Advertising

The Seattle Times Company

NWjobs | NWautos | NWhomes | NWsource | Free Classifieds | seattletimes.com

Business / Technology


Our network sites seattletimes.com | Advanced

Originally published March 4, 2008 at 12:00 AM | Page modified March 4, 2008 at 4:57 PM

Print

Boeing beaten on tanker must-haves

Boeing was comprehensively beaten on almost every aspect of the competition for the $40 billion Air Force tanker contract awarded Friday...

Seattle Times aerospace reporter

Boeing was comprehensively beaten on almost every aspect of the competition for the $40 billion Air Force tanker contract awarded Friday, according to a report published Monday by a defense analyst with close Pentagon connections.

If so, Boeing may have only the slimmest chance of reversing the victory of Northrop Grumman and Airbus parent company EADS.

Loren Thompson, a defense analyst with the Lexington Institute, issued a memo Monday that discussed the outcome based on "weekend conversations with government officials intimately familiar" with the Air Force decision.

On the five specific criteria used to decide the winner, Thompson wrote, "Northrop Grumman's victory was not a close outcome. ... The Northrop-EADS offering was deemed much better in virtually all regards."

Responding to the firestorm criticism about the award, the Pentagon's chief weapons buyer, undersecretary of defense for acquisition John Young, issued a statement Monday saying a team of independent civilian and military analysts appointed by him would vouch that the Air Force "conducted a very open, fair and detailed competition process."

Those two assessments suggest Boeing's hope of a reversal of the award may now rest on largely political grounds — opposition to the outsourcing of U.S. jobs on a government defense contract.

The Air Force had scheduled its first formal briefing to Boeing for March 12, a couple of days before Congress' Easter recess.

But a bipartisan delegation of lawmakers from Washington state and Kansas — including Sens. Patty Murray and Maria Cantwell, both Democrats from Washington; and Sens. Sam Brownback and Pat Roberts, both Kansas Republicans, called Monday on Defense Secretary Robert Gates to debrief Boeing this week on the decision.

Both Democratic presidential contenders, Hillary Rodham Clinton and Barack Obama, criticized the award Monday.

Thompson, who last week used his government contacts to call the surprise outcome of the tanker contest an hour before the official announcement, said in an interview Monday that Air Force officials "were very convinced early on that there were problems with the Boeing proposal."

According to his conversations with officials, said Thompson, "Northrop offered a superior proposal in every measure and Boeing simply did not do a competent job of presenting its case."

The Northrop proposal, which put forward the much bigger A330 against the 767, even swung the Air Force around from its original thinking.

advertising

"The Air Force started out believing that the larger aircraft was a liability," Thompson said. "Northrop did such a superior job of analysis that they convinced a reluctant Air Force to treat the larger aircraft as an asset."

His memo listed the five key criteria as capability, risk, past performance, cost and "integrated fleet aerial refueling assessment," a score from a computer model that measures performance in various war scenarios.

"Boeing didn't manage to beat Northrop in a single measure of merit," Thompson wrote.

The two proposals were assessed as equal on the perceived risk that the contractor would not perform as required.

By every other measure, Northrop won. On past performance, the big delays to the Japanese and Italian 767 tanker programs weighed heavily against Boeing, Thompson said.

And Thompson, who was considered by EADS to favor Boeing in the competition, added this damning endnote to his memo:

"The reviewers concluded that if they funded the Northrop Grumman proposal they could have 49 superior tankers operating by 2013, whereas if they funded the Boeing proposal, they would have only 19 considerably less capable planes in that year."

Scott Hamilton, an Issaquah-based analyst who has long considered the Northrop-EADS proposal superior, described that bottom line as "astounding."

Hamilton criticized Boeing's public-relations campaign during the contest for focusing on aspects such as the creation of U.S. jobs and government subsidies to EADS, rather than the merits of the two planes.

"Boeing doesn't seem to have a leg to stand on for a successful protest," said Hamilton. "I think that [local] anger really ought to be directed at Boeing for putting together such a poor proposal."

Although the Northrop-EADS tanker will be assembled in Mobile, Ala., the major A330 airframe sections will still be built in Europe and shipped across the Atlantic.

Boeing declined to comment Monday as it awaits its debriefing from the Pentagon. But reaction to the political elements of the contest continued to build Monday.

Sen. John McCain, R-Ariz., said Monday he hadn't made up his mind on the outcome of the contract award.

McCain, the likely Republican nominee for president, helped scuttle a previous 2001 deal that gave the contract to Boeing.

"Having investigated the tanker lease scandal a few years ago, I have always insisted that the Air Force buy major weapons through fair and open competition," McCain told The Associated Press. "I will be interested to learn how the Air Force came to its contract award decision here and whether it fairly applied its own rules in arriving at that decision."

Obama, of Illinois, expressed disappointment Sunday that Chicago-based Boeing lost out.

Obama said it was hard for him to believe "that having an American company that has been a traditional source of aeronautical excellence would not have done this job."

Clinton, D-N.Y., a member of the Senate Armed Services Committee, said she was "deeply concerned about the Bush administration's decision to outsource the production of refueling tankers for the American military."

While details of the decision are not fully clear, Clinton said, "it is troubling that the Bush administration would award the second-largest Pentagon contract in our nation's history to a team that includes a European firm that our government is simultaneously suing at the [World Trade Organization] for receiving illegal subsidies."

Dominic Gates: 206-464-2963 or dgates@seattletimes.com

Material from The Associated Press was included in this story.

Copyright © 2008 The Seattle Times Company

UPDATE - 09:46 AM
Exxon Mobil wins ruling in Alaska oil spill case

UPDATE - 09:32 AM
Bank stocks push indexes higher; oil prices dip

UPDATE - 08:04 AM
Ford CEO Mulally gets $56.5M in stock award

UPDATE - 07:54 AM
Underwater mortgages rise as home prices fall

NEW - 09:43 AM
Warner Bros. to offer movie rentals on Facebook

Advertising

Video

Marketplace

Advertising