. Gen. Donald Hoffman, the Air Force's top military acquisition official, says the Air Force is simply leaving no stone unturned in this massive competition.[10] I believe that the best value for the Air Force and our nation is to sustain and build a talented domestic workforce with all of the skills we will need in the future. The administration and the Pentagon cannot make these types of military decisions in a vacuum. If our core defense manufacturing industries close their doors, who will sustain our military should a crisis arise? Who will the country mobilize to propel the mightiest air force in the world? It is extremely shortsighted to entrust our national security and the preparedness of our armed services to foreign companies and the governments that subsidize them.[44] WICHITA, Kansas, March 17, 2008 - While Kansas workers and government officials have strong views about the recent tanker decision by the Air Force, residents of Alabama have a different point of view.[55] "Anything less," Hamilton writes, "will leave a cloud of doubt hanging over the Air Force's decision and continue to subject the award to Congressional, labor and public criticisms." Another tidbit from Hamilton's report is a state-by-state breakdown of the economic impact of the Northrop/EADS tanker.[7] At the Rotary Club luncheon in Downtown Wichita, the Air Force tanker decision was a hot topic.[55]

Alabama beat 32 other states as the site for the EADS tanker plants, even though it would be years before the Air Force would make a choice. That tells me that the political goals of Mobile's elected leaders and the economic goals of its business community were in alignment and were kept focused, even when it looked like nothing would come of it. Then they were willing to put money on the line.[28] "Ultimately the final say will be the American people. If they say we don't want you to come in and undo what the Air Force has done in their best interest, then I think the message comes even to some of the most vocal critics." Mobile County Commissioner Steve Nodine is traveling from Destin to New Orleans this week to rally support along the Gulf Coast. His effort is being dubbed "The Tanker Tour."[56]

The U.S. government and its friends in Wall Street are almost bankrupt. To the extent that our gov't agencies function at all, they comprise a wholely owned subsidiary of China INC, Saudi and Persian Gulf Oil, Japan Inc, and Germany Inc. Why not take the responsible position, Mr. Risen, which is that we don't need more Air Force tankers? If the U.S. gov't needs to make any new major expenditures, they need to be spent on the failing American infrastructure, which is the most dilapidated and energy-inefficient in the first world.[43] My premise is simple. If Boeing was determined to be in the competitive range meeting the U.S. Air Force requirement with a cost-effective, mission-capable solution, they should have won, period, end of story.[54] Meyer said Northrop Grumman/EADS beat Boeing on four of the Air Force's five key criteria and tied on the fifth.[4] While I haven't studied the absolute merits, my understanding is that Boeing did not beat Airbus on any of the selection criteria the Air Force had established. They were, in fact, not even close.[38] The Airbus tanker, said one official, would give the Air Force "more availability, more flexibility and more dependability."[48] "You have expressed to me on several occasions your concerns with the Air Force's Tanker Replacement Program," the letter said.[10] The initial program is valued at around $35 billion but could grow to $100 billion if the Air Force places additional orders.[37]

Their reaction turned to anger when they were debriefed on the decision by U.S. Air Force officials. Although the debrief confirmed that they were beaten on four of five measures -- and tied on the fifth -- the company detected numerous errors in the process.[41] The Air Force decision, if it stands, doesn't protect larger U.S. interests.[54]

As far as methods of refueling, as far as I know, only the U.S. Air Force uses the boom.[43]

The Air Force's bid requirements 'didn't set size requirements but asked for a range of aircraft all the way up to and including the 777 platform,' Northrop spokesman Randy Belote said in an interview.[16] "As time went on, the Air Force repeatedly made fundamental but often unstated changes to the bid requirements and evaluation process in order to enable the (Northrop-EADS) proposal to survive."[15]

OMB officials would not comment on the prospect of congressional intervention, stating through a spokeswoman that GAO "is well-suited to examine thoroughly the Air Force's decision." Not all contracting experts, however, believe the dispute will have such far-reaching implications or that Congress should stay out of the process. Frank Spampinato, chief acquisition officer for the Energy Department, said most contracting officers are exceedingly professional and recognize that their decisions must be based only on criteria listed in the RFP, without accounting for the type of intangibles Congress is permitted to consider. "I would, and I hope most others would, see this as an isolated incident," he said.[32] I am still unconvinced by the Air Force's reasoning. There remain a lot of questions the Air Force needs to answer about how it made its decision and whether the process was fair and equitable.[44]

"Contracting is not glamorous. And, when you don't pay attention day in and day out to contracting until something like this comes across your desk, then you end up with 535 experts." Congress has been careful not to criticize the Air Force's contracting staff, except for a few specific complaints -- Dicks, for example, said the service changed its criteria during the selection process.[32] "A quick check tells me that the Air Force has already modified the draft RFP (request for proposal) in response to a number of concerns. "I understand that these modifications have now been shared with industry and briefed to your staff and that they are responsive to the concerns identified in your letter."[10] One industry analyst said the Air Force judged the EADS/Northrop KC-30 proposal to be superior on four out of five criteria.[18]

The Air Force said acquisition officials developed the five evaluation factors 'after consulting with industry met with offerers on numerous occasions to.[50] "The Air Force remains committed to a full and open competition," said Sue Payton, the Air Force's senior acquisition executive. "The KC-X is the Air Force's number one acquisition priority and will continue to be conducted in a transparent and deliberate manner," she said.[10]

"Incredibly," Boeing added, "the Air Force somehow found no material distinctions between the approaches to production offered by Boeing and (Northrop-EADS)."[15] Here is Boeing's internal assessment of Air Force mistakes made on each of the five selection criteria.[41]

"We're continuing to look at our options," Northrop spokesman Randy Belote said Monday, adding that the company received a stop-work notice from the Air Force on Thursday.[35] In the document, the Chicago-based company acknowledged it won't be easy to overturn the decision and provided some telling detail about why it fell short. In its Mar. 18 filing with the Government Accountability Office, Boeing argued that the Air Force--under "continuing pressure from Capitol Hill" and from Northrop/EADS representatives--skewed the contest in Northrop's favor.[33] If GAO upholds the decision, Congress has the power to cancel funding for the project or direct program funds to Boeing through an earmark. Such a move, contracting experts said, would be virtually unprecedented and could spark a wave of unintended consequences. "This is something that sends a shot across the bow for any contracting officer involved in a high-stakes procurement," said Larry Allen, president of the Coalition for Government Procurement, a contracting trade group that counts Northrop among its members.[32]

From the WSJ today: "The decision sparked outrage among Boeing's supporters in Congress, as well as criticism for Republican presidential candidate Sen. John McCain, who led the fight to scuttle a previous deal that would have given Boeing the contract without a competition."[38] Boeing must be really smarting. They lost the Joint Strike Fighter, the biggest military contract in the history of mankind with a projected 5000 plane production run, to Lockheed Martin. They lost this huge tanker deal that effectively closes the market for tankers for the next 40 years.[43] Sen. Brownback hopes lawmakers in Washington decide to keep the money and jobs on American soil. "This is a big decision point, are we going to subcontract our military defense contract overseas or not?" Brownback said. Both sides of the tanker deal plan to keep pushing their agenda.[55] Voters should be slow to swallow arguments that the deal "outsources" a vital defense contract to foreign countries, given that most of the work will be done in Alabama and that the partnership promises to create 25,000 jobs stateside. German labor leaders are even fearing that this is the beginning of a trend by EADS to move more of its operations to the United States. There is the argument that limiting its shopping options to one company can leave the Pentagon at the mercy of single-source contracts that deprive the pilots of the best aircraft and taxpayers of the lowest cost. At this point, a thorough investigation is warranted.[2] House Defense Appropriations Subcommittee Chairman John Murtha, D-Pa., threatened during a hearing in early March to "stop the money" for the contract. Rep. Norman Dicks, a Democrat from Washington whose district would see an influx of jobs if Boeing won the contract, argued that "we're going to start this thing over." Others have focused their resistance on EADS, the French-based parent company of Airbus.[32]

Although the Administration's position on subsidies is clear from a USTR perspective, the Department of Defense has just awarded Airbus a $35 billion procurement contract for aerial refueling tankers.[5] Now, Boeing has been joined by several members of Congress in an effort to overturn the $35 billion contract based on the argument that only an American company should be selected. That's short-sighted.[48] The Pentagon's decision to award a $35 billion contract to the parent company of Europe's Airbus has provoked a storm of controversy.[45]

Kemp said there nonetheless was a palpable reaction among his colleagues at the news that Boeing had lost the 35 billion contract. "A lot of our guys are Delta pilots and they've been flying Boeings for a long time, so they're already checked out on that aircraft.[51]

Spampinato views the tanker contract as an extraordinary situation in which EADS received an unfair advantage because it receives foreign subsidiaries and tax breaks, not afforded to Boeing. He said Congress should intervene to correct an inequity built into the system. "I don't believe that this is something that should concern the contracting community; I see it as a godsend in a sense," Spampinato said.[32] The Dreamliner's 70% foreign content compares with 40% foreign content for the winning refueling tanker as designed by Northrop and EADS, and 15% for the Boeing tanker design.[13] Are you kidding me ? Boeing is perhaps the top flight manufacturer in the world today. Their expertise and experience are tops. They have far more experience than Airbus (Airbus has not done these air refueling tankers before, at all.[38] The Airbus plane, which Northrop would outfit for use as a military tanker, would be larger than Boeing's model. It would have greater refueling capacity. It would offer greater flexibility in carrying troops and cargo.[49] The 18-page executive summary provided greater detail about Boeing's claim that the tanker contest was unfair and tilted to favor a bigger Airbus plane offered by Northrop and its partner, the European Aeronautic Defense and Space Co., the parent of Airbus.[15] Cheers went up in Alabama and its port city of Mobile. It was a big win for Airbus maker European Aeronautic Defense and Space Co., based in France, but it was a crucial win for Mobile, where the refueling tankers will be assembled. Community leaders in Mobile believe this launches their state and city into the aerospace industry.[28] The USTR, acting on behalf of the government of the United States, has pronounced that Airbus receives illegal subsidies through the form of launch aid, European Investment Bank financing, infrastructure support, debt forgiveness, equity infusions and grants, and research and development funding. When the case was filed with the WTO, Ambassador Zoellick stated, "This is about fair competition and a level playing field. Since its creation thirty-five years ago, some Europeans have justified subsidies to Airbus as necessary to support an 'infant' industry. If that rationalization were ever valid, its time has long passed.[5] In October 2004, the United States Trade Representative (USTR), Robert B. Zoellick, filed a World Trade Organization (WTO) dispute settlement case against the European Union regarding billions of dollars in unlawful subsidies provided to Airbus by European governments. This case is still currently pending before the WTO.[5]

Boeing and Airbus (i.e. EADS) are engaged in a tough competition to sell large, commercial jet aircraft globally. It is an industry that we lead, and it provides good jobs and a significant trade surplus. The award to Northrop/EADS is a self-inflicted wound to our leadership of this critical industry. [54] Given the complexity of the newest aircraft, any big order is likely to ship some amount of work overseas. "It's a little hard to complain about foreign content on the future tanker when Boeing's Dreamliner was designed for manufacture by a global supply chain," says Loren Thompson, a defense analyst at the Lexington Institute with close ties to the military. He asserts, the 787 "will probably end up having more foreign content than the Airbus tanker."[13] The USAF ruled that the Boeing airframe was 'untested' and hence in the same risk category as the Airbus, since the proposed Boeing 767 tanker airframe was actually an amalgam of four separate 767 variants, which had never flown before in the version under tender. It is true that Boeing didn't fly a new boom, and that this may have been one of the factors which swayed the contract to Airbus.[43] Stratotanker crew member Doug Cline has been flying the KC-135 for two decades. He acknowledged that he was surprised when the Airbus contract was announced, but said he already knows that Airbus makes a good product. He said his colleagues are looking forward to putting the new tanker to the test. That hardly makes him disloyal to the old jet - which he noted is anticipated to remain in U.S. military service even as the newer tankers take to the skies. "They're going to be flying these until 2040," Cline said as he completed a post-flight checklist after the Blue Angels rendezvous.[51] U.S. consumers eventually acclimate to the idea of foreign products - to the point that sometimes consumers can't differentiate between American and foreign companies. Whether that will happen for those who will fly the Airbus tanker remains to be seen, but unlike some politicians, military members appear to be open to the evaluation.[51]

The Northrop Grumman and Airbus tanker "will probably have 60 percent or more U.S. content," Breaux said, adding that the project will add between 25,000 and 48,000 U.S. jobs.[37] Now Northrop Grumman and Airbus won the contract. Look, why are they -- they're mad because they think jobs are being outsourced.[10]

Northrop Grumman and EADS won the contract in February. They will assemble the tankers at Brookley Field.[56]

According to numerous media reports, the omission of the subsidies dispute as a factor in evaluating the proposals benefited EADS and Northrop Grumman at the expense of Boeing.[10] The surprise selection of Europes EADS, parent of Boeing rival Airbus, and Los Angeles-based Northrop Grumman is major blow to Boeing.[25]

According to Boeing, the IFAR assessment was based on a computer model provided by Northrop Grumman that was altered during the KC-X competition 'to allow larger aircraft to compete.[50]

Boeing hopes to convince the government to reopen at least part of the competition. "We know it's an uphill battle," Boeing's manager of the tanker program, Mark McGraw, said Mar. 18 as the company filed its appeal.[33] Meyer rated Boeing's chances of winning the protest as "low." It is rare that a protest is upheld by the GAO. But it does happen. In the executive summary of its protest, Boeing raised a number of issues that it says warrant a new tanker competition.[15]

Boeing's formal protest of the air tanker award was released publicly today.[20] The Northrop Grumman/EADS offer poses a much higher production risk, McGraw said. It is to be built with an "incomplete and unstable intercontinental production plan, which has not yet delivered a single tanker that has actually transferred fuel in flight through a boom," Boeing said in the protest.[4] Boeing has also turned to several of its existing lobbying firms, including Denny Miller Associates and Gephardt Group, to press its case. On Monday, Boeing said its tanker could have saved $30 billion (19.02 billion) in fuel bills over 40 years.[25] If Congress overturns a controversial $40 billion tanker refueling contract, the ripple effects for the federal acquisition community could be widespread, procurement specialists say.[32] The tanker contract on top of ThyssenKrupp's emerging $3.7 billion steel plant in north Mobile County offers "trickle-down at its best," Stallworth said. "If you live within 500 miles of here, and you've got a wallet, these things are going to affect you." This material may not be published, broadcast, rewritten or redistributed.[36] Mobile County is already in high cotton: Just last year ThyssenKrupp Steel said it will build a $4 billion plant there. South Mississippi economic development officials have supported Mobile's courtship of the steel plant and tanker project and loudly applauded its success. There's lucrative spillover in those projects, after all.[14]

Northrop and EADS will build two plants in Mobile, Ala., where the Airbus A330 will first be assembled from fuselage and wing sections manufactured in Europe, and then modified into a military tanker.[15] Awarded Feb. 29, the contract calls for Los Angeles-based Northrop and its partner, EADS North America, to build 179 tanker airplanes over 15 years.[35] The current U.S. tanker fleet dates to the early years of the Cold War. Even at the replacement rate envisioned in the EADS contract, the last of the existing tankers won't be relieved until mid-century -- some 80 years after they were built. Tankers aren't the most sophisticated aircraft, but they ensure that fighters and bombers can carry out missions far from base.[27]

The Pentagon's job is to defend the country, which means letting contracts that best serve American soldiers and taxpayers, not certain companies. Defense Department rules explicitly state that jobs cannot be a factor in procurement and that companies from certain countries, including France, must be treated as if they are U.S. firms in contract bids. Such competition ensures that taxpayers get the best value for their money and soldiers get the best technology.[27] Even when competition may be intense for a particularly big contract, there is usually little, if any, bad blood afterward, at least in public. The giant corporations of the U.S. defense industry are also like major nations that control their own territories and empires. Companies will develop areas where their own specialty will be taken for granted.[24]

I'm a bit sorry to see Boeing losing out but competition is good for business and its also a salutary lesson about not being caught bribing decision makers. (The contract was in Boeing's pocket when news about the bribery broke. This restarted the bidding process.)[43]

Predictably, Boeing's supporters in Congress have cried foul. They say the contract would send too many American jobs overseas.[49] We give Europeans a benefit on waivers on regulation. These unecessary conditions caused by the federal government's (Bush primarily) actions and inactions cause the cost of the project to be greater than in Europe. Eliminate these factors, and we (Boeing) can build it cheaper and better with 44,000 more jobs for American citizens, boosting our economy at a time when we need it the most. This is just another painful example of Globalist George Bush disregarding the health and well-being of the American people, and instead, catering to the whims of the world's business leaders, while pretending to be president of the American people.[38] At a time when the U.S. economy needs all the help it can get, the Boeing proposal would have sustained more than 44,000 stateside jobs, including more than 1,000 jobs at Boeing Wichita and its area subcontractors.[18] The EADS/Northrop Grumman Corp. proposal would create only about half as many U.S. jobs. It's possible, of course, that Boeing lost this one fair and square.[18]

If Congress tries to keep European firms out of the U.S. defense market, it will invite retaliation. Not all European nations have open markets, but it would be a big blow to Boeing and other American defense contractors if they were locked out of the entire EU because Congress started a trade war. [27] If Congress were to reverse the decision, the door for increased legislative interference could swing open, Allen said. He imagines a scenario in which members could then dictate which veteran-owned business has the best crop of former soldiers on their payroll and therefore is best qualified to win a contract. European governments and other global trade partners could be less willing to buy products from American contractors if they feel discriminated against, Allen said. "There are rules and regulations and contracting officers should follow them, and Congress should allow them to follow them," Allen said.[32]

Manager Mark McGraw said it will be "an uphill battle" with contract winners Northrop Grumman (NOC) and European Aeronautic Defense and Space Co. ( EADSY).[42] Thousands of jobs, the Washington Democrat said, were headed "to the guillotine." Ms. Murray is one of those liberals who want to build weapons but never use them. Her claim will come as a surprise to the thousands of workers in Alabama, Ohio, North Carolina and other states who will help build the new KC-45 for EADS and its Los Angeles-based partner Northrop Grumman.[27] The authority is meeting with engineers from Northrop Grumman Corp. and the architectural and engineering firm tapped to design and build the facility, Pelham said. The authority is also part of the state and local team working to move utilities to make way for the plant, he added. Director of Aviation Thomas Hughes, who attended a national conference early this month in San Diego, said airlines there had been "very receptive" to what's going on in Mobile.[40]

Mobile stands to inherit thousands of jobs as the American site for Northrop Grumman.[55]

Northrop Grumman's first KC-45A aerial refueling tanker took off on its maiden flight in September.[49] The recently announced air refueling tanker award to Northrop Grumman/EADS is a perfect example of a Pentagon procurement system that ignores the forest and prefers the trees.[54]

There was Boeing's 52-year record in having a lock on the USAF's air tanker business. [24] The reason is simple : the only current generation refuelling boom in all the NATO air fleets is Boeing's boom. Boeing would never sell Airbus their boom, or even allow the rival company to base their new model on it. Airbus was forced to design and build their contender from scratch, and this proved to be in its favour.[43] Get over it ! You lost and Northrop won, plain and simple. It's like Boeing has been building model T's for years and they feel that they can dictate to the Airforce what to continue to buy model T's. They are not the only company qualified to build airplanes in the world.[7]

Fourth: Cost/price is the area where Boeing always expected the Northrop team to fare best, because European partner EADS is not subject to the same profit pressures as Boeing. The key pricing metric was "most probable life-cycle cost," and Boeing executives are certain their smaller plane costs less to fuel and operate. They also contend the multisite, multicountry assembly plan for the Northrop plane is intrinsically more expensive.[41] The Boeing was based on the 767 airframe. The EADS team strictly apeaking didn't 'make their plane larger'.[43]

Where previously it had outsourced parts for planes but completed assembly in Washington, with the 787 it contracted out design and sub-assembly responsibilities as well. "Boeing's supply chain is global, its sales are global, and even its current ad campaign promotes its globalness," says Todd Malan, president and CEO of the Organization for International Investment, a Washington-based association representing U.S. operations of foreign companies. "It's a little disingenuous for them to criticize others in the industry for being globally integrated." [13] If the Pentagon can't or won't fix it, the Congress or White House should. This is not about Boeing and its key suppliers throughout the United States. It's about a great mission capability and industry that we have led globally for over half a century - and one that feeds a key part of the U.S. economy.[54]

If Boeing had gotten the nod, a similarly large set of suppliers in as many states would have benefited. In some cases, the same firm was lined up as a subcontractor for both of the competing tankers. Such gamesmanship seems inevitable. It usually drives up the cost of the hardware purchased, but no one in Congress seems to mind that, nor is there a groundswell of opposition from voters or taxpayers. The best one can hope for is that Congress minimizes the scope and degree of such influence.[53] Shelby is the senior member of the Senate's appropriations committee. That alone probably was a consideration in Alabama getting the assembly plant. He either knows that or is extremely nave. There is no doubt that if Shelby represented the state of Washington, home of many Boeing facilities; Kansas, where the Boeing tanker would have been assembled; or Illinois, home to Boeing's corporate headquarters, he would be singing off an entirely different sheet of music.[53]

Murray is meeting with labor leaders and workers at a rally near Boeing's Everett plant, where the tankers would have been built, to protest the contract.[29] Boeing has protested the contract award to the Government Accountability Office and is seeking to have it overturned. Breaux said that as a former lawmaker, he can relate to the pressures on the congressional delegations from Washington and Kansas, home to major Boeing manufacturing facilities.[37] According to federal law, the U.S. Government Accountability Office must review the Boeing protest within the next 100 days.[50] The Government Accountability Office has 100 days to look over the protest and officials will then decide whether Boeing's objections are valid.[49]

Boeing has protested at the decision to the Government Accountability Office, the oversight arm of Congress.[23]

Boeing is going to appeal the award, and it has every right to. Its executives have put forward a list of questions about the award, and on a deal as big as this - $35bn - every decision deserves scrutiny. The problem is that in pushing its case, Boeing is also implicitly fanning the flames of a not-so-latent, trade-focused nativism that has done much to destroy America's image abroad. We spend a lot of time talking about the impact of the Iraq war and waterboarding on how foreigners view this country. As we should - these issues matter a lot. We pay less attention to how our politics distort our business and trade policies, and how those distortions play in the rest of the world.[43] The next step in the process may take a little time. Now that Boeing has filed a formal protest, an independent group has 90 days to review the deal and present its findings. Congress won't have its say until after that.[55]

Search, wherever you can, for information about whether the deal is good for the Air Force, and for the taxpayers who support it. [2] The air force of Iran. If the U.S. fears an embargo they can ask Iran how keep the fleet running.[43] The study calculated Air Force's cost at oil prices of $100 and $125 a barrel.[34] The Air Force's fear is that an adverse ruling against a competitor could drive the price up and inadvertently pin the service into paying unanticipated costs.[10]

KONDRACKE: I agree. Here's what he asked for: He asked for the Air Force to take into consideration, which he thought the Air Force regulations required, aircraft -- taking into consideration maximizing cargo and passenger capacity, which are important in a supertanker. Well, they did.[10] Just think if the Air Force had only had one bidder and gave it to a company.[10] The Navy and Marines use the tube, and all European militaries and most other world Air Forces use the tube as well.[43] The Air Force had a chance to place our nation's security in the industrious hands that have maintained the dominance of America's military for over 200 years.[44] "The technology that Ronald Reagan has bequeathed on us is now aging, and our opponents are beginning to catch up," said Wynne, Air Force secretary since 2005.[39] "I don't understand the assertion that the Air Force changed anything," Meyer said.[4] Rich Comer and George Monroe examine what it means and takes to be an irregular warfare air force. It's sim to single seat for younger pilots training on F-22.[54]

"The simpler and cheaper probe-and-drogue system is used by many other military organizations including the U.S. Navy and Marine Corps and many non-US forces and can be more easily fitted to existing tanker and receiver aircraft than the flying boom system." [43] Boeing spokesperson Daniel Beck dismisses the comparison "between an aircraft developed solely for an international commercial market and a tanker aircraft developed solely as a military asset."[13] Boeing wanted to continue the 767 assembly line. Boeing tried to claim that its militarised airframe was 'proven' since tankers had already been sold to other countries, whereas the A330 airframe had no past track record in any military capacity.[43] The 767 tanker would then have been flown to Boeing's facility in Wichita, Kan., for installation of the air-refueling equipment and military avionics.[15]

The contract up for bid was the KC-x Tanker Program, one of the most coveted awards from the military in recent history.[44] Boeing was so convinced that the final KC-X RFP called for an 'an agile, medium-size tanker' that it did not even offer a tanker based the largest available commercial versions of the 767, let alone the 'KC-777' option that the company could have alternatively bid.[50]

Hmmmm. The Boeing protest spurred Mobile County, which stands to pick up 1,500 of those, to send out an e-mail asking, "Are you sick of Boeing backers bashing our tanker? Let them know, with just a few clicks of the mouse."[14] Still the technologies are similar. Both tankers are juiced-up commercial jetliners after all -- in Boeing's case, an upgraded 767; in EADS/Northrop's case, an Airbus 330.[13] The winning proposal would be based on the Airbus A330 passenger airliner. As in any large endeavor of this sort, a substantial part of the work for both the Airbus model and the Boeing plane would be done overseas.[49] One reason: Problems with completing center and rear fuselages of the plane at a plant operated in Texas by an alliance of Italy's Alenia Aeronautica and Vought Aircraft Industries of Dallas. Getting all the 787 parts and components to the sub-assemblers at the right time has turned out to be more challenging than anticipated, says Cai Von Rumohr, an aerospace analyst at Cowen & Co. (COWN) "What was supposed to be their salvation now works against them." He says Boeing had projected deliveries of 109 Dreamliners in 2009.[13]

This whole thing just seems amazing to me, but I guess it strikes an emotional chord with some people. These Boeing politicians would have everyone believe that their company only builds aircraft using American citizens and they have never received tax breaks.[5] What has been lost in the discussions over the past two weeks is that it is no longer accurate to describe Boeing as an American company, nor EADS/Airbus as a European one. It is much more accurate to describe both companies as "transatlantic" or even "international."[45] The company's supporters in Congress and the states of Connecticut, Washington and Kansas are furious. Their complaints are economic (the Pentagon should be supporting American companies, not foreign ones) and political (Europeans should not be rewarded for their minimal support of U.S. actions in Afghanistan and Iraq).[45] LIASSON: There is nothing easier to demagogue when a foreign company gets a big contract, or even with an American partner in the United States. This happened with the Dubai ports deal; it's happening now. It turns out that they're gonna look at this, they're gonna see if this contract was awarded fairly, and they'll make a determination.[10]

The new Airbus tanker would be 60 percent U.S.-made. It is expected to create 25,000 jobs in the United States.[48] Airbus buys about $6 billion worth of U.S. goods a year, supporting 140,000 jobs in 40 states.[45] EADS went to Mobile in large part with the help of $120 million in cash and tax incentives from the city, county and state. In return, Mobile gets a potential investment of $600 million from EADS to build its plants and more than 1,000 jobs, paying an average weekly wage of $1,250, double what manufacturing work now pays in Mobile.[28] Many of things that worked for Mobile can work for us. EADS, and now other European firms, are contemplating moving more of their operations to the United States. The falling dollar actually makes it attractive to the Europeans to build in the United States where most of their customers are anyway.[28]

Finmeccanica also partners with Airbus on the A380, with BAE and EADS on the Eurofighter and missiles, and with France's Alcatel on satellite and space products. Like so many other U.S. and European defense and aerospace companies, Finmeccanica is forging international links that virtually eliminate its national identity. [45] The draft 'WTO clause' was seen as penalizing EADS, whose commercial aircraft unit Airbus is the target of the U.S. government case at the Geneva-based referee of the global trading system."[10]

Rising global demand for aircraft will further blur the identities of Boeing and Airbus in the coming years.[45]

Lockheed Martin is famous for the Patriot anti-ballistic missile for which it is the prime contractor. Occasionally, just as entire provinces may change hands in a war, or overseas colonial empires become independent or change hands, one giant corporation will win a contract in an area which another corporation has looked upon as its own traditional preserve. This happened under the Clinton administration when Boeing won the main orders for the Future Intelligence Architecture -- the next generation of U.S. intelligence, surveillance and reconnaissance satellites, wresting the business from Lockheed Martin, which had been dominant in the field for more than 30 years. [24] Boeing plans to appeal the decision to the GAO, which reviews military contracts.[48] Kansas officials say the Wichita area would gain up to 500 jobs and 3,800 statewide if the 35 billion-dollar contract would go to Boeing.[31] Airbus Chief Executive Officer Tom Enders said the contract will result in 1,300 jobs in the Mobile area that will start delivering the first of the 179 KC-45As in 2011.[9] It would have greater refueling capacity. It would offer greater flexibility in carrying troops and cargo. They say the contract would send too many American jobs overseas.[49] The contract will sustain an estimated 25,000 jobs, to which 2,000 could still be added, and 230 smaller American subcontractors.[9]

The contract to build 179 KC-45As is worth about $35 billion (about $196 million per aircraft). [46] The Warrenville -based truck and diesel engine-maker said the latest order brings the total number of MRAP vehicles the Pentagon has ordered from Navistar to 5,214, for a total contract value of about $3 billion. An expected drop in ad sales and earnings increases the risk that the Chicago-based publisher of the Chicago Tribune and other papers might violate covenants in its bank agreements in the first half of next year, S&P; said.[11]

NAVISTAR: Navistar International Corp. said the U.S. Marine Corps ordered an additional 743 mine-resistant, ambush-protected vehicles in a contract valued at $410 million.[11] Kansas Republican Sen. Sam Brownback says it makes no sense to give a military contract to a country that hasn't always seen eye to eye with U.S. policy. That would be the war in Iraq, which resulted in French fries temporarily getting renamed in House of Representatives cafeterias.[30]

I could not agree more with the sentiment of the gentleman who spoke about the American infrastructure. I recently travelled on the standard train service from Venice to Verona and it was absolutely brilliant and cheap in euro but not in dollars Personally, I think the USA should cut their overseas bases and their military committments. Tell the Europeans and the Japanese etc, that they should change their military structures to be independent of the USA. Why is the U.S. currently touting the idea of an American/African military structure. Why does America feel the need for this type of adventure. They should invest their monies in a slimmed down military, education, Health and a U.S. infrastructural development program. Why does America feel the need for this type of adventure.[43]

By all appearances, Airbus working with primary contractor Northrop Grumman offered the better deal for taxpayers and the military. [49] Boeing says it satisfied all stated requirements, tying or surpassing Northrop Grumman in most -- for example, it was rated higher on survivability.[41]

Northrop and EADS are relying on a group of Washington firms ''' including Hill & Knowlton, Quinn & Gillespie, and Public Strategies ''' to counter Boeing'''s powerful lobby on Capitol Hill.[22] Can the same be said of any other country over the US? Of course not. A big reason why that is the case are these aircraft that EADS will provide just as Boeing did in the past.[43]

The domestic (US) percentage of the two planes is pretty similar, with Northrop/Grumman the lead contractor. Boeing planes, and this tanker would be no exception, use many non-US components and assemblies. This is nothing but good old fashioned corporate lobbying, nothing unusual or new.[43] The release of the proposal is Boeing's latest public relations salvo in the tanker battle.[20]

Members whose districts include Boeing facilities are up in arms because the winning team is co-led by European Aeronautic Defence & Space Co. (EADS), whose owners include Daimler AG and the French, Spanish and Russian governments.[27] Boeing is protesting the win in hopes of getting another shot at the deal. Right now, the Government Accountability office (GAO) is looking at both sides to make sure the contest was fair.[56] Stephen Nodine, president of the Mobile county commission, is worried that Boeing, the loser in the $35bn deal, might engineer a reversal on Capitol Hill.[52] The planes will be assembled in Mobile in a deal valued at up to $40 billion.[35]

C'mon American tax payers are paying $35 Billion for these planes its not unreasonable to hope that that money would go to American workers.[43]

Since the U.S. is using Guam and Diego Garcia as launching points into the world's key strategic fronts, the kind of service the Boeing plane would have offered just would have been flat compared to what we have now. [43] The city lost a bid to get a Boeing plane built in Mobile in 2005, but though the city was disappointed, it was not disheartened. When the opportunity came again, they were ready to go.[28]

The numbers about which tanker bid would have created more jobs are impossible to confirm and meaningless.[27] Unfortunately, that task, which requires better support for education, job training and scientific research, is far more complicated and less amenable to sound bites than the current blather over refueling tankers.[45]

The impact on Boeing obviously is important the company has said 44,000 jobs could be affected and its allegations of an uneven playing field should be studied thoroughly.[2]

The facts of the evaluation process are currently unknown; some insight will be gained through the protest process recently initiated by Boeing.[54] In the case of the Dreamliner, so much new manufacturing space was needed -- 3 million square feet -- that Boeing spread the work around the world so that parts could be produced concurrently, rather than sequentially, which would take more time.[13] CC does have a connection with aircraft industry here in CC. We do have a skilled labor force that is highly skilled and trained to work on aircraft. It has only been here since Vietnam.[28] Post 2 March 16, 2008 at 8:33 a.m. The problem with our endemic aircraft work force is that they are not right to work supporters. They are hard core union people that have repeatedly jeopardized what little aerospace work is available in the City.[28]

Rep. John Murtha, D-Pa., chairman of the House defense appropriations subcommittee, which oversees defense-related budgets, has threatened to hold up funds for the tanker following the Airbus victory. Lott won't be able to lobby his former colleagues because Senate ethics rules bar that kind of work for one year after a senator retires; Lott left in December. [37] Airbus plans to assemble the new tanker in Mobile, Ala. The engines will be made by General Electric. The GAO should sort through all this and complete its review as quickly as possible.[49] Supporters have even set up a Web site at www.keepourtanker.com to help. "What we need to do is to start fighting for this just like the other areas are fighting," said Mobile County Commissioner Mike Dean. Congress may get the final say in this debate since it has the "power of the purse" which finances the tanker contract.[55]

Rep. Todd Tiahrt, R-Kan., said "we should have an American tanker built by an American company with American workers," and Rep. Duncan Hunter, a Republican from California, argued that the decision would hurt "national security interests." [32] Hillary Clinton declared herself "deeply concerned about the Bush administration's decision to outsource the production of refuelling tankers for the American military".[43]

Northrop says some $360 million will be generated for the U.S. economy. [9]

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47. FT.com / Columnists / Michael Skapinker - The battle for global business is not yet won
48. Editorial: Best bid should win tanker contract
49. www.kansascity.com | 03/16/2008 | Selection of Airbus proposal draws dubious complaints from Boeing
50. Boeing Protests KC-X Tanker Award to Transatlantic Team: AINonline
51. Military clings to beloved air tanker - Salt Lake Tribune
52. FT.com / Comment & analysis - Observer: Gloves off
53. Lotterman: Politics has always played role in military purchasing | Business | Idaho Statesman
54. Faulty Tanker Decision - Defense News
55. Alabama to Kansas: Move on with tanker program | KSN.com - News, Weather, Sports - NBC - Wichita - Great Bend - Garden City - McCook - Kansas | Local News
56. Tanker Waiting Game - Mobile Alabama News AL Pensacola Florida News FL

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The Air Force Tanker We Should Have Had

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