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  (Source: Northrop Grumman)

Northrop Grumman/EADS KC-45A tanker  (Source: Northrop Grumman)
Boeing wins the battle, but the war continues with the controversial Air Force tanker program.

It looks like the ongoing battle between Northrop Grumman/EADS and Boeing over the $35B Air Force tanker contract will go on for at least another year. Northrop Grumman/EADS won the KC-X tanker competition earlier this year and it was announced that the Airbus A330-based KC-45 would replace the Air Force's existing fleet of 531 KC-135 tanker aircraft.

With foreign hands having a part in the design and construction of the KC-45, some in Congress weren't too happy with the move. "We should have an American tanker built by an American company with American workers. I can't believe we would create French [and British] jobs in place of Kansas jobs," said Todd Tiahrt, a congressman from Kansas.

Boeing filed a formal protest against the Air Force's decision with the Government Accountability Office (GAO) in March. Boeing contended that it deserved the contract due to numerous errors and concessions made during the competition and noted that it provided "75 years of unmatched experience building tankers" and "offered the Air Force the best value and lowest risk tanker for its mission".

It looks as though Boeing has quite a bit of pull in Washington, because the GAO sided with Boeing’s protest. "Our review of the record led us to conclude that the Air Force had made a number of significant errors that could have affected the outcome of what was a close competition," said the GAO in a statement.

"We recommended that the Air Force reopen discussions ... obtain revised proposals, re-evaluate the revised proposals, and make a new source selection decision, consistent with our decision," the GAO continued.

Further stacking future proceedings in Boeing's favor, the GAO reported that the Air Force performed "unreasonable" cost/performance analysis with regards to the Northrop Grumman/EADS entry versus Boeing's competing entry. Had those errors not have been made; the GAO concluded that Boeing would have been the low-cost champion of the competition, and likely the overall winner.

The Air Force will in essence have to start the competition all over again to satisfy the GAO's requests – in the mean time; the aging KC-135 fleet will still take to the skies. "In theory, the air force has 60 days to answer. But in reality, it's obvious they're going to have to start over," said Lexington Institute military analyst Loren Thompson.

EADS, as expected, wasn't exactly elated with the GAO's decision. "Though we are disappointed, it's important to recognize that the GAO announcement is an evaluation of the selection process, not the merits of the aircraft," said EADA spokesman Louis Gallois.

"We will support our partner Northrop and remain confident that the KC-45 is the aircraft best suited to make the Air Force's critical mission requirements, as demonstrated by four previous competitive selections."

Not surprisingly, Boeing is ecstatic about the ruling. "We welcome and support today's ruling by the GAO fully sustaining the grounds of our protest," said Boeing tanker group VP Mark McGraw. "We look forward to working with the Air Force on next steps in this critical procurement for our warfighters."

Supporters of Boeing's protest in Congress also welcomed the GAO's decision. "The GAO's decision in the tanker protest reveals serious errors in the Air Force's handling of this critically important competition. We now need not only a new full, fair and open competition in compliance with the GAO recommendations, but also a thorough review of -- and accountability for -- the process that produced such a flawed result," said Senator Carl Levin (D-Michigan).

"The GAO did its work, and the Air Force is going to have to go back and do its work more thoroughly," added Representative Ike Skelton (D-Missouri).

You can read the GAO's full report including seven areas in which it found the Air Force's decision to be flawed here.

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RE: That's not quite how it works...
By crleap on 6/19/2008 11:58:17 AM , Rating: 1
in america, we like higher prices by paying american unions to produce the same (competitive) products for a higher price. look at the steel industry, agriculture, and virtually all other industries. unions fight to keep ahold of their artificially inflated wages and keep jobs in human hands that could more safely and efficiently be done in automated factories. this is a glass ceiling on development, because it doesn't force people doing these easy low-qualification monotonous jobs for super high artificially inflated wages when automation could complete the task better. it lets them cling to these jobs instead of getting an education and moving along with scientific progress and bettering society as a whole.

RE: That's not quite how it works...
By DASQ on 6/19/2008 12:12:56 PM , Rating: 2
Well, unions were never exactly GOOD for competition.

RE: That's not quite how it works...
By DASQ on 6/19/2008 2:11:31 PM , Rating: 2
Explain to me, those who rated down, why you think unions actually make any company more competitive?

Must be union members voting me down.

RE: That's not quite how it works...
By ChristopherO on 6/19/2008 12:19:44 PM , Rating: 2
You *do* realize that the EU has bigger, more powerful unions than the US...

Although I do agree in part that unions arbitrarily maintain certain roles which either, should be paid minimum wage, or automated away.

However, I'm not going to make a blanket assumption this applies to most manufacturing jobs... Mostly automotive/assembly line type activities. Aircraft production is still highly specialized and not as mechanized as smaller machinery. You can't roll a 747 down the "line".

This whole situation is also inane. From everything I understand the Airbus was better when measured with every single yard-stick (except the political one!) and it was cheaper to boot.

RE: That's not quite how it works...
By jarman on 6/19/2008 1:26:50 PM , Rating: 2
I'd suggest you reevaluate your understanding of "better". I highly recommend some background reading in the areas of mission assurance and risk. If you look at the new selection criteria for US military hardware you'll find that performance only receives ~20% of the weighting, MA and Risk account for ~50-60%.

If the Air Force had asked for a "supertanker". Boeing would have designed one. However you and NG fail to realize, that is wasn't asked for in the first place.

“And I don't know why [Apple is] acting like it’s superior. I don't even get it. What are they trying to say?” -- Bill Gates on the Mac ads

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