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A drawing of the Multi-Role Tanker Transport aircraft A330 produced by EADS. NEW YORK: The U.S. Government Accountability Office on Wednesday backed Boeing's protest against the awarding of a lucrative contract for refueling tankers to EADS and Northrop Grumman, saying the Air Force had made errors during the process.
The $40 billion tanker program is the Air Force's No. 1 priority, designed to replace a fleet of aerial refueling tankers that provide fuel to fighter jets and cargo planes in mid-air. The current fleet dates to the Eisenhower era and is coming under stress in wars in Iraq and Afghanistan.
It is one of the modern military's most lucrative contracts, but it is more than a battle over planes. It has become a trans-Atlantic battle involving delays, politics and cries over jobs and national pride. Three global military contractors were the chief players - Boeing on one side and the partnership of European Aeronautic Defense & Space and Northrop Grumman on the other. Hundreds of global subcontractors and suppliers depend on the outcome.
The decision in February to award the tanker contract to the partnership of Northrop and EADS was a stunning upset for Boeing and quickly made headlines around the world. It was a sign of the growing influence of non-U.S. suppliers within the Pentagon and tangible evidence that the Pentagon was as willing to buy products from other countries as it was to ensure that American military contractors sold their goods overseas.
But even more, it broke a decade-long relationship between Boeing and the Air Force, which had built the bulk of the existing tanker fleet and was thought to have the inside track on the deal. Besides building most of the current tanker fleet, Boeing was a main provider of any number of other cargo planes, fighter jets, helicopters and any number of other aerial vehicles for the Air Force.
Boeing's decision to protest the Air Force's choice was a bold one and risked alienating the company's biggest customers. At the time of the decision, Air Force officials had sent out strong signals that they hoped Boeing would not take the course that it did, arguing that a protest by Boeing would only further delay a badly needed program.
But Boeing did so anyway, with a multimillion-dollar advertising and public relations campaign, rallying members of Congress from areas where Boeing did business and that were sympathetic to the company's "Buy America" sentiment. It has run full-page color ads in large newspapers and in trade publications read by members of Congress and Pentagon officials.
Boeing's main argument is that the Air Force decision-making process was flawed and that its own offering - a revamped Boeing 767 - would cost less over the life of the plane than the EADS-Airbus tanker. The Air Force had miscalculated when it concluded that the costs of the two planes were about equal, Boeing said.
In addition, Boeing said its product would be a lower-risk choice because it would be produced on an existing assembly line and not a new one to be constructed for the tanker, as with Northrop-EADS. Boeing also said that its plane, which is smaller than the Airbus A330 that would be used for the EADS tanker, would give the Air Force more flexibility. Boeing said it was led to believe that the Air Force was in the market for a smaller plane.
In Congress, "Buy America" proponents lead the charge for Boeing, deriding the EADS plane as a "French tanker," even though it would be assembled in Mobile, Alabama. Representative Norman Dicks, a Washington Democrat and member of the powerful House Appropriations Committee, criticized the Air Force tanker choice as "wrongheaded" and said that the competition was "badly mishandled."
Northrop and EADS responded with a nearly daily e-mail barrage, saying that its tanker provided better value for the Air Force and criticizing Boeing for causing additional delays.
For the Air Force, the tanker decision was also about its own reputation and ability to run a fair and honest competition after a previous decision to award the tanker contract to Boeing, through a leasing arrangement, collapsed amid a controversy. Evidence of a pattern of pro-Boeing favoritism within the Air Force led to Congressional hearings and the jailing of a former senior Air Force procurement official and a former senior Boeing executive.
Earlier this week, the Pentagon strongly defended and stressed the importance of getting new tankers into its fleet. Geoff Morrell, the Defense Department spokesman, said Tuesday that "we believe that the acquisition and contracting process that eventually produced Northrop Grumman and EADS as the winner of this deal was a fair and transparent one. It was very deliberate."
"Our people felt very secure about the contracting process. Obviously, the eyes of the world were upon the Air Force, as they were pursing this contract, and in light of what had happened with the previous attempt to award this contract, Morrell added.
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