georgeob1 wrote:If this procurement is to be overturned , it is much more likely the Democrats will do it in the next administration -- the Dems are in a seriously protectionist mood right now. It will be amusing to watch the Europeans discover that they really won't like many of the "changes" ("yes we can") that may be in the offing.
There is no way this contract can be taken away from Airbus without major consequences for American international relations. It also would be highly likely that Boeing would suffer on the commercial side as pissed off governments make sure that Airbus gets their countries orders, even if Airbus does not have the best plane for the job.
The European Aeronautic Defence and Space Company EADS N.V. (EADS) is a large European aerospace corporation, formed by the merger on July 10, 2000 of DaimlerChrysler Aerospace AG (DASA) of Germany, Aérospatiale-Matra of France, and Construcciones Aeronáuticas SA (CASA) of Spain. The company develops and markets civil and military aircraft, as well as missiles, space rockets, satellites, and related systems. The company is headquartered in the Netherlands in Schiphol-Rijk. The company operates under Dutch law.
41.63% of EADS stock is publicly traded on six European stock exchanges, while the remaining 58.37% is owned by a "Contractural Partnership".
The latter is owned by SOGEADE (27.38%), Daimler AG (22.41%), SEPI (5.46%) and Dubai Holding (3.12%).
SOGEADE is owned by the French State and Lagardère, while SEPI is a Spanish state holding company. France also owns 0.06% of publicly traded stock.
36.7% Germany
36.2% Other Europe
19.8% USA
7.30% Rest of world
I kind of have an inside source. They say Boing had to much scandal last year. Some Boing executives did some prison time over "favors" and bribes.
Maybe I should get outside more.
ok ready amigo boing boing bon
Boeing Co. on Monday inched closer to formally protesting a $35 billion Air Force tanker award it lost, saying it has "serious concerns" about the fairness of the competition.
March 10, 2008
In Tanker Bid, It Was Boeing vs. Bold Ideas
By DAVID HERSZENHORN and JEFF BAILEY
WASHINGTON ?- Just hours before the Air Force announced the winner of a $35 billion contract to build aerial refueling aircraft on Feb. 29, an Airbus plane lumbered off the runway in Getafe, Spain, and climbed to 27,000 feet to rendezvous with a Portuguese F-16 fighter.
Then, in the skies south of Madrid, the two aircraft edged closer and closer, until they were joined by a 50-foot boom hanging off the back of the big Airbus plane. For the first time, the boom pumped fuel into another plane, 2,000 gallons in all during several connections.
The technology to pass fuel from one plane to another may not be rocket science ?- in fact, aerial fuel booms have been in use for more than 50 years ?- but it helped Airbus's parent and its partner, Northrop Grumman, establish their technical bona fides.
Eager to enter the American defense market, the European Aeronautic Defense and Space Company, the owner of Airbus, made several bold plays, perhaps none more dramatic than building the $100 million state-of-the-art refueling boom on spec.
As a result, Boeing, the pride of American aerospace, was outmaneuvered on its home turf for a contract that could grow to $100 billion, becoming one of the largest military purchases in history.
Boeing received a detailed briefing from the Pentagon on Friday about why its bid fell short. Now it must decide by Wednesday whether to file a formal appeal.
The company and its allies in Washington have already made a number of arguments. Among them are that too many American jobs are being lost overseas, and that sensitive military contracts should not be in the hands of a foreign company.
The debate about the impact on American jobs is a murky one, because large manufacturing projects typically involve operations in many parts of the world, regardless of which company has a contract.
If Boeing tries to reverse the decision, it could find itself in a difficult position, accused of further delaying critically needed equipment in a time of war.
Boeing could also be forced to revisit the corruption scandal in 2004 that derailed a $20 billion deal for the company to lease refueling tankers to the Air Force. Two Boeing executives went to jail as a result, and the chief executive stepped down.
The parent of Airbus, known as EADS, and Northrop Grumman proposed a tanker made from a refitted A330 jetliner that could carry more fuel than the rival proposal, a modified Boeing 767. It also offered more flexibility for carrying cargo, transporting troops, airlifting refugees and delivering humanitarian aid.
Boeing, the heavy favorite to win the contract, having built earlier tankers, promised a new boom but did not build a prototype. One analyst who followed the contest said that Boeing, based in Chicago, seemed arrogant and offered a plan that Air Force officials thought would deliver only 19 tankers by 2013 compared with 49 by the Airbus team.
"The Boeing team was not responsive and often was not even polite," said Loren B. Thompson, a defense analyst at the Lexington Institute in Arlington, Va., based on conversations he said he had with defense officials. "Somehow that all eluded senior management," Mr. Thompson said. "They were not even aware there was a problem."
William Barksdale, a Boeing spokesman who attended the Air Force debriefing on Friday, said Boeing asked "whether we were hard to get along with." He said Air Force officials had no complaints in that area.
On Capitol Hill, the blow to Boeing has set off a protectionist furor among many lawmakers. And on the campaign trail, the Democratic candidates for president, Senators Hillary Rodham Clinton and Barack Obama, suggest that the Boeing loss reflects other Bush administration policies that have resulted in jobs moving offshore.
But the hot rhetoric could sound overly nationalistic, and even hypocritical, once the real implications for jobs and national security become clear. Boeing, for example, would have made many of its own tanker parts overseas, and some experts say that claims of job losses to a foreign company seem exaggerated.
For now, though, the pro-Boeing, pro-America talk is showing no signs of letting up.
"We really have to wake up the country," said Senator Patty Murray, Democrat of Washington State, where Boeing is a significant employer. "We are at risk of losing a major part of our aerospace industry to the Europeans forever."
Representative Todd Tiahrt, Republican of Kansas, said: "It's outsourcing our national security. An American tanker should be built by an American company with American workers." Boeing would have done some of its tanker assembly in Kansas.
Some officials have even suggested that it would have been better to revise the tainted lease deal than to let Airbus compete.
Defense industry analysts, however, say that the Airbus deal in many ways does make sense and that fears of lost military secrets are misplaced.
"We're not talking about missile defense issues," said Jon B. Kutler, chief executive of Admiralty Partners, a firm that invests in defense companies. "This is as plain vanilla as a major contract gets."
The Airbus and Boeing aircraft are both global products ?- Boeing has said roughly 85 percent of its tanker components would be American-made, the Airbus group about 60 percent ?- making the impact on jobs unclear.
Boeing said its bid would create or support 44,000 American jobs. The Airbus team's figure was 25,000 jobs in 49 states. Both numbers are impossible to verify. Industry analysts point out that, employment claims aside, the manufacturers have a profit motive in building the planes with as few workers as possible.
In fact, no layoffs are expected at the Boeing plant in Everett, Wash., where the 767 is assembled, as a result of losing the contract. On the contrary, the company is hiring workers because of a $255 billion backlog for jetliners. Airbus, too, has a huge backlog.
But while politicians continue to make election-year speeches about protecting jobs, industry analysts say a more useful debate might be over whether there was too much consolidation of American defense manufacturers in the 1990s when military spending slowed, leaving the government with limited domestic options.
With the award to the Airbus group, Mr. Kutler, the defense company investor, said: "The Defense Department is sending a message: on major contracts, don't be assuming we have no other options. It's a global marketplace."
Another crucial question is how such big contracts will be awarded in the future given the indications that many American officials seem to favor competition, but only if American companies win.
"If Cessna wants to start building bigger airplanes, I am happy to see that happen," said Senator Murray, of Washington. "I don't disagree with the concept of more competition, but there is a second bigger question and that is military capability and losing military capability."
Experts warned that excluding foreign competitors could prompt other countries to take similar steps against American defense manufacturers and that choosing inferior domestic products would only put military service members at risk. That tendency, acted on in other countries, has already created what one analyst, Richard Aboulafia of the Teal Group, called "a hideous mix of higher costs and reduced combat effectiveness."
Boeing and its allies in Congress have raised a number of objections that they say could justify reversing the Air Force decision, including whether the bid evaluators properly considered subsidies that Airbus may receive from European governments, or even the fact that Boeing pays higher health care costs because much of Europe has national health insurance.
In a statement after Friday's briefing, Mark McGraw, a Boeing vice president in charge of the tanker program, said that the company would "give serious consideration to filing a protest." He added: "What is clear now is that reports claiming that the Airbus offering won by a wide margin could not be more inaccurate."
If the company appeals, it would be to the Government Accountability Office, which would then have 100 days to issue a ruling.
The Air Force, meanwhile, insists that it chose the better plane.
Sue C. Payton, the assistant secretary of the Air Force, at a contentious hearing before the Defense Appropriations subcommittee last week, said: "Northrop Grumman brought their A game." Northrop is based in Los Angeles.
Ms. Payton also disagreed with assertions that the Air Force had tipped the scales for Airbus. She said officials had carefully followed procurement rules and an array of laws, including the Buy American Act, which she noted calls for certain countries, including Western European allies, to be treated as if they were the United States.
"Let me say I view Northrop Grumman as an American company," she said. "I view General Electric, who has jobs from this in Ohio and North Carolina, as an American company. I view the folks in Mobile, Alabama, and Melbourne, Florida, as Americans. But that did not enter into my decision here."
"You said we want a fair and open competition under the laws," she told the panel. "I complied with those laws."
General Electric is to make the engines and Northrop Grumman expects to hire hundreds of engineers in Melbourne for the Airbus group's tanker, which will be assembled in Mobile, Ala.
The victory on the Air Force contract could mark the arrival of Airbus as a major builder of tankers after decades of dominance by Boeing, which manufactured the only widely used boom.
The Boeing spokesman, Mr. Barksdale, said his company could easily pull together the new boom it promised the Air Force. "It's not a huge leap of technology," he said. "It would not be a huge deal."
But to Northrop Grumman and EADS, building the boom on spec presented a chance to demonstrate their competitive hunger.
"They had to start from scratch," said Tim Gann, a retired Air Force tanker pilot and group commander who now works for the Airbus group, EADS North America. "Up until we developed our boom, only Boeing had a boom. Boeing wasn't going to sell us the boom."
Government Cites Litany of Errors in Tanker Award
By Dana Hedgpeth and Robert O'Harrow Jr.
Washington Post Staff Writers
Thursday, June 26, 2008; Page D03
The Air Force bungled its biggest procurement deal to spend $40 billion to buy new aerial refueling tankers to replace its aging fleet, federal investigators declared last week. But what wasn't publicly known until yesterday was just how badly they did so.
In a 67-page review, the Government Accountability Office sharply criticized the Air Force for a litany of contracting transgressions, including everything from failing to follow its own evaluation criteria to miscalculating the maintenance costs, size and amount of fuel a plane could carry and holding unfair discussions with one of the bidders.
The competition featured Northrop Grumman and its partner, European Aeronautic Defence and Space, which won the deal Feb. 29, beating out Boeing. It was a bitter loss for Boeing, which built the Air Force's existing tanker nearly 50 years ago. It lodged a protest.
When they announced the winner, Air Force officials said repeatedly that they'd run an "incredibly open and transparent" process that would withstand any legal challenges.
But the GAO report made public yesterday differed about as sharply as could be imagined.
It found that the Air Force's selection process was so misguided that it was "undermined by a number of prejudicial errors that call into question the Air Force's decision."
Along the way, the Air Force seemed to guide Northrop through some pitfalls. In one instance, the Air Force first told Boeing that it had satisfied one set of objectives, but later, after discussions had been closed, decided that it had not. But the Air Force told Northrop about objectives it had not met, allowing that company to change its proposal and meet the requirements.
"It is a fundamental precept of negotiated procurements that discussions, when conducted, must be meaningful, equitable, and not misleading," the GAO said in its assessment. The GAO said the Air Force "treated the firms unequally" in holding discussions with one but not the other.
"This is a damning report," said David Berteau, a senior defense analyst at the Center for Strategic and International Studies. "It is baffling to me: how did so many smart people at high levels at the Pentagon come to the conclusion that the process was so well done and announce a winner, and then we see a GAO report that gives them a black eye in running a smooth, fair procurement process."
The GAO's report is not an evaluation of the merits of the two aircraft; it is essentially a technical critique of the Air Force's acquisition process. It sharply criticized the Air Force for not following the evaluation criteria it set out and said that "judgments in the evaluation of proposals must be reasonable and must bear a rational relationship to the announced criteria."
Top Pentagon and Air Force acquisition officials met with Defense Secretary Robert M. Gates yesterday to discuss how to deal with the contract. The GAO has essentially recommended that the Air Force start the procurement process from scratch.
Boeing's stock closed down $5.15 to $69.64 yesterday.
After the Air Force awarded the contract, which could be worth as much as $100 billion over the next two decades to the Northrop team, Boeing filed a protest with the GAO on March 11, arguing that its aircraft was unfairly evaluated. Congressional leaders, many of whom represent areas where Boeing has major operations, have rallied to get the Air Force to reconsider its decision and have threatened to withhold funding from the tanker program.
"This decision boils down to the fact that the Air Force ran a tanker competition that was neither transparent nor fair," said Sen. Patty Murray (D-Wash.). "This decision is as damning as it is unprecedented. I want to know how the Air Force got this so wrong. Whether it was incompetence or impropriety, clearly the process was completely mishandled."
The GAO said Boeing should be reimbursed for its attorneys fees and the costs of filing the protest.
It was clear in its judgment that the competition was almost a dead heat.
"But for these errors, we believe that Boeing would have had a substantial chance of being selected for award," the document concluded.
Editorial
The Air Force's Tanker Mess
Published: June 29, 2008
Defense Secretary Robert Gates must take over the troubled contracting process for the Air Force's new midair refueling tankers. The current tankers are decades old and the Air Force needs the new planes. But its repeated bungling of the procurement process shows that it is incapable of doing the task on its own.
Healthy competition among defense contractors ?- on both sides of the Atlantic ?- is the best way to ensure that the Pentagon buys the best possible gear for the lowest possible price. But according to a scathing report by the Government Accountability Office, there was nothing healthy about how the Air Force awarded the $35 billion tanker contract to the team of Northrop Grumman and the European company EADS over rival Boeing.
The government watchdog agency did not say which was the best plane. But it accused the Air Force of breaking its own contracting rules. It told Boeing it wouldn't give extra credit for a big jet and then gave extra credit to Northrop's bigger jet. It changed its rating of Boeing's communications and computer system without telling Boeing. But it discussed Northrop's system with Northrop. It also appeared to give Northrop a pass on at least two important stipulations, including whether its tanker could refuel all the planes in the fleet.
The Air Force also miscalculated the full cost of operating the two rivals' jets. If not for the errors, the report said, "we believe that Boeing would have had a substantial chance of being selected for award."
The Air Force's previous attempt to get new tankers ?- a no-bid deal to lease planes from Boeing ?- was derailed after it was revealed that Boeing offered a job to the Air Force official negotiating the contract.
The Air Force must follow the agency's recommendation to reopen the bidding process. But Mr. Gates will have to work especially hard to ensure that the process isn't further tainted by election-year politics.
That will be difficult. Both Senators Barack Obama and John McCain have called for redoing the competition. Mr. McCain, who was rightly praised for his role in derailing the earlier sweetheart deal with Boeing, must now answer for the role he played in pushing the Air Force to keep Northrop-EADS in the competition.
Some members of Congress, spurred by an aggressive and expensive lobbying campaign by Boeing, are trying to use the agency's report as an excuse to overhaul how defense contracts are awarded: attaching buy-America provisions and job creation requirements. That was not part of the agency's criticism.
Such requirements would almost certainly provoke retaliation from allies in Europe and elsewhere ?- a dangerous course for the world's biggest weapons exporter. Excluding foreign bidders almost guarantees that taxpayers will end up paying more for less defense.
Mr. Gates is already working to overhaul the dysfunctional Air Force. He fired both the secretary of the Air Force and its chief of staff for their inexcusable failure to keep track of nuclear munitions, among other problems. Mr. Gates and the service's new leadership must now clean up this tanker mess. They must appoint a new procurement team. With the proper oversight in place, the bidding for the new tanker must start as quickly ?- and nonpolitically ?- as possible.
By LESLIE WAYNE
Published: July 10, 2008
The Air Force will reopen the bidding for a multibillion-dollar contract for midair refueling tankers, the defense secretary, Robert Gates, announced on Wednesday.
The action reignites the controversy surrounding the largest trans-Atlantic military contract. The Pentagon's decision will also enter the realm of presidential politics because John McCain, the presumptive Republican nominee, had long been a critic of Boeing's initial bid and as a member of the Senate Armed Services Committee held a series of hearings that opened the door to the bid made by Northrop and European Aeronautic Defense and Space.
As a result, critics have contended that he has favored a European supplier to an American company for a critical American military contract ?- an impression not helped by the fact that several of his top campaign advisers had worked as lobbyists for Airbus.
In strictly business terms, with the $35 billion contract having the potential to grow to more than $100 billion, both the Northrop-EADS partnership and Boeing led prominent campaigns on both sides of the Atlantic to land the business. Both European and American politicians entered the fray with statements supporting their own side as part of an intense public relations effort.
When the Air Force decided to award the refueling contract to the Northrop-EADS team, the selection stunned the global military community and was taken as a sign that the Pentagon was, at long last, opening its doors to European suppliers. These companies had long complained that they had been shut out of American military business, even though their countries had long purchased American military goods.
The decision also ended long decades of a close relationship between the Air Force and Boeing, which had made Boeing one of the Pentagon's biggest suppliers.
As soon as the contract decision was announced, Boeing filed its protest and, in an equally dramatic turn of events, the Government Accountability Office upheld the Boeing protest and started the process that led to the reopening of the contract.
The contract itself would provide for 179 aerial refueling tankers that would replace the current Air Force fleet, which dates date back to the Eisenhower era. Both Boeing, whose tankers are based on its 767, and EADS, which uses a variation of the Airbus A330 for the tanker, have competed head-to-head in countries around the world for tanker contracts. But, none of these contracts are as large as the Air Force proposal.
With national pride and jobs on the line, the tanker deal has stirred up strong emotions on both sides of the Atlantic. When the Northrop-EADS team was chosen, there was elation in Europe. This was only followed by disappointment when the G.A.O.'s surprise ruling criticized the process that selected the Airbus plane and opened the door to the rebidding of the contract.
"EADs feels very raw over this," said Alexandra Ashbourne, who heads Ashbourne Strategic Consulting in London, an aerospace analysis firm. "There was a lot of effort expended for no return. You cannot underestimate how raw and burnt they feel as a result of all this."
Loren Thompson, a military analyst at the Lexington Institute, a Washington policy research group, said that the fact that the announcement is coming from the defense secretary and not from the Air Force is a sign that the Pentagon wants to move quickly to get the contract signed.
"I think they want to get this award wrapped up by the end of the Bush administration," Mr. Thompson said. "If they do so, it would set a new land speed record for Pentagon contracts."
Complicating matters are internal matters within the Air Force. Mr. Gates had ousted the Air Force's two top officials over a series of securities breaches. The episode raised serious questions over Air Force management as well as over its ability to manage its massive weapons-buying budget.
One of those ousted, Michael Wynne, the Air Force secretary, added more fuel to the controversy as he departed. In a news conference with reporters, he said he was surprised and disappointed by the G.A.O. ruling that overturned the Air Force decision and said the report had been unclear and overly subjective.
