Posted on 07/09/2008 12:15:52 PM PDT by jazusamo
Secretary of Defense Robert Gates announced Wednesday that Northrop Grumman and Boeing will have to submit revised proposals for the Air Force’s highly contested aerial refueling tanker program.
The Pentagon chief's decision comes after the Government Accountability Office (GAO) upheld Boeing's protest of the Air Force's decision to award the contract to Northrop Grumman and EADS North America, the parent company of Boeing rival Airbus.
“I have concluded that the contract cannot be awarded,” Gates said at a Pentagon news conference. Northrop Grumman won the heated competition on Feb. 29, but is currently under a stop-work order.
The decision means Boeing could win the contract. After it lost the initial decision, it opened a risky lobbying and public relations battle against the Air Force’s decision in the hope of overturning it.
The Pentagon had 60 days to decide how to heed the GAO's recommendations, but intense pressure from Capitol Hill likely sped up the decision by several weeks. Congress is to hear testimony on the GAO report on Thursday.
Boeing's congressional supporters used the GAO's ruling to push the Pentagon to reopen the competition. In its report, GAO said the Air Force made "significant errors" in its selection process.
Gates said John Young, the Pentagon's top weapons buyer and a former Senate Appropriations Defense staff member, would be in charge of the tanker selection. Air Force officials were in charge when the contract was awarded to Northrop Grumman.
The Air Force will still be in charge of the program once a contractor is selected, Gates said.
Young said that the Pentagon will issue a draft request for proposals that will address all of the GAO's findings. The Pentagon is not starting the competition from scratch but is asking the bidders to modify their proposals to address the GAO concerns. Young stressed that he wanted to see as few areas as possible changed in the request for proposals.
The Pentagon will issue the draft request at the end of the month or the beginning of August. Young expects to select the winner by the end of the year.
Young was not clear how the Pentagon will handle the fact that a contract already was signed with Northrop.
Gates said that he hoped the Pentagon's way forward on the tanker program would restore confidence among lawmakers who have been increasingly critical of the Air Force's ability to select a new tanker — the service's No. 1 priority.
“Sounds like the America-hater free-traders arent gonna be happy with this.”
Oh so you’d rather have the obsolete jet offered by Boeing that is partially manufactured in china as opposed to the more modern and capable jet that will benefit over 400 U.S. companies?
Then there is the fact that of the 8 KC767’s thats been ordered by Italy and Japan, not a single one was delivered on time. If Boeing can’t deliver 8 aircraft on time, then how does anyone expect them to deliver 170+ on time?
I think all Americans should be forced to buy their cars from General Motors, no matter how high the price or how shoddy the build quality. Otherwise they hate America.
And the AF should definitely buy from Boeing, despite Boeing's tender being an inferior effort solely based on extending 767 production. Otherwise they hate America.
GAO recommended AF to toss the source selection because of a multitude of factual errors and procedural mistakes, thereby the decision was flawed. GAO can only advise, they cannot make then throw out the source selection. Congress didn't make the Air Force throw out the source selection. The Air Force itself upon reviewing the findings, made the decision, and those that know Sue Payton, she can't be bullied.
Nothwithstanding the fact the EADS/NG jet did not meet the requirements and refused to respond to others (incomplete, non-compliant), I can hardly see awarding the contract under those conditions.
Then there is the national security aspect.
We (U.S.) engage in FMS for access, influence and infrastructure. Meaning, we sell our military kit internationally to ensure closer ties through greater physical and political access. That access provides to the U.S. influence. This influence givess the US leverage over a country, as we can suspend, slow or terminate deliveries if the country abuses or does not comport well with US policy objectives (Pakistan F-16’s for example, and should do to Israel as well—but that is a subject for another thread).
Now, in the case of the EADS/NG bid, we see the situation in reverse. As a talking empty head said, in so many words, on the Monday after the original announcement (GMB?), if the US decides to act out of school like they did in Iraq, “we” have leverage.
A tanker is a strategic asset and one that goes beyond selling shoes. It provides the US a real capability in global reach and global power.
Ron Fogleman, the most respected Chief of Staff for the Air Force since, what, Hap Arnold, he “broke with the Air Force” over the way the Air Force handled this source selection.
There are many threads that will provide analysis of the RFP and process, if you care to review. In the meantime, since it is a done deal, I suppose you support re-bidding against the same RFP, right?
Oh. . . .so how goes BAE these days. . .
Boeing will win this.Heads rolled at the top of the Airforce over this.
She's been 'fired' from the KC-X contract. Gates removed Sue Payton as Source Selection Authority and installed Under Secretary John Young.
That’s true. . .from the source selection authority.
She still had a role in determining course of action ref the GAO recommendation.
Not to worry, the feds couldn't get a contract out in less than 18 months if the fate of the world depended on it.
There has been an announcement of selection, probably a letter of intent or interim funding vehicle (can't remember the term for 'not really the contract just yet, here's money'), and a memorandum of understanding (or agreement) that comes before the contract itself. Historically, memos of understanding require tons of review and are not enforceable. Historically, memos of agreement CAN be enforced once signed but I think that is dropping away these days.
In any event Lockheed/Airbus will probably be able to collect reasonable startup / termination costs that could be quite sizable due to the nature of this thing. It would be interesting to see how DOD factors in the costs already flushed away by the first exercise.
Negative note:
AF will go into this with hurt feelings in any event, more problematic if Boeing does get the selection - which I think is likely at this point since Airbus had to have been implicated in at least the breaking of communications taboos and was directly responsible for the changes to specification.
Because they now have an operating production line and processes?
You know the hell of this is that one of these days a wing is going to fall off an old ‘58 model KC-135 inflight and about a hundred folks will perish with it.
Where’s the finger going to point then?
Thanks for the insight, norton.
I’ve been following this to some extent but am not familiar with defense appropriations or bidding procedures. The thing that stands out in my mind is the millions the DOD has put into this already and they’re having to start over again, it just seems there should be a better way.
Agreed, we need these new tankers and the sooner the better.
False. This is a new contract. The old Boeing Honchos responsible went to jail. EADS lies and bribes for every SINGLE plane they sell, and they never go to jail, and they even routinely write off their bribes as business expenses, and take them as tax deductions. Something they were supposed to stop 7 years ago.
And btw, the GAO is the "A" team for auditing integrity. And non-partisan. So wake up and smell the coffee.
Check THIS OUT about your buddies:
*Department of Defense Finds Catch-22 When Dealing With EADS
Michael Reilly - 5/5/2007Yossarian was moved very deeply by the absolute simplicity of the clause of Catch-22 and let out a respectful whistle. ‘That's some catch, that Catch-22,’ he observed. [1]
The reality of industrial globalization means that the United States will increasingly rely on foreign suppliers of military equipment. That’s not necessarily a bad thing, as long as we know that our global suppliers want to be true defense partners, are trustworthy, and will compete fairly to provide the best value for American taxpayers and the best products for American warfighters.
The Department of Defense (DoD) has rightfully welcomed the move toward globalization. But, with the large-scale entry of the European Aeronautic, Defense and Space (EADS) consortium into the U.S. market, DoD is finding itself in a procurement Catch-22 that would have even Joseph Heller, the creator of the phrase, in awe.
The catch in this case holds that even though DoD personnel are sworn to protect our country, they must award contracts regardless of the political actions of companies from what the Defense Acquisition Guidebook calls “friendly foreign countries.” Though it seems crazy to buy products from a company such as EADS whose owners, executives, and workers politically undermine American defense and foreign policy, this catch makes it not only rational but legally binding. Espionage, bribery and other dirty practices [Milo:] ‘But it's not against the law to make a profit, is it? So it can't be against the law for me to bribe someone in order to make a fair profit, can it? No, of course not!’ He fell to brooding again, with a meek, almost pitiable distress. ‘But how will I know who to bribe?’ 'Oh you don't worry about that,’ Yossarian comforted…‘You make the bribe big enough and they’ll find you.’ [2] The French government owns 15 percent of EADS, and its industrial policy consists of espionage, bribery and other actions to give its favored companies an unfair advantage over American firms. By making EADS a substantial defense supplier, the United States would be rewarding the French government for years of espionage and bribery that inflicted billions of dollars of damage on the American aerospace industry.
EADS, precursors, and subsidiaries themselves also have a long history of bribing corrupt officials into buying its products instead of American ones. EADS and its subsidiaries have been the subject of bribe related scandals in Belgium, Canada, India, Kuwait, Switzerland, Syria,[3] and most recently Austria where one of its lobbyist is accused of paying 87,000 euros ($117,00) to the wife of an Austrian Air Force general overseeing a $2.7 billion contract won by an EADS subsidiary.[4]
Former CIA Director R. James Woolsey confirmed seven years ago that Airbus bribed foreign officials to buy its planes. In a Wall Street Journal op-ed addressing European complaints about our Echelon electronic intelligence program, Woolsey said that the U.S. was not using Echelon to spy on European companies to steal their trade secrets. “Instead we were looking for evidence of bribery,” Woolsey said. He confirmed that Echelon was aimed partly at Airbus: “That’s right, my continental friends, we have spied on you because you bribe.”[5]
Woolsey added, “When we have caught you at it, we haven't said a word to the U.S. companies in the competition. Instead we go to the government you're bribing and tell its officials that we don't take kindly to such corruption. They often respond by giving the most meritorious bid (sometimes American, sometimes not) all or part of the contract. This upsets you, and sometimes creates recriminations between your bribers and your bribees, and this occasionally becomes a public scandal…” [6]
U.S. officials have a tough enough time guarding against fraud and corruption where the abuse is just on the part of individuals; it does not need to deal with companies where it is seemingly corporate policy.
Trying to supply America’s adversaries with weapons.
Milo shook his head with weary forbearance. ‘And [they] are not our enemies,’ he declared. ‘Oh, I know what you're going to say. Sure, we're at war with them. But [they] are also members in good standing of the syndicate, and it's my job to protect their rights as shareholders. Maybe they did start the war… but they pay their bills a lot more promptly than some allies of ours I could name.’ [7]
EADS tried to circumvent US law in bid to help Chavez. Last year, the Center for Security Policy cited EADS for its sales to Venezuelan dictator Hugo Chavez and in January, 2006, the U.S. invoked international arms trade regulations to stop EADS from selling its Spanish-built EADS CASA C-295 and CN-235 transport and patrol planes to Chavez. Under the regulations, known as ITAR, other countries cannot sell military products containing American-made components to third countries without U.S. approval. Since the EADS CASA planes contain dozens of U.S. parts, including engines and unique turboprops, the White House notified EADS and Spain of its objections.
Rather than stop its dealings with Chavez as a reliable U.S. defense partner would be expected to do, EADS immediately tried to circumvent ITAR by stripping out the American-made equipment and trying to find non-U.S. replacements. Only when it was clear that EADS could not come up with the substitute components did the deal officially fall through, in an October, 2006 announcement – nine months after President Bush invoked ITAR.
Working to arm China.
Since the 1989 Tiananmen Square Massacre, the European Union nations have largely stopped their military cooperation and arms sales to Beijing. Over the past few years though, EADS owners in France and its workers in Germany and Spain have agitated to end the embargo. This desire to fully open the technological floodgates was most recently evinced in March by French Defense Minister Michele Alliot-Marie, who while in Japan, continued to declare that the ban was “illogical” and “paradoxical.” In fact, she later stated that China’s burgeoning military might was not a threat but that, “what is important is for China’s military power to be put to the service of peace.”[8] It should be noted that the French government is no mere shareholder in EADS; President Jacques Chirac has used his influence to hire and fire the company’s top executives and to intervene in management decisions.
Weapons and nuke parts to Iran. As if selling advanced military equipment to China was not bad enough, EADS is also marketing its wares to the Islamic Republic of Iran. In 2005, for example, Eurocopter representatives attended an air show in that country and were seen attempting to sell what they said were “civilian” helicopters.[9] However, astute observers noticed that EADS’ promotional videotape for the show was labeled “Navy” and that that it prominently featured a military helicopter. EADS official Michel Tripier when questioned why they were ignoring U.S. policy to isolate Iran said, “As a European company, we’re not supposed to take into account embargoes from the U.S.”
Perhaps even more worryingly, there are concerns that EADS may be inadvertently aiding the Iranian nuclear program. As late as 2005, the company was selling Nickel 63 and so-called “Tritium Targets” – both crucial to triggering a nuclear explosion – to the South Korean firm Kyung-Do Enterprises. Reportedly, unbeknownst to EADS, the South Koreans were then reselling the nuclear parts a company called Parto Namaje Tolua, a front for the state-owned Iranian firm Partoris.[10] Even if the sale was an accident, it is extremely worrying that EADS did not take the time to verify the end-user of the nuclear materials.
Pro-American marketing and advertising, Anti-American workforce
‘You’ll be all right,’ Yossarian assured him with confidence. ‘If you run into trouble, just tell everybody that the security of the country requires a strong domestic Egyptian-cotton speculating industry.’ ‘It does,’ Milo informed him solemnly. ‘A strong Egyptian-cotton speculating industry means a much stronger America.’ [Yossarian:] ‘Of course it does. And if that doesn't work, point out the great number of American families that depend on it for income.’ [11]
If you exchange the words Egyptian-cotton industry with European Aerospace-lobbying industry in Heller’s passage above, you would have a good summation of how EADS has justified its activities and marketed itself to the American public.
In recent years, EADS has been building assembly and service facilities in Alabama and securing the support of targeted congressional delegations. “The company has been busy building U.S. domestic political support for a program that would ultimately involve billions of dollars and thousands of jobs,” Air Force magazine reported in June, 2006. “The company also has been recruiting talent with the technical know-how (and political connections) to get deals done in Washington.” [12]
In reality the amount of American jobs EADS plans to create is miniscule compared to the huge number of jobs it provides to anti-American labor unions that form the backbones of some of Europe’s most powerful anti-American socialist parties.
Anti-American union workers in Germany. The German socialist IG Metall union represents workers at Airbus Deutschland. Faced with losing thousands of jobs to the current Airbus reorganization, IG Metall is hoping EADS aircraft will start winning large DoD contracts. But the union, as a matter of policy and pride (its flag is still the Soviet-era red banner), openly shows hatred of the United States. The May 2005 cover of its magazine Metall contains a cartoon of a bloodsucking insect grinning and tipping its Uncle Sam hat. In words reminiscent of Germany’s darkest era, Metall ripped American businesses as “bloodsuckers” and “parasites.”[13] When asked to renounce the grotesque depiction, IG Metall’s Chairman Juergen Peters responded by calling the insect cartoon “a good caricature” of Americans. [14]
EADS CASA workers in Spain: On the wrong side. In Spain, where the EADS CASA division manufactures a variant of the CN-235 for the Coast Guard’s Deepwater program, the aircraft workers are even more militant than the Germans.
The EADS CASA’s main union, the General Confederation of Workers (CGT), is virulently opposed to the war on terror, to the United States, and to the NATO alliance. Its red-and-black anarcho-Marxist flag indicates an alliance of two forms of extremism, and its official Rojo y Negro (Red and Black) newsletter shows a militancy seldom seen any more in industrialized democracies.
• Stirring up extremism in Mexico. The CGT appears to back any radical movement in Mexico that opposes the Mexican government and the United States. The union openly supports both anarchist and communist causes in Mexico that seek to destabilize the southern border of the U.S. The union has its own “CGT Solidarity with Chiapas” committee to back the Marxist Zapatista guerrillas in the south of Mexico,[15] and publishes communiqués by the Clandestine Revolutionary Committee Indigenous Command of the Emiliano Zapata National Liberation Front (EZLN).[16]• Globalizing Latin American protests against the United States. The CGT promotes the international networking of protests against the President of the United States. Last month the CGT spread anti-Bush propaganda to incite opposition to the American president’s South America visit as it denounced American “plans of imperialism for the region.” [17]
• Militantly anti-NATO. The CGT is steadfastly opposed to the NATO alliance – not simply to alliance policies, but to the very existence of the collective security system itself. In February, the CGT held a major anti-NATO protest in Seville at the EADS CASA manufacturing hub where the company expects most of the future Pentagon work to take place. The demonstration coincided at the NATO leaders’ summit, with the CGT denouncing the alliance as the “global armed wing of the capitalist powers and their multinationals.”[18]
Running from responsibilities
‘But you can't just turn your back on all your responsibilities and run away from them,’ Major Danby insisted. ‘It's such a negative move. It's escapist.’ Yossarian laughed with a buoyant scorn and shook his head. ‘I'm not running away from my responsibilities. I'm running to them.’
EADS has the technology and resources to be a valuable partner in the defense and security of the United States. But if EADS is to be trusted – if Americans are to be comfortable buying its products and services – then the company, its owners, and its workers will have to live up to their responsibilities as America’s partner and change some of their ways.
Also, just as Yossarian finally realizes his Catch-22 is a made up bureaucratic absurdity, the Pentagon and Congressional overseers need to finally realizes the folly of their self-created procurement catch, and that they, at a minimum, have the responsibility to take into account the actions, if not the politics, of foreign suppliers.
REFERENCES
1. Joseph Heller, Catch-22, (London: Vintage Random House, 1994), Chapter 5, p. 63.
2. Ibid, Chapter 24, p. 337.
3. “Special Report: Airbus’s Secret Past – Aircraft and Bribery,” The Economist, June 12, 2003.
4. “For the Record”, Defense News, April 16, 2007 p.3
5. R. James Woolsey, “Why We Spy on our Allies,” Wall Street Journal, March 17, 2000.
6. Ibid.
7. Heller, Chapter 24, p. 325.
8. Herve Asquin, “France Calls to Lift China Arms Embargo,” Defense News Online, March 15, 2007.
9. Ibid.
10. “Iran Allegedly Purchasing Nuclear-Weapons Parts.,” RFE/RL Iran Report, 2 August 2005, Volume 8, Number 30.
11. Heller, Chapter 24, p. 338.
12. Richard J. Newman, “The European Invasion,” Air Force, June 2006, Vol. 89 No. 6.
13. “US-Firmen: Die Plünderer sind da,” Metall, May 2005. Online at http://www.igmetall.de/cps/rde/xchg/SID-0A342C90-8AD8F407/internet/style.xsl/view_4764.htm.
14. Ray D., “Germany’s Largest Trade Union: Portraying Americans as Blood Suckers ‘A Good Caricature,’” in David Kaspar, Davids Medienkritik blog, http://medienkritik.typepad.com/blog/2005/05/germanys_larges.html.
15. (10 February 2007)
16. (10 February 2007)
17. (10 February 2007)
18. (10 February 2007)
19. Heller, Chapter 42, p. 567.
Michael Reilly is the Chief Operating Officer of the Center for Security Policy. Dr. Michael Waller and Bryan Hill provided research for this article.
Check Tommy Dale’s entries, I think he was at different, more direct, level than I.
Will not start over.
From today’s OSD press conference:
“It is important to remember that this decision does not represent a return to the first step of a process that has already gone on far too long. On the contrary, given the amount of work that has been done, we believe that we can complete all of this and award a contract by December.
In short, all GAO findings will be addressed. The source selection authority will be changed. New personnel will be assigned to the advisory committee. And we expect to complete the revised process by year’s end. “
Okay, so the Pentagon will only be asking the bidders to modify their proposals to address the GAO concerns re the several items that were changed, supposedly unbeknown to Boeing during the last process, is that your understanding?
Because they now have an operating production line and processes?
They don't. The KC-767 Tanker supplied to Japan, and almost supplied to Italy is not the same as the KC-767AT on the USAF bid (for one thing B has to tweak the design to lift ans extra 40,000lb jet fuel)
If Boeing has used the 6 month grace period to have its design staff do actual work on the design, it may have a chance of meeting the original schedule.
If, as I suspect, that was mothballed while Boeing management talked to its Senators, there won't be any Boeing Advanced Tankers built before 2015.
I do not want my tax dollars going to EADS.
This is not protectionism, this is recognition of the fact that the ability to produce military aircraft is a strategic asset.
I don’t care if we buy canteens from the Philippines, web belts from Bangladesh, helmets from Germany or machine guns from Belgium. If we have to reconstitute those industries in a pinch, we can do it.
We cannot reconstitute advanced aircraft production easily, the same way we cannot reconstitute shipbuilding capability easily if it atrophies further than it already has.
I don’t care if the Germans can build better ships or the Swedes can build better planes. We should keep the parent companies in this country to maintain the capability.
Just my opinion.
Nothing “supposedly” about it. GAO found this to be the case.
Now, as far as modifying proposals, let’s go to the tape:
“MR. YOUNG: What we are seeking to do is expedite the decision to purchase a tanker. We will not expedite steps in the process. We have to do this methodically, fairly, and without bias in any way. So we will follow a normal acquisition process, we will issue a draft request for proposals, it will be amended to reflect the GAO findings, we will ask the company — THE BIDDERS TO PROVIDE MODIFIED PROPOSALS in response to that amended RFP, and then we will allot evaluation time for those — conduct a new source selection process for those proposals.”
And later in the press conference:
“MR. YOUNG: That’s correct. As the secretary indicated, there is a substantial foundation and a great deal of review and scrutiny that’s been applied to the requirements, the final RFP as well as the proposals, both within the government, by the industry and by the GAO.
That foundation, I think, is beneficial to build upon, making the corrections that are necessary to move forward. And we can leverage that. We’re still going to allot time for industry to modify their proposals as they see fit, once we give them the amended request for proposals. “
“Q Just two questions. One, you’re only focusing, then, on the seven or eight concerns raised by GAO, exclusively, in the three competitions?
MR. YOUNG: Yeah. As I understand it, our eight specific findings — we’ve analyzed those pretty thoroughly and we believe that we can ask both bidders to modify their proposals to address those concerns based on how we will implement those findings in that amended request for proposals and move forward. I don’t — I think we would like to err on the side of changing the minimum amount. We have a valid requirements document that has not been called into question.
And, you know, as the secretary said, a great deal of scrutiny and a lot of attention’s been paid to all of the pieces of this process. We have to fix certain detailed areas, but I think we would like to err on the side of changing fewer things rather than more things, so that everyone feels they have a fair chance. They understand the process. And the things we would change would be things we can explain. We can explain we changed some because the GAO found a factual issue that we needed to address. We made an adjustment which grounded in the requirements document, or we made any adjustment necessary to the benefit of the taxpayer. I mean, we obviously want to pay careful attention to what this program will cost the taxpayer.
One arm, I see — I’m sorry. I’m not order here. “
Boeing, and I am sure EADS/NG, will carefully review the RFP and make necessary adjustments, or no adjustments at all.
From the Boeing press release:
“We look forward to working with the new acquisition team as it reopens the competition, but we will also take time to understand the updated solicitation to determine the right path forward for the company. “
That’s my opinion also, especially for highly technical and complicated systems such as these tankers. Not only that but these planes will be in service for many years, should a problem arise twenty years down the road with a foreign company or country we could be screwed.
Thanks, Hulka. I know that was what was alledged but didn’t know if that was precisely what GAO had ruled on.
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