Sometime before the winter, the Air Force is supposed to award one of the most momentous defense contracts in its history: a deal worth at least $35 billion to finally replace its ancient fleet of refueling tankers. On the surface, the contract is about buying 179 planes that will ensure the U.S. military can continue to fly wherever it needs around Planet Earth. Beneath the surface, it’s a cutthroat competition for the future of the defense industry, with congressmen and the Air Force eager to influence it.
Shane Harris has a comprehensive piece in Washingtonian recounting the ins and outs of a decade-long search for a new tanker. (Full disclosure: Harris will be my editor on a freelance piece.) The current KC-135 tankers, built by Boeing during the Eisenhower era, show rust, decay and corrosion: in Germany in 1999, one malfunctioned during a landing, killing all four crew members. But the seemingly simple task of replacing the tanker fleet, Harris documents, is a case study in what happens when procurement battles collide with politics.
A legislative baron, the deceased Senator Ted Stevens, set up up a lucrative, competition-free deal to lease tankers from Boeing as a cost-control measure: buying new tankers is enormously expensive. Senator John McCain not only stopped the deal in the name of open competition, but he helped uncover corruption within the Air Force over it. Emails written by Secretary James Roche hoped an acquisition official would “tortur[e]” a representative from Boeing rival EADS “slowly.” That official, Darleen Druyun, went to jail for negotiating an executive job for herself at Boeing while working on the contract.
And that’s just the most infamous moment in the long tanker war. The frequent collapse of the contracts to hold it have been more mundane but just as momentous. After Congress killed the leasing deal in 2004, McCain stayed heavily involved in the tanker, warning the Pentagon brass to keep the competition based on value when it looked like Washington state-based Boeing might lowball an EADS-Northrop Grumman team. When EADS and Northrop actually won in 2008, Boeing quickly appealed. The protracted battle led the Pentagon to pull the plug on the tanker contract later that year. But competition got so intense that by early 2010, Northrop walked out of its partnership, convinced that the deck remains stacked in Boeing’s favor by the Air Force choosing to award the contract on the basis of who offers the “lowest price, technically acceptable.”
Even so, EADS, the European defense giant, is fighting — hard — to win the tanker deal. That’s because it thinks it has a real chance to dislodge Boeing at the top of the U.S. aviation market. Boeing has the natural advantage: it’s an American company, providing thousands of jobs in a terrible economy. In order to check Boeing’s All-American image, EADS began setting up factories in the economically battered — and heavily Republican — Deep South, pledging to build at least half the new tanker in Mobile. All of a sudden, EADS looks like it’s helping rebuild the Gulf Coast.
And the once-mighty Boeing is fighting for survival, even as a home-state congressman, Democrat Norm Dicks, chairs the powerful House appropriations subcommittee on defense. (Well, at least until the polls close today, that is.) It recently lost contracts to build the (also troubled) Joint Strike Fighter and military satellites. Rumors are flying that it might try to merge with Northrop to stay alive (and create the world’s biggest defense corporation).
The process is about at its end. (We hope.) By December, the Pentagon will have finished reading 16,000 pages of proposals for the tankers submitted by Boeing and EADS and will reach a decision. Politics permeates into the bids with ease. “The people who know this contract well believe that military officials are being influenced by members of Congress, who have taken sides in the deal along party lines,” Harris writes. “If the Democrats maintain their majority, Boeing wins; if the Republicans take over, EADS gets the nod.”
That’s a bit overstated. EADS’ political action committee, for instance, gave 56 percent of its campaign cash to Democrats during this heavily anti-Democrat midterm election; and it gave Republicans 54 percent of its cash the previous (heavily anti-Republican) election season. But Harris’ broader point is that the competition has become “poisoned” by outside influence. And any fair assessment of the ongoing saga of the tanker would have to endorse that conclusion. Photo: Staff Sergeant Robert Barney
11-02-2010, 03:12 PM
A Tanker, PLEASE!
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