Posted on 03/01/2008 7:42:30 AM PST by jdm
The Air Force snubbed longtime partner Boeing and awarded a lucrative contract to Northrop and EADS, the European maker of the Airbus, to build a fleet of refueling aircraft. The decision stunned Boeing and elected officials in the Northwest, who immediately objected to the decision to reject the all-American option. However, officials claim that Boeing’s submission simply didn’t measure up — literally:
Air Force officials offered few details about why they choose the Northrop-EADS team over Boeing since they have yet to debrief the two companies. But Air Force Gen. Arthur Lichte said the larger size was key. “More passengers, more cargo, more fuel to offload,” he said.
“It will be very hard for Boeing to overturn this decision because the Northrop plane seemed markedly superior” in the eyes of the Air Force, said Loren Thompson, a defense industry analyst with Lexington Institute, a policy think tank. And as the winners of the first award, EADS and Northrop are in a strong position to win two follow-on deals to build hundreds of more planes.
Boeing spokesman Jim Condelles said the company won’t make a decision about appealing the award until it is briefed by Air Force officials. Boeing believes it offered the best value and lowest risk, he said.
Stifel, Nicolaus & Co. analyst Troy Lahr said in a research note it was surprising the Northrop-EADS team won given the estimated $35 million per-plane savings offered by Boeing. Lahr estimated the Boeing aircraft would have cost $125 million apiece. “It appears the (Air Force) chose capabilities over cost,” Lahr said.
In short, Boeing gave a better price, but Northrop/EADS gave more capabilities. It can deliver more fuel or carry more personnel and/or cargo, depending on configuration. That may be a rational trade-off, and the Air Force is the organization best positioned to make that choice. They understand what their missions require and should know which airframe best complements them.
Appeals rarely if ever work, as the GAO assumes the client (Air Force) knows what it’s doing. It will only have a chance of succeeding if Boeing can demonstrate that the Northrop/EADS offering does not meet the specifications demanded in the RFP, or if the competing bid has unfair pricing or other violations of the process. And even then — as I know from personal experience — Boeing is unlikely to succeed, and could damage their chances for future contracts.
In the mid-1980s, the FAA put out an RFP for a system to completely replace the air-traffic control system across the nation. Two companies got selected to compete for the prime contractor position, IBM and Hughes Aircraft. The spec had three bedrock requirements: the system had to use all-new components in the ATC suite, it had to be functional at the time of submission (no mock-ups), and it had to use IBM’s computer as its core. IBM was required to give Hughes its at-cost pricing to ensure fairness.
IBM won that contract, as it bid significantly lower costs than Hughes. After the debriefing, Hughes found that (a) IBM had priced its core higher for us than for them, (b) their model reused existing components in the ATC suite, and (c) they didn’t have a working system. Hughes appealed the decision, which was considered something of a scandal in its own right at the time, but got overruled.
Three years later, IBM gave up on the contract, admitting that it could not produce the system. By that time, Hughes had sold its system to Canada, as well as other nations, while the US remained reliant on ATC computer systems dependent on tubes.
If that deal didn’t cause Congress to demand a redirected result, this one won’t, either. Congress may have the Air Force explain their decision to send some of their procurement budget to Europe rather than employ Americans, but unless someone turns up corruption or compromised safety, the decision will likely stand — and it might just be the best decision in any case, at least in terms of support for the missions the Air Force has to accomplish.
48% of the project went to French Muslims.
Our next move may be to negotiate for Chinese solders ( cheaper) to fight for the US.
House them here and create even more US jobs!
Don’t worry about Tanker Aircraft, worry about our aging fighter fleet.
My Nephew is a Flight Commander for the USAF. All the F-15’s are starting to become dangerous to fly. The step to F-22’s is not happening like they promised over 3 years ago.
The Bush administration, and the Democrat controlled Congress is holding/diverting funds and using upgrade appropriations to fund the War.
Many of our finest and trained pilots are ready to resign their commissions over this problem. It will only get much worse.
You left out two of their most important aircraft. The T-38 and F-5!
Sure it can be defended. Look at how many fighter aircraft we sell to the Europeans! Are you trying to say that the Europeans should buy all the fighter aircraft we want to sell them at the cost of billions and not expect us to buy anything from them. Its attitudes like that that perpetuate the sterotype of the ugly american! This program is good for balanced trade
I don't know.
I am a Ronald Regan Card carrying GOP member. I met and Talked with Barry Goldwater at the AZ Biltmore. I still have my '64 "Win with Barry" Remco Doll on my desk.
I'm open to foreign competition for all but our Military needs.
The one thing we could count on was that the bullets would be made here. Not 58% of the bullet, but the whole bullet.
It's not a north vs south or regional issue.
I'd like 100% of thee planes made in Alabama.
The new plans at off shoring of US military Projects to French/Muslims and the "A weak dollar is good" was nicely handed to the Liberals.
This will hand the election to Huessin.
And guess what he will do with the project?
Hey that’s a great point it’s a fly wire plane!
I agree with you. I am not opposed to fair trade. My husband is an engineer. I have witnessed first hand the devastating cost of free trade as applied these last 30 years. I believe the long term welfare of the US is sacrificed for short term profits. I believe as you do that there are national security issues at state here. We need to be able to build our weapons in American from steel to the finished product. This aside, to award a contract to foreign competitors while the Democrats are fighting the free trade issue in the absolutely crucial state of Ohio is lunacy.
There is nothing ‘balanced’ about this agreement.
http://www.northropgrumman.com/kc30/operations/section.html
The other 48% of the jobs were sold to French Muslims at a USD to Euro of 0.661% !
They would get my vote too. Why should I be loyal to Repubs. They have shown no loyalty to Americans.
Maybe and yeah you are correct. There are no good choices this election.
So you think American companies build crappy products? Why am I not surprised.
Workers see good manufacturing jobs lost...whether they work in that area or not, they are incensed. Further more, who knows how many jobs awarding this contract to Boeing would have created or saved.
All recent reports have stated that the only American jobs will be the ones in Alabama. The articles you provide are old articles discussing what jobs might be provided in the US. Those jobs are going to Europe and are not coming back.
Thats it exactly Northrup is a front man. They hope to convince American (whom they think are stupid) that Northrup will actually have more jobs than the ones in Alabama promised.
Reagan was speaking of the American company. It’s awful difficult to tax those pesky foreign companies. I guess that’s another loss for America-no corporate taxes will be paid.
Some do, some don’t. If your talent at making shoes is equal to your talent at defending Boeing, you should stay out of the shoemaking business.
This is Northrop’s one words...they hold out a carrot-maybe more jobs, but the reality is...
‘But Northrop, a defense contractor perhaps best known for developing the B-2 stealth bomber, said it would assemble and modify the tanker in Mobile, Ala., making it, in its words, an “American-built” plane.’
Again personal insults instead of arguments...I don’t think this comment speaks well to your ability to argue a point.
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