Reuters reports that Boeing Inc. (NYSE: BA) is signaling that it may not submit a bid for the $35 billion Air Force contract for Tankers -- airborne refueling vehicles. Is Boeing serious about not submitting a bid or is it using its leverage to get the Air Force to revise the bidding process to create a more level playing field?
The tanker contract has a long history. The Air Force awarded it this February to EADS, parent of Airbus, and Northrop Grumman (NYSE: NOC). Boeing protested the award citing errors in the way the process was run. The General Accounting Office (GAO) sided with Boeing. And the Air Force announced that it would rebid the contract. But many thought that the rebidding process favored the French company.
Now Boeing is considering not submitting a bid. If Boeing ends up not bidding, it will be an embarrassment for the Air Force, which was bending over backwards to change the specifications to keep Airbus and Northrop in the process so there would be two bidders. Or it might have been to satisfy Thomas Loeffler, an EADS lobbyist who headed up John McCain's finance committee. Regardless of why it was done, if Boeing doesn't bid, the Air Force will be in a tight spot.
So maybe the Air Force will change the process and make the bids due after the November election rather than the current October deadline. That would change the politics of the bidding process dramatically. But it might result in a better solution for our Air Force as well.
Peter Cohan is President of Peter S. Cohan & Associates. He also teaches management at Babson College and edits The Cohan Letter











Reader Comments (Page 1 of 1)
8-11-2008 @ 3:43PM
marc said...
Why does no one mention that Boing had this deal at one time and it was taken away from them because it was found that they were overbilling and defrauding the government - hence, you, the taxpayer!!!!
Seriously, they are using you - wan'na-patriotWhy does no one mention that Boeing had this deal at one time and it was taken away from them because it was found that they were over-billing and defrauding the government - hence, you, the taxpayer!!!!
Seriously, they are using you - wan'a be-patriot schlub - to game the system and provide an inferior product at an inflated price. Not only should they have been penalized into the ground and heads should have rolled right into federal prisons (which of course they didn't), but Boeing should have been denied to bid on future contracts and barred from the tanker contract.
I don't care; I would rather take a better tanker from an ally, than take a tanker from a Company that tries to defraud the American people and game the system by manipulating the hordes of idiots that make up this country into a deal that makes executives rich.
schlub - to game the system and provide an inferior product at an inflated price. Not only should they have been penalized into the ground and heads should have rolled right into federal prisons (which of course they didn't), but Boeing should have been denyed to bid on future contracts and barred from the tanker contract.
I don't care, I would rather take a better tanker from an ally, than take a tanker from a Company that tries to defraud the American people and game the systme by manipulating the hordes of idiots that make up this country into a deal that makes executives rich.
Here's a free article on it. (There is a lot more in archives for a fee)
http://www.thestreet.com/markets/ericgillin/10160110.html
8-11-2008 @ 4:10PM
Joe Norman said...
Boing should tell Thomas Loeffler to kiss their ass and bid. Too much bought government is why citizens give Congress and the Presidency shuch an abismal confidence rating.
8-11-2008 @ 4:39PM
Parick said...
So, Mark I assume you are from Alabama and will be upset by the jobs lost if Boeing were to win the contract.
I'm a taxpayer and would rather waste money supporting US jobs and not outsourcing our military.
8-11-2008 @ 5:01PM
Joe said...
@marc:
The article you've linked to reports that a "$23.5 billion deal to build refueling tankers...overcharged the government by $4.5 billion."
That being the case, how much does the $35 billion deal discussed in this article overcharge the tax payers? By my math taxpayers were $11.5 billion better off with the original Boeing deal.
8-11-2008 @ 4:51PM
Richard said...
This Cohan guy is absolutely clueless. Why in the world would EADS, thus Loeffler, want to restructure the bidding process after they had already won the bid!? Cohan you are an idiot, thus making your not-too-subtle jab at McCain as credible as this article. Boeing cried foul and tried to push the claim that it was unpatriotic for a European country to do the work. What is unpatriotic is ripping off the American people! Boeing can eat it
8-11-2008 @ 5:09PM
Richard said...
Most of Boeing's manufacturing is done overseas. At one point the jobs were in America even though they could be cheaper overseas. Boeing was eventually given the excuse it needed when some union workers went on strike, and all of a sudden instead of wanting higher wages, these workers were earning none at all... I bet the Chinese love American worker unions.
Cohan wants to talk politics? If you are in support of the American worker, you definitely want John McCain. Obama will blow up taxes. McCain will slash the corporate income tax rate from 35 percent to 25 percent, which is absolutely essential to making U.S. manufacturing more competitive in the global economy. This protectionist BS that Obama spews will do nothing than send us into a deeper recession and maybe depression. Oh I forgot, Obama says that those hands that used to work in manufacturing will be used to install solar panels... right
8-11-2008 @ 6:02PM
PandaBear said...
You guys should stop arguing before understanding the facts behind the issues rather than calling names on each other.
1) Turning to the technical arguments and the part they played in the decision, consultant Hearne said they were finely balanced. Air Force officials cited the larger Northrop/EADS tanker's ability to carry more passengers and more cargo, but also highlighted its flexibility and dependability. "The comments imply that the sheer size of the A330 outweighed the lower operating costs and smaller footprint of the 767," said Thomas Weisel analysts.
2) Hearne, however, believes the decision came down to the U.S. government's fear that Boeing was developing a monopolistic position.
"I see this as a move to prevent them from getting too cocky and a way for the U.S. Air Force to have a wider choice of suppliers and more leverage on pricing," he said.
Who cares about American Jobs. If you need a weapon in a war and you can only buy the best elsewhere, buy it from elsewhere. If you want cheap stuff, buy it locally.
McCain is an arss regardless of who wins the contract, he is Keating 5 and have been in the same corruption camp of the GOP, what else do you expect him to be other than selling himself to the highest bidder?