GAO decision–only the tip of the iceberg?

Newsweek has a piece about US Sen. John McCain and the KC-X tanker competition, quoting an unidentified Pentagon official about McCain’s involvement. This is the first article we’ve seen quoting a Pentagon official.

As readers know, we were in Washington, DC, when the GAO announced its decision upholding the Boeing protest of the award to Northrop Grumman. We’ve been told by a Boeing partisan of something that, if true, will create a procurement scandal if not quite equal to the illegal activities surrounding the first tanker award to Boeing in 2004 will at least rock the Air Force to its procurement core. This may or may not come out in the 69-page GAO report that is being sanitized for proprietary information before its release, perhaps as early as this week. If what we’re told is true and it’s not in the report, it should be, or certainly should become the subject of Congressional investigations of the thoroughness and aggressiveness undertaken by McCain following the Boeing tanker award in 2004.

If what we were told is true, not only was the process examined by the GAO flawed but it was outright subverted.

Meanwhile, fired Air Force Secretary Michael Wynne, on his last day in office, said a rebid is likely and suggested that a fly-off between Boeing and Northrop might be worthwhile. This Reuters story may be found here.

New, Monday, June 23, 1030 PDT: An interesting twist to the GAO decision. Readers will recall that we’ve previously mentioned that there was a “shadow group” looking over the shoulder of the Air Force the whole way during the evaluation process. It turns out that the GAO was a member of this shadow group. Now if one presumes that the role of the shadow group was to keep the USAF on track and not to simply look over the shoulder and not say anything or raise questions about whether there were irregularities, then one has to ask: just where was the GAO itself during this process? Perhaps the 69-page report will say.

New, Monday, June 23, 315 PM PDT: Loren Thompson has a fresh commentary on the tanker fiasco here.

New, Tuesday, June 24: Politico reports the Air Force is considering a KC-767/KC-30 flyoff. The Hill reports the Defense Department acquisition group may take over the rebid process from the Air Force in this report.

New, Tuesday, June 24, 945 AM PDT: Here’s an amusing piece from the United Arab Emirates about the tanker program. It’s amusing because it takes a shot at CNN’s Lou Dobbs, a once-fine financial reporter who has gone off the deep end on anything not US. The piece also has some interesting facts in it.

In the meantime, JD Crowe, the cartoonist with the biting wit for The Mobile Press-Register, inked this one today:

The Press-Register’s Washington reporter has this look at the current situation in the wake of the GAO protest.

Economist piece on Airbus

In a welcome reprieve from the tanker saga, here’s an interesting piece about Airbus and the A380 from The Economist.

What’s next on the tanker?

We’ve been asked by media across the country, What’s next for the tanker competition?

We stated our position long ago: if Boeing lost the protest, it should accept the GAO decision. On the other hand, if the Air Force lost, then the service and Northrop should accept it.

This means the deal, in our view, should be rebid as recommended by the GAO.

As for what should happen, we’ve been clear about that for a long time: double the production and appropriation and split the order between Boeing and Northrop. Then everyone can get on with their lives and be put out of collective misery over this interminable saga.

Details beginning to emerge in tanker ruling

All those interested in the GAO tanker decision are waiting for the 69-page decision to be sanitized of proprietary information, but one detail about life cycle cost emerged, according to this Bloomberg report: that Boeing wound up with a $91.8m life cycle advantage after the Air Force corrected a math error. This math error was one of seven “significant” errors identified by the GAO in its three page press release in recommending a recompete.

To put this in perspective, this is a difference of $2.3 million per year over the projected 40 year life cycle, out of a $35 billion program. This is a rounding error, and not one we’d call particularly significant. It’s also a far cry from the hyperbolic, hand-ringing $40 billion promoted by Boeing.

We hope the 69-page decision is a bit more definitive and substantive than this.

New, 100 PM EDT: The Mobile Press-Register’s JD Crowe is at it again with this cartoon following the GAO decision:

GAO sustains Boeing’s protest

In another stunning twist in the USAF tanker contract, the GAO sustained the Boeing protest over the award to Northrop Grumman. In a three page press release, the GAO sustained Boeing on key elements of the protest while rejecting other unidentified elements.

One of the complaints that Boeing had was that the Air Force didn’t communicate well on the competition. This is the crux of the NA KOA complaint we’ve written about as well.

We’re swamped with media calls and e-mails, so we’ll be digesting this a bit more when we have time. But this doesn’t look like the “close call” that either side expected; it looks like a clean victory for Boeing.

The Air Force doesn’t have to follow the GAO’s decision and recommendation to reopen the bidding, but politically we don’t see how it can’t.

If we’ve got this figured out, here’s the three page press release. press-release-final-boeing-decision-6-18-08

More, 245 PM EDT: We’re going to be very interested to read the 69-page redacted GAO decision when it becomes available. It has to be sanitized for proprietary information first.

One of the things that we find stunning about this decision is that given how the Air Force screwed up the first time around 2001-04, in which people went to jail and and lost their jobs, you would have thought the USAF would have avoided screwing up this time. The Air Force even created a “shadow” group to oversee the process, yet the GAO concluded the service screwed up anyway.

What happens now? The Air Force has 60 days to decide what it will do. As mentioned, it is not legally obligated to follow this decision. In fact, on a previous GAO protest a over tanker maintenance contract, the Air Force ignored the GAO upholding the loser’s protest over the award to Boeing.

An interesting element is that the new chief of the Air Force, who assumed this office after his predecessor was unceremoniously by DOD Secretary Robert Gates, is the former chief of the Air Mobility Command–in other words, a cargo guy. What, if any, bearing this will have going forward is a matter of speculation.

More, 430 PM, EDT: Although Boeing and its supporters are understandably overjoyed by the GAO decision, and assuming the USAF does undertake a recompete, this hardly means that Boeing will win the recompete. This is going to be another uphill battle for Boeing. Any assumptions on the part of Boeing-boosters that this knocks Northrop out of the game is simply wishful thinking.

One of the questions we were asked by the media is whether the award to Northrop was the Air Force’s way of simply stuffing it (our word) to Boeing as a result of the 2004 tanker scandal, or whether the Air Force simply a bunch of bumbling idiots (the broadcaster’s words).

My response: Well, this is the government, after all, and bumbling idiots are not incompatible with government. But in all seriousness, we really won’t get the full picture until the redacted GAO decision is issued for public consumption.

Tanker update, June 17

It’s Wednesday and we’re here in Washington, DC. Tomorrow is the deadline for the GAO to issue its decision in the Boeing protest over the USAF tanker contract to Northrop Grumman, but the buzz here is that the announcement could come between 430-500pm EDT today.

Meantime, there have been a number of stories on the tanker that may be found via Google News. This one in the Wall Street Journal is the most interesting, although it’s reporting something we exclusively wrote about months ago: that Boeing will be out of the tanker business for 20 years or more if it loses the USAF business, including its troubled international tanker program. This is the program begun with the orders by Japan and Italy for the KC-767. The two tankers delivered to Japan still aren’t in service, due to operational troubles, according to Northrop Grumman, which is tracking Boeing’s progress. Two other tankers for Japan haven’t been delivered and none of the Italian tankers have, either, which now three years late.

This story by George Talbot of the Mobile Press-Register gives a good wrap of the the issues, the GAO process and the “what’s next.” George also includes a comment from the USAF that it would like to boost production from the planned 12-18 tankers a year to 26. Perhaps this is floating the trial balloon along the lines of what we’ve been advocating: double production and split the buy. There simply are some missions for which the KC-767 will be better suited than the KC-30, and others for which the KC-30 is better than the KC-767.

Months ago we were told a story that the Air Force selected the KC-30 because it knew the ensuing controversy would erupt and this was the only way the Air Force figured it could get the appropriation in the amount needed to get a higher replacement rate. We were never able to confirm the story (one person we asked responded he didn’t believe the Air Force was that smart). So with this strong caveat, we throw this conspiracy theory out there.

NA KOA’s protest

We previously wrote about an obscure second protest over the tanker award by an obscure company called NA KOA (na-ko-a) (June 2 on our Corporate website). We don’t expect a decision on this protest today or tomorrow; the deadline listed on the GAO website for this one is in July.

New, 1125 AM EDT: The USAF redacted copy of its filing in the GAO protest is now available here. It’s 154 pages in a PDF file.

Waiting with bated breath

It didn’t take long for one of our readers to e-mail us that the headline for our Corporate Website update today (June 17) had a misspelling: Waiting with baited breath.

Well, be that as it may–we said it was a fish story and we may not really be all that far off–we take a final look at the USAF tanker protest in advance of the decision by the Government Accountability Office on Boeing’s protest. The deadline for issuing the decision is Thursday, June 19. The buzz here in Washington, DC, where we are, is that it might come down after the stock market closes tomorrow.

We also posted on our website four big PDF files of redacted documents filed by Boeing and Northrop Grumman with the GAO in April.

Whether the GAO decision comes out tomorrow or Thursday, we’ll be in DC.

Casey at the bat

We’re traveling and have limited access to reading things about the tanker, but we’ve seen the news about the USAF admitted a calculation error in the life cycle costs for the KC-30 vs the KC-767.

This reminds us of Casey Stengel, the iconic New York Yankees player and manager who later became the manager of the expansion team the New York Mets.

Although the Mets later went on to become world champs, the initial team was so bad that Stengel lamented, “Can’t anybody here play this game?”


We can’t hlep but ask the same question of the Air Force. After all the scandal involving the first tanker award to Boeing in 2004, in which illegal activities canceled the award, sending the Boeing CFO at the time to jail as well as a former Air Force procurement official who went to work for Boeing; and causing the end of several careers of ranking Air Force civilians and military men; and after recognizing the scrutiny that would be on this competition; and after having a “shadow” group over-see the competition, you’d have thunk that the USAF might avoid such a basic mistake.

This certainly falls under the “Good grief” category.

via BBC

This one seems appropriate, too:


On the road

We’re on an extended travel schedule, so there won’t be much in the way of updates on this site.

In advance of the anticipated June 19 GAO decision on the tanker competition, we’ll have some documents to post to our Corporate Site June 17.

Airplane crossing

St. Maarten landing. Via

The landings at St. Maarten in the Caribbean are notorious for being close to the beach. This is the best photo we’ve ever seen of just how close.