Boeing Loses Tanker Contract
By Jim Camden, The Spokesman-Review, Spokane, Wash.
Mar. 1–The Pentagon’s decision to buy 179 new tankers delighted some people in the Air Force who may eventually fly them, but outraged members of Washington’s congressional delegation.
Los Angeles-based Northrop Grumman and its European partner, which builds Airbus, beat out Boeing Co. for one of the largest contracts ever awarded by the Air Force, an estimated $35 billion deal to build the first round of replacements for the KC-135 air refueling tanker, Pentagon officials announced at a Friday afternoon press conference.
Gen. Arthur Lichte, head of the Air Mobility Command, said the modified Airbus jetliner won the competition to become the new KC-45A because it can carry more fuel and cargo, and it has better dependability and flexibility.
“It’s simply a great day for the Air Force,” Lichte said of a decision that within three or four years will allow the military to begin retiring some planes that are a half-century old.
The sentiment was echoed by Col. Roger Watkins, acting commander of the 92nd Air Refueling Wing at Fairchild Air Force Base, where KC-135 tankers have been stationed almost as long as they’ve been in the fleet.
“We are thrilled to be getting the new tanker,” said Watkins, who was quick to add there was no telling when, or even if, Fairchild will receive the new planes. Some KC-135s will remain in service until 2040.
During a Pentagon news conference, Lichte downplayed the suggestion of possible “blowback” from Congress because part of the plane will be made in France by the European Aeronautic Defence and Space Co. Northrop has announced plans to build a 25,000-worker factory near Mobile, Ala., for final assembly, but some parts of the plane will be built in Europe.
“This is an American plane flown by American airmen. It has a big American flag on its tail,” Lichte said.
Sen. Patty Murray, D-Wash., who said she was frustrated and angry that the contract was not going to Boeing, shot back: “You can put an American sticker on a plane, but that doesn’t make it American-made.”
Murray and most other members of the state’s congressional delegation issued a statement saying they were outraged that foreign workers would be making a plane that’s a key component of the American military strategy at a time when the country is facing a recession.
Congress may need to look at whether “we want our planes built overseas when we don’t know what the future holds,” Murray said during a press conference after she toured the Boeing facility in Everett. The Northrop proposal was apparently less expensive, but Murray said Congress will need to look at whether the prices are realistic and what provisions are set aside for potential cost overruns.
Boeing workers also were steaming. Tom Wroblewski, president of the Machinists Union District 751, criticized the Pentagon for awarding the contract for a plane that exists only on paper to a factory that isn’t yet built. Boeing is already building and delivering its 767, Wroblewski said.
Northrop said, however, it has already test flown a military version of its A330 Airbus, and the refueling system that will be used in the new plane also has been flight tested. In a press release, Northrop Vice President Gary Ervin called the competition thorough and transparent, adding that it will give the Air Force “the aircraft that best meets their current and future requirements.”
Boeing has 10 days to decide whether it will challenge the award by filing an appeal with the Government Accountability Office.
Jim Condelles, a company spokesman, said Boeing won’t make a decision on an appeal until it meets with Pentagon officials who plan to “debrief” both bidders on the strengths and weaknesses of their proposals.
Boeing believes its proposal, a modified version of its 767 commercial jetliner, still offers the best value and lowest risk, Condelles said.
Loss of the contract means the 767 line in Everett eventually will close.
Rep. Cathy McMorris Rodgers, an Eastern Washington Republican, said she was surprised at the decision and thought Boeing was the “smart choice” for cost and efficiency. But she wants to hear more details about the reasons behind the contract award before deciding whether Congress should intervene.
“I am quite concerned about further delaying this process,” McMorris Rodgers said. “It’s taken a long time to get to this point.”
The Air Force has been concerned about the age of the KC-135 tankers for more than a decade. The tankers, which are the workhorse of the air refueling fleet, were designed in the early 1950s from the same frame as the Boeing 707 and delivered through the early 1960s. In the 1990s, it was common for Air Force commanders to point out that the planes were usually older than the pilots who flew them.
Lichte said the Air Force flies about 1,000 sorties a day, a fourth of them by KC-135s.
But replacing a fleet of more than 700 planes was expensive, particularly when the Air Force also was looking at new fighters and stealth bombers. After the terrorist attacks of Sept. 11, 2001, when the American aircraft industry suffered declining orders from a recession-strapped airline industry, Boeing came up with a way to cut the upfront costs of new tankers.
It offered to build 100 new tankers based on its 767 and lease them to the Air Force for 10 years for $22 billion, a system that would get the planes into the fleet quickly with lower upfront costs. The plan had strong support from Washington’s congressional delegation, not just because Boeing is a major employer in the state, but because the Pentagon, which favored the lease plan, was offering to send the first 35 new tankers to Fairchild, and held out the prospect of building a school to teach pilots to fly the new planes at the West Plains base.
But the lease deal hit a series of snags. It was denounced as too expensive by Sen. John McCain, R-Ariz., who pointed out that after the lease was up, Boeing got the planes back. Darlene Druyun, an Air Force official assigned to the tanker lease contract and who was hired by Boeing, was convicted of federal crimes for negotiating her job at Boeing while working on the tanker program. She and Boeing’s chief financial officer at the time were sent to prison in the scandal.
That prompted Congress to cancel the lease plan and restart the search for a new tanker. Airbus and Northrop entered the competition, but Boeing was thought to have the inside track because of its experience: It had built the KC-135 and purchased McDonnell Douglas, the manufacturer of the Air Force’s other tanker, the KC-10.
As the competition dragged on, the Air Force stepped back from plans to send the first new tankers to Fairchild. It now says the West Plains base is one of many under consideration for the new planes, which won’t be in service until 2012 at the earliest.
Sue Payton, the Air Force’s assistant secretary for acquisitions, said Friday at a press conference that the scandal involving Druyun had nothing to do with the selection of Northrop and Airbus. The scandal was about a half-decade ago, she said, and “we have done everything according to acquisition regulations.”
The contract was awarded primarily on the performance of the two planes and secondarily on the cost, Payton said. The number of jobs the two proposals would create was not a factor in the decision, she said.
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