Tanker award to slip to 2011?

Update, Aug. 6: Here is a Pentagon spokesman reacting to the US Aerospace protest over being rejected for its KC-X bid because it missed the filing deadline by five minutes, as reported by The Dayton Business Journal:

In a press briefing Thursday, Pentagon Press Secretary Geoff Morrell said the notion that any U.S. Military personnel deliberately interfered with the company’s attempt to deliver a bid is “absolutely absurd.”

“Listen, the other two companies that bid on this went to great measures to ensure that their bid arrived at the prescribed time … This is not a high school homework assignment, okay? These deadlines count and any professional contractor understands that,” Morrell said.

Update, August 4: This falls into the Holy Crap, What’s Next? department. The Seattle PI has the latest in the saga of the KC-X procurement. US Aerospace–the one with the Russian tanker proposal based on a plane that doesn’t exist–has filed a protest with the GAO over being denied the right to bid on the contest on a technicality.

Original Post:

In what has become perhaps the longest-running and certainly most tiresome story in Defense procurement, there is increasing speculation that the USAF contract award for the KC-X tanker might slip from November 12 into 2011.

Heidi Wood, the aerospace analyst for Morgan Stanley, wrote in her report on Boeing earnings last week that the award might slip. She did not elaborate in her note, but in an email to us expressed her skepticism of the November 12 date, given the history of this procurement.

The date is already a slip from the USAF’s promised August award. The complexities of the evaluation and the decision by the Air Force to grant EADS a 60 day extension to July 9 to submit a bid for the Airbus-based KC-45 contributed to the delay. The new, present date comes 10 days after the mid-term Congressional elections, in which Republicans are expected to significantly narrow the gap they have as minority party in the House and the Senate. Some even forecast the GOP might pick up enough seats to gain a majority in one of the chambers.

EADS is widely considered to be closer to Republicans and Boeing closer to Democrats, though there are politicians on both sides of the political parties supporting one or the other.

Whenever the USAF announces the award–whether it is November 12, as planned, or after the new year when the winners and losers shuffle about in Congress, the decision is bound to be controversial–and probably protested, pushing any final award into 2011 on this basis alone.

A closely divided Congress means more politicking will rule as opposed to letting the USAF do its job.

Surprisingly, one of Boeing’s most vociferous supporters from one of the nation’s most reliable Democratic states is in trouble for reelection. Sen. Patty Murray (D-WA) is only running neck-and-neck in early polling with Republican challenger Dino Rossi, who twice lost races for governor. The first was lost in three recounts by a mere 133 votes after leading in the first count. His second run, in 2008, was swamped by the Obama election tide.

In Rossi’s third run for statewide office in six years, the electorate seems tired of the sometimes shrill Murray, who is also facing the growing dissatisfaction with Obama. Murray has been a reliable supporter of Obama’s controversial policies. Rossi is no shoo-in, though. In the 2004 and 2008 gubernatorial elections, he was an early favorite only to fade in the home stretch.

But if he defeats Murray–still an uphill prospect, for the mud has only just begun to fly–EADS can’t count on this Republican vote. Anyone elected to Congress from Washington pretty much has to support Boeing, the state’s largest employer, and Rossi is already on record as supporting the KC-767 bid. But if he wins, Rossi will be a freshman senator with no power base in the Capitol; Murray is the #4 ranking Democrat in the Democratic majority, and holds a seat on the powerful Senate appropriations committee, where she can try to block any award to EADS at the committee level.

We won’t be surprised if whoever loses the tanker award protests. The Congressional supporters on both side will line up to further attempt to block any sole source contract, we think.

The entire process is likely to slip into 2012 whether or not Heidi Wood is right.

29 Comments on “Tanker award to slip to 2011?

  1. OTOH – a lame duck congress could close the door on any reasonable protest- depending – by simply pulling the initial funding.

    Besides which- the ONLY way to keep who won a secret before election would be to halt the evaluation process at some point BEFORE the final score sheet is tallied.

    Looks like we may have found a process schedule that even puts the dreamliner to shame

    Hello- we are from the government – we are here to help you !

  2. “EADS is widely considered to be closer to Republicans and Boeing closer to Democrats, though there are politicians on both sides of the political parties supporting one or the other.”

    Where did that come from? Just because the Senator from Alabama is supporting EADS? EADS is promising jobs in his state. Republicans want American jobs, just as much as Democrats do, save John McCain and Harry Reid.

    Boeing has been listing stste by state the number of jobs, new and saved, each state will get if the KC-767 is selected. EADS only says “45,000 jobs” without a state by state breakdown, except for 1,000-2,000 jobs in AL. Republicans and Democrats notice job numbers like these in their home states. A republican from OK will support getting 900 jobs in his state, just as a Democrat from CA will support getting 1200 in hers.

    I think if you took a poll of both Houses in Congress on who they support for the new tanker, my guess is the vast najority of “R” and “D” will side with Boeing, and only a few “R” and “D” side with EADS.

    • The perception is there because the reliably red states of Alabama and Mississippi stand to gain from an airbus win. Beyond these two states, I don’t see any “automatic” Republican support for EADS. For example the two Kansas senators are both Republican, and would eat ground glass before seeing airbus get this contract without the mother of all political battles. I expect the political political composition of Congress will not only change–dramatically–but it will be increasingly populist, and perhaps even more isolationist.

      • Duh!

        It has been obvious for years that the aviation industry is moving away from So Cal both for cost and the States regulation of industry. When you have to fill out a form and submit it to the state each time there is “touch up” painting it is obvious that the state government does not want you, only your money.

        Unfortunately, Washington State has not learned to be business friendly either. Although I live here, it is hard to imagine Boeing opening any new assembly line here that is not an expansion of a current product. It would actually not surprise me if the KC-767 assembly ended up in Kansas.

  3. Watch the Russian built tanker win and see EADS and Boeing file a joint protest…lol

    I wouldn’t doubt 2012.

    • Antonov winning the competition under the noses of Boeing and EADS would be hilarious. Good luck to them, I say!

  4. Regardless of whether or not Sessions and Shelby are Republicans or Democrats they will support the EADS bid, and having Boeing lose Senator Murray in Washington State wouldn’t matter either since her Republican opponent would be just as anti-EADS and pro-Boeing as she is.

    The only advantage for EADS in a Republican majority in the Sentate is that Shelby and Sessions are fairly senior Senators and Shelby in particular had an important role in defense appropriations. In fact it was Shelby’s role in defense appropriations that helped stear EADS towards Alabama under the theory that if they won the contract they would need strong support in the Senate to protect the contract and keep the rest of the Sentate from gutting it after the fact. In the end once Shelby and Sessions lost their comittee positions in 2006 the EADS bid was probably politically doomed since they no longer had any friends in powerful positions to protect the contract if they won it.

    Which in my mind has always begged the question why did such a political astute service as the USAF blunder so badly in selecting the NG/EADS bid in the last round? Even without the GAO assessment a number of more political astute observers labeled the EADS bid DOA in the Sentate without Shelby and Sessions holding key positions to fund the contract during the first few critical years after approval.

    • That would indicate enemy action imho.

      Nobody in the US is berating any WTO ruling,
      that could certainly indicate “happy with value
      received in exchange” ;-?

  5. It ceases to amaze me how such a desperately critical procurement decision has become a political football.

    I’m sure commentators here would agree the USAF is infinitely more aware of it’s needs than any politician in this process.

    Fistly bribes & then a much delayed winner emerged in a mildly suspect duopoly competition with the AF exclaiming More, More, More comment on it’s chosen design.

    Boeing has much to answer for in this process with it’s relentless persuite of what it perceives as being fair, I doubt if the USAF would disagree with me as they would be close to seeing a flying example of their chosen More, More, More design by now.

  6. I don’t know if the USAF would disagree with you, Phil, but it is interesting to note that General “more, more, more” retired and is now employed by EADS North America. So “mildly suspect” may be more suspect than mild.

  7. another connection

    T. Allan McArtor was the Administrator of the U.S. Federal Aviation Administration from 1987 to 1989.

    McArtor is Chairman of Airbus North America Holdings, Inc., parent company of Airbus North America Sales, Inc. and Airbus North America Customer Services, Inc., all located in Herndon, Virginia, Virginia, plus Airbus North America Engineering in Wichita, Kansas. Named Chairman in June 2001, McArtor oversees the activities of Airbus in the United States and Canada in several key areas, including governmental affairs.

    McArtor is a 1964 graduate of the U.S. Air Force Academy (BSE) and was the Cadet Wing Commander. In addition, he holds a Masters Degree (MSE) from Arizona State University.

    McArtor was a highly decorated combat fighter pilot in Vietnam, an Associate Professor of Engineering Mechanics at the Air Force Academy, and capped his Air Force career as a pilot with the U.S. Air Force “Thunderbirds” Aerial Demonstration Team. McArtor continues to hold a Commercial Pilot’s license (instrument rating, multi-engine) and is a member of Tau Beta Pi (engineering honorary society).

    off we go – into the wild . . .

  8. Before someone points it out, all major defense contractors routinely hire former DOD officials and retired generals and admirals. However, the ink wasn’t even dry on General More, More, More’s retirement when he was picked up by EADS. AFAIK, there is a “decent interval” or prescribed period of time that one has to wait before accepting employment with a company in which one had either a “material participation” or a role in a contracting action. Without getting into the exact letter of the law with respect to the Federal Procurement Laws and Standards of Conduct that regulate these matters–and certainly not implying a violation (Heaven forbid! 😉 ) , one would think that EADS would at least be rather eager to avoid the perception of a conflict of interest? No? Oh well….

    Does the fact that these former general officers and secretaries of the navy work for the North American branch of a european company exempt them from registering as agents of a foreign government?

  9. Decisions of this nature are not the result of an alledged paid individual spouting out complimentary comments, they are a result of a intricate confidential analysis that few are or ever will become party too.

    Colour it any way you will but casting aside the factual reality of the More More, More comments I reasonably conclude that the award to EADS was not an impulsive from the heart reaction but formed part of a extensive fair & reasonable analysis the result of which was only arrived at after an intense scrutiny of the products on the table.

    Delicately repeating the bleeding obvious, Boeing has much to answer for in this process, full stop.

    • Phil: “I reasonably conclude that the award to EADS was not an impulsive from the heart reaction but formed part of a extensive fair & reasonable analysis the result of which was only arrived at after an intense scrutiny of the products on the table.”

      And one that was found to be badly flawed by the GAO. Sometimes when one has already preselected the outcome, there is a tendency to make the “facts” fit the conclusion. Could that have been the case in the last go-around?

      But don’t worry, one can safely infer that given DOD’s steadfast refusal to consider any misconduct by EADS shareholders (i.e., Daimler bribery), the WTO ruling, and to bend over backwards to extend the deadline so EADS could compete, I think its safe to say that this is heading for another KC-30 selection.

  10. Wonder if Ms Dryun could explain the ground rules and timing. ?? ;-P

    • I also wonder if Daimler AG has settled their bribery case with the Department of Justice yet?

  11. I am always amused by the Boeing supporters who would like to vilify Airbus North America as a foreign company from Europe or a French company, strange DoD does not seem to see it that way.

    By the way, read your history books, if it wasn’t for the French we would not have a country!

  12. I’ll grant you this, a case could be made that if it weren’t for the Haitian rebels tying down Napoleon’s army, we never would have got our hands on Louisiana.

  13. “By the way, read your history books, if it wasn’t for the French we would not have a country!”

    Oh Jay come on the British Empire dissolved on it’s own all countries within the empire eventually became independant regardless of whether they fought a revolution like us or were simply granted independepance from Britian like Canada or Australia. The US would have become independent regardless of French actions and this has zero bearing on a tanker contract anyway. Geez, we should repay the French for assistance in the Revolutionary war some 235 years later by giving EADS a big tanker contract?

    • Not to be taken seriously but elsewhere I read just that
      only in reverse :

      The Euros should be thankfull for getting liberated in/after
      WWII and keep quiet, submit and bend over, fast .
      I seem to remember it was about some funny tanker or
      transport plane 😉

  14. Man, some of you guys need to run for office. You’ve got the Potomac Two Step down pretty good, don’t address the facts change the subject, not bad!

  15. General Schwartz went on the record today saying the award will be “on time”, or whatever the latest target date is…I think its now mid-November.


    It will be hugely embarrassing if they don’t make it given that the Air Force Chief of Staff is now on the record. Quoting Gen. Schwartz from the linked article: “We’re going to come in when we say we are.”

    But then again, when is it that they say they “are”? Quoting Schwartz again, “I would be very, very surprised” if the award deadline on the $35 billion contest slips past mid-November, ….”

  16. . . Quoting Schwartz again, “I would be very, very surprised” if the award deadline on the $35 billion contest slips past mid-November, ….”

    He would also most likely be out of a job .. for personal reasons . . . depending on who wins !

    • Airforce juvelines trying to haze the new kid?

      (cite of cite from article)
      Our proposal was hand delivered on July 9, 2010. The messenger arrived at the government installation, Wright-Patterson Air Force Base, well before 1:30 pm, more than half an hour before the 2:00 pm deadline. Air Force personnel initially denied the messenger entry to the base, then gave incorrect directions to 1755 Eleventh Street Building 570, and finally instructed the messenger to wait where he was for Air Force personnel to come and get him. He at all times complied with the instructions of Air Force personnel, from the time he arrived at the installation until the proposal was taken by Air Force personnel at the program building. Although the proposal was arbitrarily marked received at 2:05 pm, it was under Air Force control before the bid deadline.

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