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Boeing Back in Tanker Contest

June 19, 2008

By Les Blumenthal and David Goldstein, The Kansas City Star, Mo.

Jun. 19–WASHINGTON — The aerial tanker wars spun in a new direction Wednesday when the Government Accountability Office accused the Air Force of “significant errors” in awarding its $35 billion contract.

In a major victory for Boeing Co. — and lawmakers from Kansas and Washington state — the GAO recommended reopening the competition, including rewriting the contract specifications.

Those errors, the GAO said, “could have affected the outcome of what was a close competition between Boeing and Northrop Grumman. We therefore sustain the Boeing protest.”

To which Sen. Sam Brownback of Kansas uttered a mighty Amen!

“Thanks be to God and the GAO,” he told reporters.

While not binding, the GAO report will serve as a heavy club in the hands of Brownback and fellow Kansan Republican Pat Roberts, another outspoken critic of the Northrop and European Aeronautic Defence and Space Co. tanker:

“We have said repeatedly that the Air Force’s decision was wrong and skewed to the wrong company with the wrong plane,” Roberts said. “This decision confirms everything we have said. The Air Force has no choice but to rebid the tanker contract, this time with a level playing field, for our men and women in uniform, for our national security and for Kansas workers.”

If Boeing lands the contract, as many as 500 high-paying aviation jobs could open up in Wichita, not counting economic ripples across the state.

The Air Force has 60 days to respond. Roberts and Rep. Todd Tiahrt, a Wichita Republican, plan legislation requiring the Air Force to reopen bidding.

“Obviously we need to go back and get it right this time,” Sen. John McCain said at Missouri State University in Springfield. “I always said I would support the product of a review process.

“It’s unfortunate for taxpayers, but obviously they need to go back through the contracting process,” said McCain, whose call for fairness and savings had opened the bid for the Europeans.

McCain insisted his diligence in the tanker contracting process saved taxpayers $6.2 billion, but critics pointed out that some high-ranking McCain primary campaign staffers also had worked as lobbyists for EADS at times.

Randy Belote, a Northrop vice president, said the GAO’s findings would be reviewed before comment.

“We continue to believe that Northrop Grumman offered the most modern and capable tanker,” he said.

The Boeing tanker would be built on a 767 airframe in Everett, Wash., and converted to tankers in Wichita.

Northrop-EADS would use an Airbus A330, built in France using parts made in France, Britain, Germany and Spain. Northrop-EADS plan on constructing an assembly facility in Mobile, Ala., for its tanker.

In February, the Air Force awarded the contract to Northrop Grumman and EADS, the parent company of Boeing’s chief rival, Airbus. The Air Force said Northrop-EADS had bested Boeing in virtually every category, from mission capability, risk, cost and past performance.

The generals also said Boeing was not being punished for an earlier procurement scandal and other problems with the Pentagon. That scandal led McCain to insist the next bid not be rigged in favor of Boeing, which has built Air Force tankers since World War II.

Boeing’s protest alleged that the Air Force had adjusted the contract criteria at the last minute to ensure that there were at least two bidders.

The company said bids were initially sought for a medium-sized tanker but later switched to a bigger one, which favored the Northrop-EADS plane.

Alabama lawmakers leaped to the defense of the Northrop-EADS plane as an “American” tanker creating U.S. jobs.

Boeing and Northrop-EADS unleashed high-profile advertising campaigns, including buying full-page ads in national newspapers.

“The Air Force bought a tanker that doesn’t meet their needs and has been waging a PR campaign ever since,” said Sen. Patty Murray, a Washington Democrat.

The contract was for replacing 179 Eisenhower-era KC-135 tankers. Eventually, the Air Force plans to replace all of its more than 600 tankers.

More Brownback: “The GAO is not allowed to consider a number of other issues important in this procurement, including foreign subsidies, corruption, and domestic production and employment. These problems when combined with what the GAO found strongly suggest the Boeing 767 is the right tanker for our Armed Forces.”

Lawmakers also said it was unfair to award the contract to Airbus, which had received $15 billion in allegedly illegal government subsidies over the years.

“The Air Force has some explaining to do,” said Sen. Claire McCaskill, a Missouri Democrat.

The Star’s Steve Kraske contributed to this report. Send e-mail to lblumenthal@mcclatchydc.com.

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