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Northrop Grumman's American Heritage
What makes Boeing more "American" than we are?
Posted on 03/11/2008 9:37:52 AM PDT by NormsRevenge
WASHINGTON - Top current advisers to Sen. John McCain's presidential campaign last year lobbied for a European plane maker that beat Boeing to a $35 billion Air Force tanker contract, taking sides in a bidding fight that McCain has tried to referee for more than five years.
Two of the advisers gave up their lobbying work when they joined McCain's campaign. A third, former Texas Rep. Tom Loeffler, lobbied for the European Aeronautic Defence and Space Co. while serving as McCain's national finance chairman.
EADS is the parent company of Airbus, which teamed up with U.S.-based Northrop Grumman Corp. to win the lucrative aerial refueling contract on Feb. 29. Boeing Co. Chairman and CEO Jim McNerney said in a statement Monday that the Chicago-based aerospace company "found serious flaws in the process that we believe warrant appeal."
McCain, the Republican presidential nominee in waiting, has been a key figure in the Pentagon's yearslong attempt to complete a deal on the tanker. McCain helped block an earlier, scandal-marred tanker contract with Boeing and prodded the Pentagon in 2006 to develop bidding procedures that did not exclude Airbus.
EADS retained Ogilvy Government Relations and The Loeffler Group to lobby for the tanker deal last year, months after McCain sent two letters urging the Defense Department to make sure the bidding proposals guaranteed competition.
"They never lobbied him related to the issues, and the letters went out before they were contracted" by EADS, McCain campaign spokeswoman Jill Hazelbaker said Monday.
According to lobbying records filed with the Senate, Loeffler Group lobbyists on the project included Loeffler; Susan Nelson, who left the firm and is now the campaign's finance director and former Secretary of the Navy William Ball III, who has campaigned for McCain. Ogilvy lobbyist John Green, who was assigned the EADS work, recently took a leave of absence to volunteer for McCain as the campaign's congressional liaison.
"The aesthetics are not good, especially since he is an advocate of reform and transparency," said Richard Aboulafia, an analyst with the aerospace consulting firm Teal Group. "Boeing advocates are going to use this as ammunition."
McCain on Tuesday defended his work on the tanker.
"I had nothing to do with the contract, except to insist in writing, on several occasions, as this process went forward, that it be fair and open and transparent," he said at a meeting with voters in St. Louis. "That was my involvement in it."
Later, he told reporters: "I think my record is very clear on this issue, including a paper trail of letters that we wrote to the department of Defense during this process and saying clearly and unequivocally we just want a fair process and we don't want a repeat of the previous process." He added: "I think my record on this issue is very clear and authenticated by both written and verbal statements on the issue."
McCain, a longtime critic of influence peddling and special interest politics, has come under increased scrutiny as a presidential candidate, particularly because he has surrounded himself with advisers who are veteran Washington lobbyists. He has defended his inner circle and has emphatically denied reports last month in The New York Times and The Washington Post that suggested he helped the client of a lobbyist friend nine years ago.
He has also cast himself as a neutral watchdog in the Air Force tanker contract, one of the largest in decades, and has defended his aggressive oversight.
"Defense procurement is to defend America, and to make sure that our nation is secure, and we don't have unlimited dollars to do so," he said Tuesday. "So as long as it was a fair and open process, I think all Americans will support such a thing."
Last week, Air Force Secretary Michael Wynne told the Senate Armed Services Committee that the EADS-Northrop Grumman plane was "clearly a better performer" than the one proposed by Boeing.
It is unclear what EADS hired the lobbyists to do. Loeffler and Airbus officials did not immediately respond to phone and e-mail messages left late Monday.
A Boeing spokesman declined to comment Monday on the links between McCain and lobbying efforts on behalf of EADS.
But Boeing supporters already have begun to accuse McCain of damaging Boeing's chances by inserting himself into the tanker deal.
One of them, Rep. Norm Dicks, D-Wash., said the field was "tilted to Airbus" because the Pentagon did not weigh European subsidies for Airbus in its deliberations — a decision he blamed on McCain. Everett, Wash., is where Boeing would perform much of the tanker work, and Dicks is a senior member of the House Appropriations defense subcommittee.
In December 2006, just weeks before the Air Force was set to release its formal request for proposals, McCain wrote a letter to the incoming defense secretary, Robert Gates, warning that he was "troubled" by the Air Force's draft request for bids.
The United States had filed a complaint with the World Trade Organization alleging that Airbus unfairly benefits from European subsidies. Airbus in turn argued that Boeing also receives government support, mostly as tax breaks.
Under the Air Force proposal, bidders would have been required to explain how financial penalties or other sanctions stemming from the subsidy dispute might affect their ability to execute the contract. The request was widely viewed as hurting the EADS-Northrop Grumman bid.
The proposed bid request "may risk eliminating competition before bids are submitted," McCain wrote in a Dec. 1, 2006, letter to Gates. The Air Force changed the criteria four days later.
Dicks said the removal of the subsidy language was a "game-changer" that favored EADS over Boeing.
"The only reason that they could even bid a low price is because they received a subsidy," Dicks said last week. "And Senator McCain jumped into this and said that (the Air Force) could not look at the subsidy issue — which I think is a big mistake, especially when the U.S. trade representative is bringing a case in the (World Trade Organization) on this very issue."
EADS' interest in the tanker deal is evident in the political contributions of its employees. From 2004 to 2006, donations by its employees jumped from $42,500 to $141,931, according to an analysis by the nonpartisan Center for Responsive Politics. So far this election cycle, company employees have donated $120,350. Of that, McCain's presidential campaign has received $14,000, the most of any other member of Congress this election cycle.
McCain prides himself in the role he played blocking an earlier version of the tanker deal that gave the contract to Boeing. As chairman of the Senate Commerce Committee and of an Armed Services subcommittee, McCain led an investigation that eventually helped kill that contract in 2004. A former Air Force official and a top Boeing executive both served time in prison, and the scandal led to the departure of Boeing's chief executive and several top Air Force officials.
"I intervened in a process that was clearly corrupt," McCain said on Friday. "That's why people went to jail."
While McCain has praised Boeing for fixing its practices, his campaign said the experience prompted him to demand "a full, fair and open competition." His letters — one to Deputy Defense Secretary Gordon England in September 2006 and the other to Gates — were sent with that spirit in mind, Hazelbaker said Monday.
Once the rules were in place, Hazelbaker said, bidders submitted proposals, the Air Force reviewed them and the contract was awarded.
"That is a process that McCain, appropriately, had absolutely no role in," she said.
____
Associated Press Writers Glen Johnson in St. Louis and Libby Quaid contributed to this report.
PING
Dems are gonna drive the Airbus stake into McCain.
Nice of the AP to not mention that a couple of people went to jail because of the graft on Boeing's part.
Also the AP doesn't mention the jobs that will be created in Alabama.
Devastating in a “recession year”.
Ping
Please link in earlier threads or comments to that effect. Thanks! altho your bullets are quite clear, and Yes, this is from AP. ;-)
We should have an “open and fair” approach here, much as our elected officials would proclaim to support being open and acting aboveboard in all their dealings that have such a significant effect on our country and ability to defend itself here and abroad.
With my help
I think there are two questions here. One is which team deserved the contract. The other is whether McCain was, as he claimed, a “neutral” arbiter.
On the first, you can make an argument on both sides. On the second, I’d say it’s pretty clear that McCain is NOT neutral. Three of his advisers are lobbyists for EADS. EADS donated to his campaigns.
McCain is a guy who bears a grudge, and it’s obvious that Boeing angered him, and he’s still angry. EADS, in contrast, paid him off.
+1 for McCain it looks like.
Under the Air Force proposal, bidders would have been required to explain how financial penalties or other sanctions stemming from the subsidy dispute might affect their ability to execute the contract. The request was widely viewed as hurting the EADS-Northrop Grumman bid.If you parse this out, someone had interjected into the bid process a requirement for EADS to explain how some future penalty that MIGHT be levied against the company would effect their ability to deliver the price they offered.The proposed bid request "may risk eliminating competition before bids are submitted," McCain wrote in a Dec. 1, 2006, letter to Gates. The Air Force changed the criteria four days later.
Dicks said the removal of the subsidy language was a "game-changer" that favored EADS over Boeing.
"The only reason that they could even bid a low price is because they received a subsidy," Dicks said last week. "And Senator McCain jumped into this and said that (the Air Force) could not look at the subsidy issue — which I think is a big mistake, especially when the U.S. trade representative is bringing a case in the (World Trade Organization) on this very issue."
Given that they had no way of knowing what kind of penalty they would be hit with, or even if they would be hit with a penalty, but that the requirement would have forced them to divulge information about subsidies in order to explain the level of risk.
That might have been useful information, but it sounds like asking Boeing to explain how they would handly any penalties they might receive for cheating, lying, and rigging bidding processes again.
It's hard enough detailing costs you know about, without being asked to justify costs that you DON'T know about and that might not exist.
The process was open and Boeing's former shennanigans didn't do them any favors.
I am not a fuel tanker expert, but the procurement system was opened up and is now transparent, and that's a good thing.
Hello? Remember us? What are we? Chopped liver?
Northrop Grumman's American Heritage
What makes Boeing more "American" than we are?
Maria Cantwell (D) Washington
Patty Murray (D) Washington
Barak Obama (D) Illinois
Dick Durban (D) Illinois
Anti-War, America hating moonbats that have undermined our war effort and don't support our soldiers!
Screw them and their constituents! They don't deserve big military contracts.
Elections have consequences!
Boeing’s former shenanigans, like the former shenanigans of Northrup Grumman, Lockheed and ever other major defense contractor, should have had no bearing on this bid process. Yet McCain was lobbied by a bunch of EADS hired guns, turned around and lobbied the Pentagon to change the original RFP so that Airbus could compete. McCain is a crook, nad not just on this subject.
***Last week, Air Force Secretary Michael Wynne told the Senate Armed Services Committee that the EADS-Northrop Grumman plane was “clearly a better performer” than the one proposed by Boeing.***
Sounds like a good pick to me. All the Rats have been complaining about for Iraq is the quality of equipment so now they get the Air Force to pick the better equipment and they still complain.
Sleep with dogs, you get fleas.
No, the REAL question is
"Did McCain do anything to give an unfair advantage to NG/EADS?".
So far I haven't seen anything but innuendo...certainly nothing saying he pressured the Pentagon on the contract.
Hmm, and Boeing's proposal would have been 100% American made with 100% American parts. Is that what you are saying? The truth is that Boeing outsources a lot of it's production to places like China. This all a tempest in a teapot and you are doing your best to get everyone into a tizzy, while ignoring the fact that thousands of jobs are going to be created in Alabama, There was a reason Sen. Jeff Sessions had a big smile on his face when the Northrup/EADS deal was the winner.
Like I said, I am amazed at how many don’t have any problems with our industries go foreign.
tempest in a teapot?
The IG will go through it eventually, we’ll see.
Dems and AP are right. The Air Force should have awarded the contract to the less competitive bid, offered by the company with a history of executives being convicted of corruption related to government contracts. The Air Force should have taken the lower quality product from the company with a track record of not delivering on product requirements, like with the virtual fence. After all, the Air Force’s mission is to create jobs, not anything as unimportant as winning wars.
/s
if companies have been disciplined in the past and paid the consequences, fines pennalties, incarceration, etc., , should they then be black-listed entirely from any future dealings with gubamint?
This country would have few major businesses left to deal with if that were the case. Gubamint goes to the best product at the best price.. Im not sure where this one is headed but there sounds to be enough to warrant a thorough review of this whole process before cutting the cheesecake and sipping champagne. jmo. ;-)
No one can stop you throwing around unfounded allegations. But there is nothing in that article that makes McCain "a crook". Nor does it say he "lobbied the Pentagon".
He wrote the letter to gates insisting that the RFP language be changed to allow airbus. You can call it whatever you want.
if his past conduct in the Keating affair were indicative of his predilection for supporting his “constituents” by writing non-biased letters asking for swift and certain action soon already .. I don’t know.. crook is such a loosely used and oft times appropriate term these days, especially in DC. ;-)
McCain was flying a A-4 Skyraider over Vietnam when he was shot down. The Skyraider was built by Douglas, who later became McDonnell Douglas, and is now Boeing.
There's your grudge!
</sarc>
Um, the Kansas congressional delegation, who are equally upset about this, are Republicans.
I call it plausible deniability.
The article says: "The proposed bid request 'may risk eliminating competition before bids are submitted,' McCain wrote in a Dec. 1, 2006, letter to Gates. The Air Force changed the criteria four days later".
If I believed there should only have been one bidder, then I would see your point. But I don't agree with that. I support competition in government contracting whenever possible.
Your implication of his being a "crook" would only apply if he tilted the playing field. If all you've got is that he allowed more competition, then I think you're slandering him unfairly.
I’m afraid this will cost him Missouri. Boeing has a huge presence here.
But then, if he pushed Boeing out of fear of losing Missouri...
well, that WOULD make him a crook, wouldn’t it?
How would McCain even know that? He was lobbied by his EADS buddies. During the RFP process, right in the middle of it, NG/EADS decided to get more favorable language by threatening to withdraw to their patron McCain. Nice.
OK, I won’t change your mind.
But do you ever have anything to say about Murtha’s threat to “cut off funding for the project” if the Pentagon doesn’t give it to Boeing?
Agreed. Any such large contract should be open and transparent, even to the point of review by another agency or branch of govt.
That being said, ignoring the bidder's track record re bidding process and product quality makes no sense, and awarding a contract for military equipment based solely on job creation relegates the military to a social agency. So far i've seen nothing that even hints that Boeing had a better product, a better value or a better track record, just "more jobs."
And, BTW, the review process is being driven primarily by policital calculations from Democrat politicians in 2 states during an election year. That should make everyone highly skeptical that the review process is nothing more than re-election publicity for a handful of incumbents, paid for at taxpayer expense.
Yes, that is dead wrong, unless Murtha can demonstrate gross malfeasance on the AF’s part.
Boeing is exercising its right to challenge. If it can prove its case, then great. If it can’t, then so be it.
We’ve reached agreement! :)
The US is actively suing EADS for unfair subsidies even as they award the contract-really messed up situation. We are in a recession. Yet, they send jobs overseas.
I think possibly they can present evidence from a lawsuit filed against EADS by the US government that EADS received 100 million or so in subsidies from their government-clearly unfair to Boeing.
Thanks for the ping, but it sounds to me like this article was written by Boeing.
I support McCain’s actions on this one. Inclusion of the WTO issue in the bid evaluation process clearly tilted the competititon in favor of Boeing and had no precedent in prior procurements or in government regulation—nor was there a stated basis as to how it would be considered. Given Boeing’s past actions (Druyun, etc), I understand the efforts by McCain to make sure the competition was fair and square and based on established, verifiable criteria. Note that in December of 2006, the WTO issue was just one of many contentious issues that had arisen and Northrop Grumman was indicating that it may withdraw from the competition, altogether, due to the lack of clarity in evaluation criteria. That would have put it back to a sole-source procurement with zero competition (a situtation Boeing obviously favored.)
McCain’s letters put DOD on the spot to state why the unusual WTO criteria was to be included in the RFP and questioned under what authority (see links below). Funny thing—late last year, Northrop Grumman suggested that the contract be split between NG and Boeing. Boeing, thinking it had it in the bag scoffed at the idea and set its lobbyist loose on Washington and had 62 congresscritters send letters to the Air Force denouncing the idea. Boeing wanted an all-or-nothing game and they got it.
NG structured the work content so that no technology-sharing with foreign interests takes place. Many other defense programs have operated in this fashion, including the new F-35 program. This whole media ruckus seems like the typical leftist propaganda campaign to me (and Boeing utilizing it their full benefit.)
Let me just mention that the A330 is a superior platform to the 767 which would imply a better tanker and a better product for our military. The Northrop Grumman entry in the competition was actually built and tested—no such test model was offered by Boeing. The A330 is currently pumping out airframes at a production rate of 8-per-month, while the 767 production rate has been dropped to about 2-per-month, a major factor in making the A330 cheaper due to economies of scale. From everything I have read, NG won this fair and square.
Below are copies of McCain’s letters to DOD.
http://www.leeham.net/filelib/McCain_Reply_to_England.06.09.18.pdf
John McCain’s Letter to DOD Asking for an explanation about WTO issues Sep 8, 2006
• McCain asks DOD to explain why the Air Force requires Boeing and Northrop Grumman address disputes before the World Trade Organization over allegations of illegal subsidies to Boeing and Airbus as part of the competition.
http://www.leeham.net/filelib/McCain%20Letter%20to%20England%209%2008%2006.pdf
John McCain Letter to DOD Re: WTO-Air Force Tanker Issue Sep 18, 2006
• McCain’s reply to DOD Deputy Defense Secretary England, who decided to reaffirm the Air Force requirement that WTO issues be addressed in the aerial tanker replacement competition.
He could have simply remained neutral. If you take sides in something like this, you automatically piss off a whole lot of people and leave the impression of a payoff. A false impression is sometimes harder to buck than an untruth. He should have had more savvy.
Ping to above, FYI
It also could be a navy thing. Grumman is virtually sinonymous with naval aviation. I’m trying to remember if Grumman ever supplied a plane to the air force,
Gotta disagree with your analysis and McCain motives. McCain does nothing on the up and up, you should know that by now.
McCain, the presumptive GOP presidential nominee, played a crucial role in blocking the deal to build air tankers from going to U.S.-based Boeing, instead paving the path for EADS to score the loot. He framed his decision as an example of political integrity; Boeing has previously been exposed of contract abuse. But a review of campaign finance donations and lobbying records suggests that money and personal lobbying may have also been in play.
On January 15, 2007, McCain appeared at Alabama Gov. Bob Riley’s gubernatorial swearing in ceremony and formally called for multiple bidders in the tanker deal. The push for an open process had only one true beneficiary, however, and that was the Northrop Grumman/EADS consortium, which was poised to be Boeing’s sole competitor.
A day after McCain made his proclamation, the contributions began to flow. John Green, a lobbyist for EADS donated $2,100 to the senator’s presidential campaign. Ten days after that, Michelle Lammers, the “Chief of Staff” for EADS North America, gave $250 to the McCain campaign. It was her first political contribution ever. Less than a month later, the long-time head of EADS’ government affairs program, Samuel Adcock, made a $2,100 donation to McCain. And eleven days later, Ralph Crosby, the head of EADS North America, donated $2,300 himself.
All told, as documented earlier by CQ PoliticalMoneyline, McCain received more than $15,000 from EADS and its subsidiary, Airbus North America. Not only was this the highest amount received by any federal candidate, but prior to 2006, not a single employee from EADS had ever contributed to McCain.
http://www.huffingtonpost.com/2008/03/11/mccain-received-defense-f_n_90951.html
The KC-330 MRTT that EADS is currently testing for the RAAF does not have a working boom yet. EADS is using an A310 aerial demonstrator to develop their flying boom system.
Following the Air Force’s KC-X decision announcement, press articles have appeared quoting aerospace experts who purport to have insights into why the KC-767 was not chosen. These articles allege that “Northrop Grumman’s victory was not a close outcome” and that “Boeing didn’t manage to beat Northrop in a single measure of merit.”
Nothing could be further from the truth.
Factor 1 — Mission Capability
• Boeing scored “Blue (Exceptional) and Low Risk” in this area – the highest possible rating in the most critical “factor” in this competition
• The Air Force assessed Boeing as meeting or exceeding all Key Performance Parameters (thresholds and objectives)
• Indeed, the Air Force evaluated Boeing as having significantly more strengths (discriminators) than the competitor
Therefore, it follows that Boeing 1) received the highest rating possible, 2) met or exceeded all KPP thresholds and objectives, and 3) was graded as having significantly more strengths than the competition
Factor 2 — Proposal Risk
• Boeing’s proposal risk was rated “Low”
• Surprisingly, the competitor was also rated as low despite the high risk associated with its evolving multi-country, multi-facility, multi-build approach as contrasted with Boeing’s integrated approach to design, build, and certification in existing facilities with experienced personnel
Therefore, it follows that Boeing 1) was low risk, 2) had an integrated and lean build approach, and 3) the competition should have been assessed greater risk for its complex and unproven multi-country build approach.
Factor 3 — Past Performance
• Boeing’s past performance was rated “Satisfactory” • Northrop Grumman/Airbus was also rated satisfactory, despite having no relevant tanker experience and having never delivered a tanker with a refueling boom
• Press reports indicate that some of the most relevant programs for Airbus (the KC-30 for Australia and the A-400M) are both significantly over cost and behind schedule
Therefore, it follows that Boeing 1) had satisfactory past performance, and 2) relevant Airbus programs like the Australian KC-30 tanker and the A-400M are struggling.
Factor 4 — Cost/Price
• As determined by the RFP, “Most Probable Life Cycle Cost” (MPLCC) was the only measure of cost to be assessed
• The Air Force described the cost visibility information Boeing provided as “unprecedented” and rated Boeing’s MPLCC cost “Reasonable,” “Balanced,” and meeting “Realism” criteria – all the highest ratings a competitor can receive
• As recognized by the Air Force itself in 2002, the significantly bigger A-330 would demand a greater infrastructure investment with dramatically lower operational effectiveness
Therefore, it follows that 1) Boeing’s MPLCC was judged by the Air Force to be realistic, 2) Boeing’s submitted MPLCC were significantly lower than the Air Force adjusted MPLCC costs and, 3) the Air Force adjustments to Boeing MPLCC costs effectively deprived Boeing of the benefits associated with its integrated in-line production approach.
Factor 5 — Integrated Assessment
• The model used by the Air Force to judge tanker “fleet effectiveness” was developed and is maintained by Northrop Grumman
• The mission scenarios and operational constraints to be used with the model issued in the draft RFP to judge tanker “fleet effectiveness,” were based upon the 2005 Air Mobility Command “Mobility Capabilities Study” (MCS).
• Before and after the RFP release, changes to the model’s parameters occurred so as to allow a “greater variety of aircraft to be considered” – in essence to allow larger aircraft to compete. However the Air Force promised that it would tie the numerical output of the model back to real-world constraints by weighing “insights and observations.”
• The inherent complexities of the model have made its results inconsistent and un-repeatable and its overall operational relevance questionable;
Therefore, 1) Northrop Grumman’s experience with the model was an inherent advantage, 2) changes were made to ensure Airbus’ larger aircraft worked in the model, but there is little evidence that the Air Force used “insights and observations” to tie the model back to real world operational constraints and 3) the model’s accuracy and relevance are debatable.
Conclusion
Boeing submitted a strong and extremely competitive proposal. In assessing the critical factor of Mission Capability, Boeing was given the highest ratings and evaluated by the Air Force as having significantly more strengths (discriminators) than Northrop Grumman/Airbus. The Air Force modified the Northrop Grumman analytical model before and after issuance of the RFP to enable competition and to allow a larger tanker to compete. In the end, the “leveling” of the competition and subjective assessments of the two proposals seems to have led the Air Force to select a larger, more expensive and operationally limited KC-30 tanker despite the fact that both Air Force requirements and the KC-X RFP call for a medium-sized tanker to replace the KC-135.
Interesting.
The push for an open process had only one true beneficiary, however, and that was the Northrop Grumman/EADS consortium, which was poised to be Boeing’s sole competitor.
Actually, the beneficiary in these cases is usually the taxpayer. Sole-source contract awards are very expensive.
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