Warbird Information Exchange

That's the problem. They had a signature on the bottom line. Not once, but twice. They twice started ramping up with a contract in hand only to have the contract in hand get yanked out from that hand and told "we don't like the contract so we're going to redo it". It's government strong-arm tactics out of control.

Speaking of the C-17, why doesn't Boeing staff up for civillian C-17 production in Long Beach? This way, they could keep that line open too.

ST. LOUIS, March 10, 2008 -- As the deadline nears for a decision on whether to protest a U.S. Air Force contract award for the next refueling tanker aircraft, officials at Boeing [NYSE: BA] spent the weekend evaluating with growing concern the information provided by the Air Force during a Friday debriefing.

"As we have gone through this process it has become clearer that this competition was much closer than has been reported, and that raises the stakes if the process was flawed and unfair in any way," said Mark McGraw, Boeing vice president and program manager for tanker programs. "We have serious concerns over inconsistency in requirements, cost factors and treatment of our commercial data."

As Boeing enters the final phase of its evaluation, the company is taking exception to reports that the Air Force had not received adequate commercial pricing data from the company. "It was clear from the Request for Proposals that the Air Force was seeking a commercial derivative tanker. However, by treating the Boeing offering as a military aircraft, the process by which the commercial cost/price data provided by Boeing Commercial Airplanes was evaluated has raised significant concerns," McGraw said. "We provided unprecedented insight into Boeing commercial cost/price data that had been developed over 50 years of building commercial aircraft. We believe this data was treated differently than our competitor's information.

"It is also important to note that the task of assembling and presenting this commercial data to the Air Force demonstrates the value of cooperation on this program within one company," McGraw added. "This is in sharp contrast to the higher risk involved in two companies from different countries and business cultures who have never worked together on a program of this size before."

Boeing is also responding to assertions that the company somehow misread Air Force requirements for the new tanker. "Our proposal was based on the stated criteria in the Air Force's Request for Proposal, with a specific focus on providing operational tanker capability at low risk and the lowest total life cycle cost," McGraw said. "We stand by our offering and believe that it did, and continues to, best meet the requirements.

"We take a protest very seriously," McGraw said. "For decades, Boeing has been recognized as a defense company that never takes lightly protests of our customers' decisions. We are following a very rigorous and deliberative process to ensure that we are comfortable that the evaluation was fair, and that ultimately it resulted in the tanker that is best suited to meet the needs of the warfighter."

March 10, 2008
Boeing To File Protest of U.S. Air Force Tanker Contract Award
Boeing announced Monday March 10 that the company will file a formal protest on Tuesday asking the Government Accountability Office (GAO) to review the decision by the U.S. Air Force to award a contract to a team of Northrop Grumman and European Aeronautic Defence and Space Company (EADS) to replace aerial refueling tankers.

“Our team has taken a very close look at the tanker decision and found serious flaws in the process that we believe warrant appeal,” said Jim McNerney, Boeing chairman, president and chief executive officer. “This is an extraordinary step rarely taken by our company, and one we take very seriously.”

Following a debriefing on the decision by the Air Force on March 7, Boeing officials spent three days reviewing the Air Force case for its tanker award. A rigorous analysis of the Air Force evaluation that resulted in the Northrop/EADS contract led Boeing to the conclusion that a protest was necessary.

“Based upon what we have seen, we continue to believe we submitted the most capable, lowest risk, lowest Most Probable Life Cycle Cost airplane as measured against the Air Force’s Request for Proposal,” McNerney said. “We look forward to the GAO’s review of the decision.”

Boeing said it would provide additional details of its case in conjunction with the protest filing on Tuesday, March 11.

When Frogs Fly
Amy Butler has a fantastic post up over at Ares on the competition for the Air Force's next tanker. The competition pits the all-American Boeing against rival Northrop Grumman, which has teamed with EADS North America to propose a design based on the Airbus A330.

The Air Force's urgent need for a new fleet of tankers has been causing embarrassment in all quarters since 2001, when Senator McCain first complained that a quietly arranged deal to lease 100 aircraft from Boeing--rather than go through the messy oversight process of a purchase--didn't pass "the sniff test." McCain's one man crusade against the deal finally forced the Air Force to scuttle it, and led to the resignation of Boeing CEO Phil Condit in 2003 and sent the company's CFO to jail.

The whole thing stunk, but six years later, Boeing remains the odds-on favorite to win the contract, which may end up totaling $100 billion. Why? The A330 would carry more fuel, more passengers, and more cargo than the Boeing KC-767. But the Lexington Institute's Loren Thompson still expects "Boeing to win the competition" because their plane is "a better match for the mission the way the Air Force describes it." Said Thompson, the Air Force is "primarily looking at refueling," which "tends to undercut" the bid by Airbus.

Thompson says "the Air Force separates [the refueling mission] fairly severly from the cargo mission . . . so they don't trip over each other in wartime."

But Northrop's A330 is also much more expensive--each modified A330 would cost roughly $160 million, as opposed to the $120 million price tag on the KC-767. Of course, Northrop might be willing to negotiate on the price. It's partner, EADS, can always fall back on massive subsidies from European governments. Thompson says that, at the end of the day, he "suspect[s] they will underbid" Boeing because they "don't operate under the same business practices." Meaning they don't have to worry so much about turning a profit--Airbus "almost always underbids Boeing in commercial competition."

But the reason Boeing is likely to win the contract has more to do with politics than anything else. Airbus is a European company, and worse, it's closely connected to the French government. Would the Air Force be flying French planes if Northrop wins the contract? Well, not really. They'll actually be built in Alabama, but just because your Toyota was made in the States doesn't mean you're driving an American car.

Which brings us back to Ms. Butler's terrific post. It seems that the folks from Northrop have been sending out promotional items to hype their bid. Writes Butler,

If Northrop and EADS win the tanker, clearly the eleventh-hour decision [to bid on the contract] was worth it. If only it were the same for their swag.
It is, after all, a french.
Yes...a small, plush, green, T-shirt-wearing amphibian--the very same creature as the cultural insult hurled at Frenchmen for decades (and allegedly based on the story of French eating french legs in the field during World War II, though it later morphed into a spiteful slur). . . .
But wait, there's more. The Northrop-EADS team denies it is a french. That just wouldn't be collegial to their teammates! Instead, Northrop Grumman officials say, it's a "tanker toad"--as in the warty sort, not to be confused with their smooth-skinned cousins.
Perhaps Northrop has a slightly better aircraft, and perhaps the higher cost can be negotiated down a bit, and perhaps Boeing ought to be penalized for prior unethical conduct that was only exposed by the persistence of Senator McCain--but can the Pentagon really hand one of the largest contracts in history to EADS? To the French? Thompson says that the "French connection . . . won't have much bearing on the Air Force's decision." But on Capitol Hill, that's a different story. Thompson says that on the Hill, the French connection is likely to be a big problem.

Despite all Boeing's prior bad acts, the company has been, according to one Senate aide, "cleaner than Jesus" in this latest competition. Which means the folks in Congress can find a way to award the contract to Boeing without the appearance of any impropriety. But how could they explain sending our tax dollars to France?



Northrop's "tanker toad" and Boeing's "tanker tiger"

By JIM KUHNHENN and MATTHEW DALY, Associated Press Writers
1 hour, 26 minutes ago

WASHINGTON - Sen. John McCain said Tuesday his inquiries into a $35 billion Air Force tanker contract were designed to assure evenhanded bidding and denied they were motivated by lobbyists who are close advisers to his presidential campaign.

"I had nothing to do with the contract, except to insist in writing, on several occasions, as this process went forward, that it be fair and open and transparent," he said at a meeting with voters in St. Louis. "That was my involvement in it."

His remarks came after The Associated Press reported that some of his current advisers lobbied last year for the European Aeronautic Defence and Space Co., the parent company of plane maker Airbus. EADS and its U.S. partner Northrop Grumman Corp. beat Boeing Co. for the lucrative aerial refueling contract.

Boeing on Tuesday filed a formal protest of the tanker award with the Government Accountability Office, citing "irregularities" in the contract competition.

Two of the lobbyists working on the EADS account gave up their lobbying work when they joined McCain's campaign last year. A third, former Texas Rep. Tom Loeffler, lobbies for EADS and serves as McCain's national finance chairman.

McCain, the Republican presidential nominee in waiting, has been instrumental in the Pentagon's long attempt to complete a deal on the tanker. McCain helped block an earlier, scandal-marred tanker contract with Boeing in 2004 and prodded the Pentagon in 2006 to change proposed bidding procedures opposed by Airbus.

EADS retained The Loeffler Group to lobby for the tanker deal last year, months after McCain sent two letters urging the Defense Department to make sure the bidding proposals guaranteed competition between Boeing and Airbus.

"They never lobbied him related to the issues, and the letters went out before they were contracted" by EADS, McCain campaign spokeswoman Jill Hazelbaker said.

According to lobbying records filed with the Senate, Loeffler Group lobbyists on the project included Loeffler; Susan Nelson, who left the firm and is now the campaign's finance director, and former Secretary of the Navy William Ball III, who has campaigned for McCain. EADS also had a long-term relationship with Ogilvy Government Relations, formerly known as the Federalist Group. Ogilvy lobbyist John Green, who records show worked on the EADS account, recently took a leave of absence to volunteer for McCain as the campaign's congressional liaison.

Danielle Brian, executive director of the Project On Government Oversight, a watchdog group that has cooperated with McCain in the past on the tanker issue, said she had seen no evidence that lobbyists influenced McCain's stands on the bidding process. But she said he is judged differently because of his reputation as a self-described "straight-talking" reformer.

"McCain ends up having to live by a higher standard than everyone else because he's the one that's been pointing out how corrupt the whole Washington system is," she said. "And when he doesn't, he does hand his critics ammunition."

McCain on Tuesday said his work on the tanker was designed to keep the bidding competitive.

"I think my record is very clear on this issue, including a paper trail of letters that we wrote to the Department of Defense during this process and saying clearly and unequivocally we just want a fair process, and we don't want a repeat of the previous process," he told reporters in St. Louis. "I think my record on this issue is very clear and authenticated by both written and verbal statements on the issue."

McCain is a longtime critic of influence peddling and special interest politics. But he has come under increased scrutiny as a presidential candidate, particularly because he has surrounded himself with advisers who are veteran Washington lobbyists. He has defended his inner circle and has emphatically denied reports last month in The New York Times and The Washington Post that suggested he helped the client of a lobbyist friend nine years ago.

A Boeing spokesman declined to comment on the links between McCain and lobbying efforts on behalf of EADS. Loeffler did not respond to phone and e-mail messages.

But Boeing supporters, particularly in Washington state where Boeing would have performed much of the tanker work, already have begun to accuse McCain of damaging Boeing's chances by inserting himself into the tanker deal.

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.

In December 2006, just weeks before the Air Force was set to release its formal request for proposals, McCain wrote a letter to the incoming defense secretary, Robert Gates, warning that he was "troubled" by the Air Force's draft request for bids.

The United States had filed a complaint with the World Trade Organization alleging that Airbus unfairly benefits from European subsidies. Airbus in turn argued that Boeing also receives government support, mostly as tax breaks.

Under the Air Force proposal, 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. Airbus objected to the provision and asked the Pentagon to drop it in June 2006.

McCain, in his letter to Gates on Dec. 1, 2006, said the proposed bid request "may risk eliminating competition before bids are submitted." The Air Force changed the criteria four days later.

Dicks, a senior member of the House Appropriations defense subcommittee, said the removal of the subsidy language was a "game-changer" that favored EADS over Boeing.

EADS also wanted the Pentagon to factor into the bidding process the ability of the new tanker to carry cargo and passengers. The Airbus proposal called for a much bigger plane than the familiar Boeing 767 tankers currently used by the Air Force.

In his letter to Gates, McCain urged the Pentagon to write bid requests that would take into account the various capabilities of the tanker plane.

Nearly two months later, Gates replied that the Air Force had made changes "responsive to the concerns identified in your letter."

Last week, Air Force Secretary Michael Wynne told the Senate Armed Services Committee that the EADS-Northrop Grumman plane was "clearly a better performer" than the one proposed by Boeing.

But Rep. Adam Smith, D-Wash., a member of the House Armed Services Committee, said Tuesday that the Air Force altered its requirements at the last minute. Smith said he didn't know whether McCain had influenced the Air Force decision. "What is clear is there was a change," he said.

EADS' interest in the tanker deal is evident in the political contributions of its employees. From 2004 to 2006, donations by its employees jumped from $42,500 to $141,931, according to an analysis by the nonpartisan Center for Responsive Politics. So far this election cycle, company employees have donated $120,350. Of that, McCain's presidential campaign has received $14,000, more than any other member of Congress this election cycle.

McCain's oversight of the tanker contract goes back to 2003 when, as chairman of the Senate Commerce Committee and of an Armed Services subcommittee, he led an investigation that uncovered a procurement scandal that killed an earlier tanker contract with Boeing. A former Air Force official and a top Boeing executive both served time in prison, and the scandal led to the departure of Boeing's chief executive and several top Air Force officials.

While McCain has praised Boeing for fixing its practices, his campaign said the experience prompted him to demand "a full, fair and open competition." His letters — one to Deputy Defense Secretary Gordon England in September 2006 and the other to Gates — were sent with that spirit in mind, Hazelbaker said.

Once the rules were in place, Hazelbaker said, bidders submitted proposals, the Air Force reviewed them and the contract was awarded.

"That is a process that McCain, appropriately, had absolutely no role in," she said.

When the last Airbus is parked in the desert, the crew will ride home in a 737.

James;
Back on page 4 of this little tome, you make a very snide remark about not being able to find the industrial intellegence any more.

So, yes, it is getting hard to find that industrial intellegence, looking for some place to place the blame? look in the mirror and be sure and see if your next Quarterly dividend is bigger than the last one---