A flurry of activity has been happening on the air force tanker front while we’ve been in Geneva, Switzerland, (working, not playing). Unfortunately, we think the activity has all been rather sad.
In the aftermath of the World Trade Organization issuing its final report on the US Trade Representative complaint about illegal subsidies to Airbus, the anti-Airbus crowd has once again seized on this issue to attack the new reports that Airbus parent EADS is now likely to bid on the KC-X contract against Boeing’s KC767NewGen.
The final WTO report contained, it is believed, nothing different on the substance of the Interim Report that found Airbus did benefit improperly. Boeing supporters called this a clean win. Airbus says not so fast: Reimbursable Launch Investment (RLI in Airbus jargon, “launch aid” to everyone else) was found to be legal if done on commercial terms. While some launch aid was done on favorable terms, ie not commercial terms, and hence was illegal, now Airbus has a legal footprint to use launch aid for the A350 and future airplanes. This wasn’t what the USTR and Boeing had in mind when they filed the complaint against Airbus: they wanted launch aid ruled illegal, period. This is a huge loss for the USTR and Boeing.
From the start of the WTO case and the subsequent linkage to the tanker competition by Boeing and its supporters, we have warned this is dangerous ground to be on: Boeing will be found guilty if illegal subsidies, too, when the WTO issues its interim report in June—we are absolutely certain about this. Then the supporters of what was then Northrop Grumman and now is EADS will have solid ground to point to that ruling and say, in the old American cliché, “So’s your Old Man.”
What we find particularly unfortunate about the current subsidy campaign by Boeing supporters is that nobody is focusing on why they think the KC-767NG is better than the KC-30, and this is the real issue—and this should be the subject of the debate. It’s not about jobs. It’s not about WTO. The procurement laws don’t allow the Defense Department to take these into consideration. It’s about the merits of the products, at least from a DOD evaluation standpoint. All the rest of this is political gobbledegook. If this procurement is to be about politics (as it seems) and not about merits (what’s that?), then screw it: have Congress make the appropriation decision now and take all procurement selection on all programs out of the hands of the Pentagon. (With a twinge of sarcasm, given the Pentagon’s recent track record on this procurement and several others, this might not be a bad idea; Congress could almost hardly do worse [and there is a lot of sarcasm in this last statement.)
The issue raised by Boeing and its supporters over the prospect of a 90 day extension requested by EADS to get full briefings previously provided to Northrop is specious. This delay, these people say, is unfair to the warfighter and places them in harm’s way. (This latter is particularly shrill and unworthy.) We will remind everyone that a contract had been awarded in 2008 and Boeing protested, adding two years of delay to procurement. If the warfighters’ interest—and their safety were of paramount concern as those criticizing the 90-day extension now suggest—is important now, why wasn’t it in 2008? Northrop would be two years into the program by now had it not been for Boeing’s protest. So we fail to see how 90 days is relevant to what is going on now.
For those who now raise the issue of possible bribery by EADS elsewhere in the world, don’t forget that improprieties by the USAF and Boeing scotched the tanker deal in 2003, leading us to where we are today, and was guilty of trade secret theft when a Lockheed Martin employee took proprietary information with him when he went to work for Boeing. This is another specious issue.
Let’s get back to the merits of the competition: which airplane is better for the mission outlined by the RFP? In 2008, the USAF decided it wanted “more, more, more.” That was the KC-30. Today it looks like the Air Force wants “just” a tanker. This is the KC-767. The USAF is the customer and it has the right to decide what it wants. And if EADS wants to bid with this hanging out there, let it. As one Reader commented on the previous post, this will drive the price down for the taxpayer, and this is a good thing. It already has forced Boeing to come up with a more advanced KC-767 than offered to the USAF originally. This is a good thing.
EADS has a KC-30 in testing while the KC-767NG is a paper concept, just as the KC-767 Advanced Tanker in the 2008 competition was a paper concept. While Northrop devilishly and effectively derided the KC-767AT as a “Frankentanker,” and make no mistake about it, the KC-767NG is Frankentanker 2, the characterization is unfair to Boeing. The company has been mixing-and-matching airplane components for decades. The 737-based P8A Poseidon is mixes-and-matched major 737 components such as a fuselage from one sub-type with the wings from another. The 767-400 had a new, 777-based cockpit and different flaps and landing gear compared with the 767-300. The 747SP had a new vertical tail and different flaps from the 747-100. And so it goes.
But the fact is EADS can offer the USAF a real airplane while the KC-767NG is a conceptual airplane. This is something that ought to be evaluated fairly and objectively, without the sideshows of the WTO, o90-days and illicit bribes.
We previously posted a column, following the exit of Northrop, in which we told Europe to “Get over it and move on.” We have the same advice to those whining about the prospect of EADS entering the competition under its own banner: “Get over it and move on.”