The recent award by the Air Force of the KC-45 Tanker to Northrop Grumman over Boeing has been controversial by all accounts. This story has stayed in the business news an amazingly long time, so I'm finally going to chime in. It hits pretty close to home, although whatever happens probably wouldn't have much affect on me. I don't actually know a lot of the details, but I wanted to put a few facts out there and highlight some of the ridiculous statements made by some members of Congress. The back-story is basically this:
- The Air Force fleet of tankers used to refuel jets in mid-air is getting really old.
- In 2003, the Air Force tried to give the contract to Boeing to lease the Air Force new tankers. A major scandal erupted when Darleen Duryun, the chief acquisition officer for the Air Force was investigated for inflating the price of the tankers while negotiating a position at Boeing and ended up pleading guilty. Boeing executives were fired and Druyun went to jail. the contract had to be recompeted.
- Northrop teamed with EADS to take on Boeing for the new contract.
- Northrop and EADS won the competition. According to initial statements by the Air Force, they won by a big margin.
- Congress members in Washington state and Kansas (places with the largest concentration of Boeing workers) go ballistic.
- Boeing files a protest, and the GAO is currently investigating.
From Forbes:
"House Speaker Nancy Pelosi, D-Calif., echoing the thoughts of many congressional Democrats, sees McCain's role in a less positive light. She said the earlier tanker deal was 'on course for Boeing' before McCain started railing against it."
Wow...blaming McCain for taking away the earlier contract from Boeing. In a sense, that's true, but perhaps you could blame the ethically-challenged Boeing executives and AF officials for destroying the first deal and not the person who found them cheating.
"The person that stopped (the tanker) from going to a U.S. company was Senator McCain," said Emanuel, "and now we are going to send major high-paying jobs overseas"
I'll be first to admit, I don't really know how they come up with job creation numbers, but the latest estimates from both companies are now relatively even on the number of jobs created for both tankers. I'll agree that this would move jobs from Washington and Kansas to Alabama, but no one ever explained what jobs would move to Europe. Plus, Northrop is a U.S company!! I mention this because after all the misinformation, some of my parent's neighbors thought Northrop was based out of France...
From the Kansas Star:
"I continue to believe the Air Force's shortsighted decision is a threat to our national defense and the future of America's aerospace industry," Murray said in a statement.
I don't understand the threat to our national defense argument, as this statement and others talk about military technology going to France. The Northrop plane would be assembled in Alabama from parts made in the US and around the world, but the militarization steps (like say integrating command and control software) would be done by Northrop in the US.
Also Friday, the Kansas state Senate unanimously passed a resolution calling on Congress and President Bush to block the contract award to Northrop-EADS. "This is an aircraft that should be built in the U.S.," said state Sen. Mike Petersen, R-Wichita.
Great, too bad no modern airplane is built completely in the U.S. The Northrop offering is estimated to have 60% American made parts, which exceeded the contract requirements. The Boeing offering does have more American made parts (estimated 85%), but I'd like to see how they will fly it without a fuselage made in Japan or a tail made in Italy.
It will be interesting to see how this all plays out, my guess is that there won't be enough evidence of anything improper to change the decision. However, when politics get involved, it's anybody's guess what will happen.
5 comments:
Having studied defense acquisition for the past several years, I have to say that this is pretty typical (though perhaps getting more press coverage than usual). Congress passes laws that require the DoD to use neutral scoring systems to evaluate contracts to ensure that the government gets the best value on the dollar. When the neutral scoring system doesn't give the result that they want, they call the DoD incompetent or corrupt. And with all apologies to the rank and file Boeing employees, but Boeing management is well known to be some of the biggest whiners on capital hill. If they hadn't treated the tanker contract as a sure thing and slacked off, they probably would have won it.
Well, you need to be careful with the scoring system. We all know that you can skew it any way you want to as long as you can back up the scores. I'm sure that they ran fedgov or decisionpoint when they did the scoring and will be able to defend every evaluators score.
Personally, I have no problem with Grumman getting it, I do have a problem with EADS which is a subsidized corporation getting it...and I hate airbus :)
I haven't gotten into it too much, but I've heard that they awarded the contract because of the larger aircraft of EADS with more range and capacity, but the contract solicitation didn't say that more capacity and range were desired.
Some more quotes for you though I can't remember which senator said it, but it was something like: "This is an American tanker that should be built by American workers on american soil"....as you said, it's going to be built in Mobile Alabama.
Scoring systems aren't perfect, but you can't complain when they don't give you the answer you want because take into account things are currently illegal to consider (like job creation).
Good Post! And Mike P. gets to the heart of my problem with Boeing's protest. I wouldn't have been inclined to comment on the protest at all if Boeing had just filed a protest and followed the process. Instead (IMHO) THEY seek to win this in the court of public opinion and THEY decided to make this a public fight and THEY are chain-revising their filings while their lawyers dredge up and distort even the most trivial details: all to keep stirring the pot to give their bagmen in Congress politcal cover to instigate a do-over.
If the protest had half the technical merits they claim, they would have filed and stepped back to let the system work.
Having nothing really to do with the situation, the article you pulled from a Kansas paper is from the Wichita Eagle, not the Kansas City Star... how's that for nitpicky?
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