The Government Accountability Office has decided that the Air Force has done Boeing (NYSE: BA) dirty. It says that in the bidding process for a new air tanker, the Air Force should not have favored Northrop-Grumman (NYSE:NOC) for the project. NOC won the tanker deal several months ago.
The Wall Street Journal reports that the decision "effectively gives Boeing the chance to recapture its decades-long lock on the business of supplying planes that can refuel other planes in midair." The GAO said the Air Force analysts had made mistakes in some of their evaluation analysis.
The whole matter stinks. Boeing has been able to push its agenda in Washington by lobbying hard to keep jobs for the tanker in the US. The Northrop proposal would have had EADS, the European airplane maker, do some of the work. Several senators got behind the idea that Boeing should get another chance.
Was the GAO influenced by Congress? Who will ever know, but if Boeing, which is the incumbent for supplying the military tankers, can get into the position to bid again, something seems a bit off.
Douglas A. McIntyre is an editor at 247wallst.com.










Reader Comments (Page 1 of 1)
6-19-2008 @ 9:42AM
Cushing1 said...
This is a rare case where logic and political expediency point to the same solution: split the contract. The Airbus version could be useful for operation from airfields capable of handling its greater size and weight, and its higher capacity would offset its lower efficiency and higher vulnerability. Because of its smaller size, relative efficiency and better survivability, Boeing's version would make more sense in risky war zones. The greater flexibility of the Boeing freighter should earn it a larger share. Other advantages of dual-sourcing are (1) we could defer the bulk of orders until we have a chance to evaluate performance of early deliveries, (2) two suppliers would expedite delivery schedules and (3) having a domestic supplier would limit France's ability to use the freighter as leverage in future international disputes.
6-19-2008 @ 9:48AM
Cushing1 said...
Correction: I meant tanker, not freighter.
6-19-2008 @ 10:14AM
George Hanshaw said...
Your comments display a surprising lack of objectivity. The Request For Proposal for this contract clearly spelled out what mission niche the Air Force was asking for proposals to fill. It also clearly indicated the criteria for judging the entries. For the Air Force to unilaterally change the criteria AFTER the RFP to award extra credit in the bid consideration for cargo and passenger carrying capacity that it specifically said it did not want or need in the original RFP was a violation of procurement law.
Just exactly who muddled up the process politically and when remains to be seen. It would appear that political pressure was indeed brought to bear...brought to bear to force the Air Force to consider an off-the-shelf model that was too big for the mission, regardless of what the real needs established in justifying the initial RFP said.
This was an RFP for a KC-135 replacement, NOT a KC-10 replacement. A sustained protest (or a hefty lawsuit from Boeing) was inevitable once the original RFP criteria were totally distorted to artificially provide competition once it was realized that EADS aircraft was not even competitive under the original RFP.
There is a PROCESS here that is established by law. Once someone changed that process, the sustained GAO appeal became inevitable.
6-19-2008 @ 10:43AM
Sean said...
Yeah...it looks like the Air Force is going to have to spilit the contract. One for the plane they want and need and one for the plane they have to buy because they are forced to. Although if they truly rebid the contract, I would expect Boeing to counter with a new design using a bigger plane.
@Cushing
Both planes are ill suited for true front line deployment. They have other much smaller planes with external tanks for that task.
That being said... when have we ever needed a a refueling plane that close to the "risky" war zone anyway? Ever?
These type of tankers usually refuel before or after entering the battle and are far out of the way of any hostile threats.
6-19-2008 @ 11:45AM
for America said...
The Boeing plane is better for the pilots and the taxpayer. It will not require larger hangars and runways. It is more fuel efficient and can fly in and out of more airfields. The illegal subsidies and insider trading going on at Airbus are just further proof that this is not a company the government should be doing business with!