Congressional move ill-advised

A move in the US House to adopt legislation to overturn the USAF tanker award to Boeing is ill-advised on a number of levels.

According to a story in The Seattle Post-Intelligencer,  Boeing supporters in the House, incensed over the award by the Air Force to Northrop Grumman and Airbus parent EADS selecting their A330-based KC-30 for the KC-45A tanker, are thinking about adopting legislation to block the award. The details, according to the news story:

  1. Prohibit the award of a US government contract to any company found by the US government to be receiving illegal subsidies;
  2. Direct the USAF to reconsider the competing tanker proposals and “factor in subsidies;”
  3. Direct the USAF to reopen the bidding and allow Boeing to propose a tanker based on the 777;
  4. Cancel the NGC contract outright.

There are so many things wrong with this approach.

  1. The World Trade Organization hasn’t ruled on the US complaint, so the USA’s interpretation of what constitutes “illegal” subsidies may or may not hold up before the international body charged with adjudicating these things. Apparently this minor legal detail doesn’t matter to the members of Congress who are behind this one. Furthermore, following the same concept, the EU has “found” Boeing to  be receiving “illegal” subsidies (also a complaint before the WTO). If Congress adopts this clause, then the EU would be perfectly justified in retaliating against Boeing by adopting a similar rule. Bad idea all the way around.
  2. We’ve written on this one before. The USAF has no expertise to factor in anything about the subsidies. It needs to stay away from this topic.
  3. Boeing had the option to offer a “KC-777” alone or in tandem with the KC-767. Boeing says it was discouraged from doing so, but as far as we know hasn’t presented written evidence to support this, at least publicly. Presumably this element is detailed in the protest filed with the Government Accountability Office. If so, then the GAO can determine whether the USAF improperly steered Boeing away from offering the KC-777 and equally presumably, this might be grounds to send the competition back to the drawing board (so-to-speak). Congress doesn’t need to be involved on this element.
  4. This is the worst possible interference in Congressional meddling. It sends a message to any foreign defense company, and any domestic company partnering with a foreign company, that it’s a waste of time to compete for Defense business. As we wrote March 22, Britain’s BAE Systems was the sixth largest DOD contractor in 2006. What kind of message would this Congressional action send to BAE? Boeing partnered with Italy’s Alenia to offer the C27J twin-engine turbo prop for light cargo operations. It so happens the Alenia airplane won this contract. The Congressional action proposed on canceling the Northrop deal has all sorts of horror-ramifications.

Let the GAO deal with this, like the law allows. If the GAO upholds Boeing’s protest, so be it. But if the GAO rejects the protest, Boeing and its supporters need to let this one go. In fact, Boeing would be better off calling off the dogs on this Congressional fight. Boeing might win the battle but lose the war. The EU won’t sit back idly if Congress interferes, and Boeing will be the one to pay the penalty, not some member of Congress with a few district jobs to protect.

As we previously said, Boeing would be far better off to devote its engineering resources to fixing the 787 program and developing the Blended Wing Body for the KC-Y competition scheduled for 2020. A KC-BWB, and subsequent commercial applications of the BWB, would be far more advanced than the KC-30 or anything else Airbus has to offer, and superior to the KC-777. Go for this gold, and the advanced technology that comes with it. Don’t stick with an airplane originally designed in the late 1970s-early 1980s. Think ahead. Be bold.

Blended Wing Body test model. Source: Boeing 

3 Comments on “Congressional move ill-advised

  1. Congress didn’t need to be involved from the start either, and force the Air Force into making and changing guide lines that allowed the Airbus to compete, but they were! So turn about is fair play.

  2. Thats a great analysis with sound advice, but when did politicians ever listen to sound advice?
    If an alternative to the 767 had been offered, a dusted off MD11 would have been a technicallly low risk alternative using KC10 fuel transfer gear.
    The 777 far too expensive and lacking field performance.

  3. An Open Letter to Senator McCain

    Dear Senator;

    On March 3rd, Alabama’s Senator Shelby accused the EADS tanker’s opponents of being mendacious. He further stated that the award will create thousands of American jobs not outsource them. In an open letter, of which you received a copy, I pointed out the errors in his logic. Eight-five percent of Boeing’s plane would have been manufactured and fabricated in America, where as only 57% of the EADS model will be American made. The net loss of those manufacturing jobs will be outsourced to Europe.
    [I have no employment or financial interest in Boeing. My only dog in the hunt is as a patriotic American and a taxpayer]

    European Aeronautic Defense and Space Company (EADS) Lobbyists

    After becoming aware that no less than five-current or former EADS lobbyists are working for your election campaign—from firms that earned $780,000 of the $1,300,000 EADS spent on lobbyists in 2007—I began to wonder if you’re as neutral as you purport?

    1. How could EADS—coming up on the largest American defense contract of their corporate life—afford to let these lobbyists go?
    2. Did their roles on the McCain campaign provide them access to influential people who would not otherwise have taken their calls?

    Your campaign claimed it was “coincidental”.

    Furthermore, your spokeswoman Jill Hazelbaker commented, “They never lobbied him related to the issues, and the letters went out before they were contacted” by EADS. This referred to two letters you sent, one to Deputy Defense Secretary Gordon England in September 2006 and the other on December 1, 2006 to incoming Defense Secretary Robert Gates.

    “I had nothing to do with the contract, except to insist …, that it be fair and open and transparent.” [Senator McCain to St. Louis voters.]

    “ I respectfully suggest that the Air Force remove W.T.O (World Trade Organization) element from its procurement evaluation.” [Excerpt from your letter to incoming Defense Secretary Robert M. Gates.] In later correspondence Gates assured you that your concerns had been taken into account.

    Can the American people believe Hazelbaker?

    Didn’t your letters follow by only a few months requests and even threats made by EADS on the very same subjects? Following your correspondence, changes were made to the request for proposal—changes that favored EADS.
    [Air Force chief of staff General Michael Mosely testified before Congress that although concerned about the nation’s shrinking base of defense industrial contractors, stated the Air Force was barred from considering that in awarding the tanker contract.

    Isn’t this one of the changes you requested?

    Washington Senator Murray countered by revealing the Navy takes the industrial base into account when considering shipbuilding contracts.]

    Did you, Senator John McCain, ever lie to hide embarrassing incidents?

    The Washington Post and the New York Times reported you had denied ever meeting with Broadcaster Lowell Paxon whose lobbyist was Vicki Iseman.
    [Newsweek, however, uncovered a legal deposition in which you admitted that you not only had met Paxon, but that you flew several times on his corporate jet. The FCC committee chair had some unkind things to say about your interfering in their process.]

    According to Newsweek, you have also denied claims by close associates on your being warned about giving special treatment to Vicki Iseman. You denied that you were ever warned.

    How much harm has your meddling done to our country?

    While thumping your chest about your involvement in exposing Boeing’s procurement scandal in 2002, why haven’t you mentioned that Northrop Grumman paid $111,200,000 to settle a suit out-of-court. A suit charging that the firm “knowingly” gave the Navy defective aircraft. [Wikipedia]

    Shouldn’t your Senate Armed Services Committee have been concerned with something that may have compromised the lives of our naval personnel?

    Your obstruction could cost the following:

    • The loss of at least 14,000 high-paying jobs just as our country enters recessionary times.

    • Potential danger to our pilots. Your opposition to leasing Boeing tankers in 2002, has already delayed the replacement tankers for six years?

    • An additional $15 billion in fuel costs, $5- $6 billion in operating and maintenance costs plus additional billions for extending runways and hangers.

    • Delay needed to construct facilities in Mobile, delay and cost needed to recruit and train workers when these facilities and experienced workers already exist in Everett, Washington.

    • By providing a plane that’s too large to service most third world countries’ inadequate airfields. The very countries where humanitarian aid will likely be most needed.

    • On a different but similar matter, Project on Government Oversight (POGO) in 2006 found it distressing “ … the only way we can afford tactical air superiority is to eventually undermine it by selling it abroad.” Senator, your stance on the EADS proposal is adding to that problem.

    • I also have a major concern about how much your interference will advance China’s badly needed technology, which will harm our future security. [Check out Senator Murray’s allegations about past French arms sales and add the harm French Exocet missiles did in sinking Britain’s HMS Sheiffeld.]

    Finally the most important question of them all?

    Why do we need to replace the aging tanker fleet now? According to the U.S. General Accounting Office (GAO), “that with relatively cheap engine and avionics upgrades, the current fleet of 545 KC-135 tankers would not need to begin being replaced until 2040.” [POGO release May 10, 2002, a release which praised your role in what they termed a $26 Billion Pork Provision]

    If the above is true, didn’t your interference unnecessairly raise the financial stakes and outsource the pork to the Europeans?

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