PENTAGON IN THE TANKER
By Quin Hillyer on 10.8.09 @ 6:08AM
The Pentagon is playing dirty pool on behalf of the already-dirtiest pool players from Boeing, with regard to the huge (179-plane, about $40 billion) air refueling tanker contract that Northrop Grumman Corp. and EADS won fair and square last year before it was stolen away from them.
As a reminder: The swiping occurred after Boeing launched an unprecedented and underhanded political-hardball campaign after Northrop won the contract with a bigger, more versatile, more efficient plane. Boeing’s bid also was some $3 billion more expensive (or $42 million more expensive per plane) than Northrop’s for just the first 64 planes. And Northrop’s offering would support, it believably claims, some 48,000 American jobs at 230 supplier companies in 49 states, compared to 44,000 new jobs that Boeing claimed it would create. The Northrop plane also could start coming off the production lines sooner than Boeing’s, by all accounts.
(Reminder continued:) Yet after Boeing strong-armed politicians and the Pentagon, the Seattle- and Chicago-based company filed a formal protest, alleging more than 100 irregularities in what already had been the most open, public, analyzed contract award in Pentagon history. (The award actually itself was a re-do; at first the Air Force was to lease planes from Boeing, but Sen. John McCain led an investigation which found such serious shenanigans that several Boeing executives and Air Force personnel were convicted in a sort of kickback scheme. Those convictions led the Air Force to open the competition, which Northrop then won, only to have it snatched away.) Eventually the Government Accounting Office found that only eight of Boeing’s 100-plus complaints — among the least serious of the complaints, at that — were valid; but on that reed-thin basis, combined with the political pressure, Defense Secretary Robert Gates in September of 2008 announced he would re-bid the entire competition yet again, never mind what the delay would do to the readiness of a current tanker fleet containing some planes more than 50 years old. The strange decision was announced only after apparent leaks to Boeing-friendly congressmen but not to Northrop-friendly ones, on the same day that Gates and other Pentagon brass dined at the Boeing table for a major 9-11 memorial dinner.
(Still a reminder:) Gates also has repeatedly and stubbornly ruled out the idea of a split contract — first broached seriously in print right here in these pages more than two years ago — even though more and more observers and experienced, neutral congressmen have concluded that the competition between the two companies could lead to more planes, faster, and at a lesser long-term cost. Gates just so happens to have a house, where he plans to eventually retire, just outside of Seattle, where he also has family ties and where Boeing rules the roost. (How much do you want to bet that Gates ends up as a Boeing “consultant”?)
Which, finally, brings us almost up to date. Here’s what’s new (quoting the Associated Press): Boeing continues to deal with ethics problems. In August, it “agreed to pay $2 million to the Justice Department to settle a whistle-blower’s previously sealed claims that the company over-billed the government for work done at a plant in San Antonio.” The whistleblower “claimed Boeing manipulated records to show others besides him had been maintaining Air Force KC-135 tankers when they had not.”
New Criteria Favor Boeing
Yet, when the Pentagon finally got around, late last month, to producing its new Request For Proposal (RFP) outlining exactly what criteria it will use to make the new contract award, it had tweaked some of the requirements in ways beneficial to Boeing. Most disturbing of those tweaks were ones that actually de-emphasized the importance of a plane’s greater capabilities in the name of focusing only on price. Because it was those greater capabilities of the Northrop plane that made the biggest difference for Northrop last time, this change clearly helps Boeing — at the expense, perhaps, of the safety or capabilities of America’s airmen. (“This is no way to buy airplanes,” wrote the Mobile Press-Register‘s George Talbot, after interviewing numerous defense acquisition experts.)
More astonishingly, the Pentagon gave a huge competitive advantage to Boeing that has nothing to do with technical superiority or efficiency or anything else that involves actually determining which is the best plane for the job. What it did — get this — was to share Northrop’s pricing data, from its last bid, with Boeing. But it did not share Boeing’s pricing data with Northrop. Obviously, this gives Boeing a huge competitive advantage in crafting its bid — but the Pentagon refuses to make amends.
U.S. Sens. Jeff Sessions and Richard Shelby of Alabama — where the Northrop plane would be assembled in Mobile — have vociferously protested, with Sessions even introducing an amendment to block all funding for the tanker program until the Pentagon releases all the pricing data from the last round of competition. “How can we expect the playing field to be level if one company was given sensitive information about the other’s bid?” asked Sessions, a conservative stalwart, as quoted by the Mobile Press-Register. “If that is the case, the best way to rectify the situation is to demand that information be shared in both directions.”
Sessions is absolutely right. The Pentagon’s stance is manifestly unfair.
Not only should the pricing data be shared, but so should the whole contract. That idea has been given heft by, among a number of others, Michael Wynne, former Secretary of the Air Force, who argued more than a year ago that a split contract could benefit the country far into the future.
Now… why should we care about this?
We should care a lot, because this new tanker is one of the most important, desperately needed pieces of equipment — by almost universal acclaim — for the entire armed forces. Air power is the essential element of force projection in a world made ever more dangerous by the spread of nuclear weapons technology to rogue nations such as North Korea and Iran. And, as noted, the current fleet includes some planes more than half a century old, with more and more of them needing to be grounded for more and more repairs.
And, of course, the new technology — a plane hurtling through high altitudes with a “boom” (a long fuel tube) hanging from its belly and precisely maneuverable and insertable into the fuel tank of a jet fighter — is so much more spectacular than the old technology that it’s almost criminal not to give our courageous pilots the advantages of the new stuff.