Dick Adams writes in today’s S-R LTE regarding Boeing’s loss of the Air Force’s tanker contract. Boeing may have become to complacent and lost the contract to a better plane and deal. Boeing thought it could convert it’s slow selling 767 for military use but Northrop in the AF’s mind put together a better deal. Spook 86 of In From the Cold has this assessment too. Time will tell however the AF really needs a new tanker before the old birds start following from the sky.

Ron the Cop

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Wednesday, March 5, 2008

Letters to the editor

Subsidies softened Boeing

The state of Washington politicians for years have given corporate welfare to the Boeing Co. They assumed tanker aircraft would be awarded to Boeing, aiding the company’s complacency. Boeing, rather than upgrading the 767, decided to make this model into a tanker. The politicians and our Gov. Gregoire continued to give away taxpayer revenue to Boeing.

Losing the Boeing contract to build tankers should not be all that surprising. All the citizens need to look at is our spendthrift Gov. Gregoire’s reckless tax-and-spend habits. The voters might ask her why Washington state is ranked in the top 10 highest taxed of the 48 contiguous states. Giving money to Boeing is one reason. It’s time to tell Gregoire where the buck stops!

Dick Adams
Spokane

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How Northrop, EADS Upset Boeing for Tankers

By August Cole, Andy Pasztor and Daniel Michaels

The upset choice of Airbus planes as the U.S. military’s newest aerial-refueling tankers represents nearly six years of planning and investment, but perhaps just as important was the relationship between a pair of executives at Europe’s biggest aerospace company and its U.S. partner who needed wins of their own.

Scott Seymour, then head of Northrop Grumman Corp.’s aircraft systems unit, and Ralph Crosby Jr., the top U.S. executive for Airbus parent European Aeronautic Defence & Space Co., parlayed their long association and knowledge of the Pentagon’s bureaucracy into a $40-billion victory.

On Friday, the U.S. Air Force announced the surprise …

Excerpt Only – Unfortunately subscription only

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From Spook 86:

Tuesday, March 04, 2008

Tankers and Politics

Once upon a time, announcement of a DoD contract meant that someone won, and someone lost.

Now, it merely signals the next round of political jockeying and protests in the defense procurement game.

Consider last Friday’s award of a $35 billion contract for new tanker aircraft to Northrop-Grumman and its European partner, EADS. By accepting their proposal, the Pentagon rejected a rival bid from Boeing, which offered a refueling variant of its 767 jetliner.

But the matter is far from settled. With so much money—and thousands of jobs—at stake, Boeing will almost certainly protest the Pentagon’s decision. And the aerospace giant is mobilizing its allies on Capitol Hill, who are already demanding investigations.
House Speaker Nancy Pelosi was one of the first out of the gate, saying the Air Force decision “raised serious questions.”

After that, the rhetoric only intensified. Les Blumenthal of the McClatchy Newspapers Washington bureau quotes Washington Senator Patty Murray (“the contract “puts our war-fighting ability in the hands of a foreign government”) and Republican Senator Pat Roberts of Kansas (the Air Force used an “Alice in Wonderland” approach in awarding the contract to a French company with no experience in making tankers). Can you guess where Boeing planned to build those 767 tankers?

Obviously, Boeing and its supporters aren’t going down without a fight.

But it’s also appropriate to ask how much of a fight they’re willing to put up. Under Pentagon acquisition rules, losing firms are allowed to file a protest, a process that can last up to a year. Boeing has every right to question the Air Force’s decision, and demand a fair review of the process.

Unfortunately, haggling over the tanker deal could last well beyond the protest period. Factor in political considerations—including the obligatory hearings, briefings and legislative maneuvering—and the fight over the new tanker might drag on for years.

Fact is the competition apparently won by the Northrop-Grumman/EADS team came four years after the Pentagon’s first effort to acquire new tankers. In 2003, the Air Force announced plans to lease 100 767 tankers from Boeing, a proposal that also attracted Congressional attention.

With Arizona Senator John McCain in the lead, House and Senate leaders pounced on the proposed lease, noting that it would be more expensive than buying new aircraft. The deal was subsequently derailed by revelations that the Air Force’s former top procurement civilian, Darlene Druyun, had been recruited by Boeing during lease negotiations. She later served a nine-month prison sentence on corruption charges..

In hindsight, McCain’s criticism of the original tanker deal was certainly valid. And, it could also be argued that re-opening of the contract resulted in a better deal for the Air Force and the taxpayer, through the acquisition of a larger aircraft (the KC-30) with greater fuel off-load and transport capabilities.

But the process also delayed acquisition of badly-needed refueling planes, designed to replace aircraft purchased during the Eisenhower administration. We’ve written extensively about problems with aging KC-135Es, assigned mostly to Air Force Reserve and Air National Guard units. Some of those aircraft are no longer flyable and their replacements won’t enter the USAF inventory for another 5-6 years.

Sadly, that forecast is decidedly optimistic. It took almost five years to untangle the last tanker mess, and it could take even longer this time around. In an election year, with thousands of jobs at stake and all that money on the table, Congressional efforts to scuttle the new tanker contract are inevitable. We can expect endless hearings on the issue, along with legislative amendments and, of course, various earmarks.

After all, if Ted Kennedy can fund a jet engine the Air Force doesn’t want (to the tune of $1 billion), we can easily envision Pat Roberts, Patty Murray, Nancy Pelosi and their friends setting aside money for a “next-generation tanker aircraft,” while working to defund the Northrop-Grumman aircraft. Boeing has already indicated that it can build a larger tanker—based on the 777 airframe—and its Congressional supporters will quickly rally to that cause.

Will that result in a better refueling platform for the Air Force? That remains to be seen. Meanwhile, those KC-135Es aren’t getting any younger, and our current tanker “shortfall” will only grow worse over time. In a rational world, the Pentagon and Congress would be working together to get new tankers into the inventory as soon as possible. But in the realm of politically-charged defense acquisitions, operational needs often take a back seat to jobs, jobs, jobs and defense dollars for the folks back home.

That’s why we won’t be surprised if the “new” tanker deal comes undone, and we’re still arguing over a KC-135 replacement in 2012. After all, if Congress could thwart the original tanker lease plan—and more recently, force re-bidding of the CSAR-X contract– then spoiling the Northrop-Grumman/EADS program should be a piece of cake.