Decision Must Be Made By Wednesday
They wanted to atone for past missteps, and strike a defiant
blow against a foreign rival for a prestigious government contract
-- but 10 days ago, Boeing lost out to EADS/Northrop Grumman for
the US Air Force KC-X tanker bid. Last Friday, Boeing executives heard the
Air Force's reasons for making that choice... and now,
Boeing must weigh the pros and cons of filing a formal protest of
that decision.
The American planemaker must also do so quickly, reports The New
York Times. The deadline for filing a protest with the Government
Accountability Office is Wednesday.
As ANN reported, the team
comprised of European Aeronautic Defense and Space Company (EADS)
and American defense contractor Northrop Grumman won out for the
lucrative contract, offering a specialized version of the KC-330
Multi-Role Tanker Transport (MRTT) aircraft against Boeing's
smaller KC-767. Both planes are based on commercial airliners.
Boeing touted its KC-767 as the more efficient choice, noting
the commercial 767 burns less fuel than the comparable A330.
Northrop/EADS countered the larger KC-330 offered more capacity for
fuel, cargo and passengers -- making its larger offering more
efficient overall. In the end, the latter argument won the day.
Now, Boeing faces a politically -- and publicly -- thorny
choice. The company badly wanted to win KC-X, for two reasons. One,
because Boeing has supplied the Air Force with tankers for over 50
years, and it didn't want to lose that prestigious role to a
foreign company...
... And two, because Boeing "lost" the tanker bid once before,
through its own bungling. As ANN reported, in late 2003
Boeing was originally awarded a $20 billion bid to start supplying
the Air Force with KC-767s -- but that bid was later cancelled on
revelations a top Pentagon procurement officer, Darleen Druyun, was
offered and later accepted an executive position at Boeing.
Two Boeing executives later went to jail as a result... and
Boeing CEO Phil Condit stepped down over the controversy. KC-X was
the end result -- a competition that forced Boeing to bid on a
contract it already won.
Should Boeing protest KC-X -- and at this point, it's even money
-- the company would be forced to relive that dark time in its
history. Boeing would likely also face charges of further delaying
the badly-needed tankers in a time of war.
For its part, the Air Force insists it picked the most-capable
aircraft. "You said we want a fair and open competition under the
laws. I complied with those laws," said Sue Payton, a top USAF
acquisitions official.
Boeing's allies in government have
strongly protested awarding the KC-X bid to
Northrop/EADS, relying largely on nationalistic, protectionist
arguments. "We really have to wake up the country," said Washington
Senator Patty Murray recently. "We are at risk of losing a major
part of our aerospace industry to the Europeans forever."
Those statements were echoed by lawmakers in Kansas; not
surprisingly, Boeing is a large employer in both states. Critics of
those assertions point out neither Boeing's nor Airbus' aircraft
are truly "American" or "European" anymore -- as both manufacturers
outsource work to other countries. The awarding of KC-X to the
EADS/Northrop Grumman plane -- now known as the KC-45A -- will also
bring jobs to Northrop and EADS plants in Alabama and Florida.
"Let me say I view Northrop Grumman as an American company,"
Payton said. "I view [engine supplier] General Electric, who has
jobs from this in Ohio and North Carolina, as an American company.
I view the folks in Mobile, Alabama, and Melbourne, Florida, as
Americans. But that did not enter into my decision here."
Loren Thompson, defense analyst with the Teal Group, presented
another side to the Boeing vs. EADS contest. Based on conversations
he had with defense officials close to KC-X negotiations, Thompson
said Boeing came across as arrogant during the selection process,
and presumed they would walk away with the bid.
"The Boeing team was not responsive and often was not even
polite," Thompson said. "Somehow that all eluded senior management.
They were not even aware there was a problem."
Boeing spokesman William Barksdale said Friday those allegations
had no basis in fact, saying Air Force officials had no complaints
when asked "whether we were hard to get along with."
Of greater concern, perhaps, was Boeing's blueprint for
supplying tankers -- which the Air Force believed would result in
the delivery of only 13 Boeing tankers to the USAF by 2013,
compared to 49 proposed by the Northrop/EADS team. Boeing is also
building tankers for Japan and Italy.