United for Peace of Pierce County, WA - We nonviolently oppose the reliance on unilateral military actions rather than cooperative diplomacy.

The Hill reported Friday that "The legislative battle over a controversial Air Force aerial tanker contract is intensifying between Boeing and Northrop Grumman supporters."[1] -- Sen. Jeff Sessions (R-AL) is holding up a bill sponsored by Sen. Sam Brownback (R-KS) and Sen. Pat Roberts (R-KS) that would require the Air Force to award the $35bn contract to Boeing, or rebid the contract "under terms more favorable to the Boeing proposal," Roxana Tiron said. -- (If Northrop Grumman and EADS North America get the contract, the tankers will be assembled in Mobile, AL.) -- On Jun. 18 the GAO sided with Boeing, saying there were "flaws in the process used to choose EADS and Northrop Grumman," the Financial Times of London reported last weekend.[2] -- While the GAO report has no legal force, the Air Force had said it would follow its recommendation. -- In another article, the Financial Times said the flaw the GAO found had to do with "the way the Air Force awarded the Northrop Grumman/EADS proposal extra credit for offering a larger aircraft that could carry more fuel, cargo, and troops than the 767"; Boeing may shift to a bid based on the larger 777.[3] -- After reviewing the 67-page GAO report, the Washington Post reported, David Berteau, a senior defense analyst at the Center for Strategic and International Studies, said: "This is a damning report. It is baffling to me: how did so many smart people at high levels at the Pentagon come to the conclusion that the process was so well done and announce a winner, and then we see a GAO report that gives them a black eye in running a smooth, fair procurement process."[4] -- On Jun. 23 Der Spiegel reviewed the history of the contract, observing that "The tanker deal is destined to go down in U.S. history as the major defense project with the most ignominious track record. Back in 2003, the coveted contract, which at first went to Boeing, had to be reopened for competition after it emerged that the Seattle-based aircraft manufacturer had enticed a worker at the Pentagon with the prospect of an attractive job in the company. If it turns out that in the second round of bidding a number of tricks were used to give the winner a helping hand, it would deal a serious blow not only to the U.S. government, but also to EADS and especially Northrop Grumman, which is highly dependent upon contracts with the Pentagon."[5] -- For more, see the web site Tanker War Blog, which is devoted to reversing the decision to award the contract to Northrop Grumman/EADS. -- A redacted version of the GAO report has been made public....

The legislative battle over a controversial Air Force aerial tanker contract is intensifying between Boeing and Northrop Grumman supporters.

Kansas GOP Sens. Sam Brownback and Pat Robertson [sic — read 'Roberts'], both Boeing supporters, on Thursday night introduced legislation requiring the Air Force to award the contract to Boeing, or re-bid the contract under terms more favorable to the Boeing proposal.

But on Friday, Sen. Jeff Sessions (R-Ala.) put a hold on the Kansans’ bill. Sessions is a strong supporter of Northrop Grumman and EADS North America -- the two companies that share the contract. The Northrop tankers are slated to be assembled in Mobile, Ala.

Boeing lost the $35 billion contract for the new midair refueling tankers but successfully protested the award with the Government Accountability Office, which this week said Boeing had a strong shot of winning the program if the Air Force has not made several errors in its selection process.

The Pentagon, with Defense Secretary Robert Gates at the helm, and the Air Force are still figuring out the path forward with the tanker contract and how to best heed GAO’s recommendations.

Senate rules allow individual members to slow the progress of legislation in the Senate. Sessions said he was holding the bill to give the Air Force time to respond and develop a way forward that served the best interest of the military.

“This legislation would take an unprecedented step of overriding the entire competition, and I strongly object. I don’t think we politicians should start awarding $35 billion defense contracts from the floor of the U.S. Senate,” Sessions said in a statement.

The procedural move requires a 60-vote majority before the Senate can consider the measure.

SETBACK FOR EADS AS U.S. TANKER REVIEW SIDES WITH BOEING PROTEST
By Demetri Sevastopulo (Washington) and John Thornhill and Peggy Hollinger (Paris)

EADS suffered a heavy blow yesterday when U.S. congressional investigators urged the U.S. Air Force to reopen a $35bn (£18bn) refuelling tanker deal the European defense company had won over Boeing.

The Government Accountability Office, an arm of Congress, agreed with Boeing that there were flaws in the process used to choose EADS and Northrop Grumman, its U.S. partner, over their Chicago-based rival.

The GAO stressed that its decision was based on errors in the selection process and was not an assessment of the merits of the two aircraft competing to replace the air force's tankers.

Michael Golden, a senior GAO official, said the air force made "significant errors" that could have affected the outcome of what was a close competition.

These included flawed cost assessments. While the GAO ruling is not legally binding, the Air Force has previously vowed to follow any recommendation. Yesterday, the Air Force said it was reviewing the decision.

Sue Payton, the top Air Force acquisitions official, said the Air Force would "do everything we can to rapidly move forward so America receives this urgently needed capability."

Richard Aboulafia, an aerospace expert at the Teal Group, said there was no chance the Air Force would reject the recommendation given the tough language in the GAO report, which he said provided a "flamethrower" to Boeing's political allies.

Mr. Aboulafia said while the GAO decision was not the "end of the road" for EADS and Northrop Grumman, "it is a serious wrench in the machinery."

Experts added the outcome was now likely to be decided by the next administration.

The GAO stressed that it had only evaluated the selection process but the ruling is likely to lead to European cries of protectionism. A French government official said: "We need a clear view on the reasons why the GAO took this decision."

Paris would be concerned if the decision meant the U.S. defense market was closed to Europeans as prime contractors.

Louis Gallois, EADS chief executive, said: "Though we are disappointed, it is important to recognize that the GAO's announcement is an evaluation of the selection process and not the merits of the aircraft."

Boeing welcomed the decision as a vindication of its protest; Northrop said it was reviewing the decision.

As news of the General Accountability Office's announcement filtered through to the 767 production line at Boeing's factory at Everett, near Seattle, on Wednesday afternoon, workers broke into cheers.

The 600 production and support staff may have been celebrating only the possibility of a stay of execution, but for Boeing the likelihood that the U.S. Air Force will have to redo the bidding process for the aerial refuelling tanker feels like vindication.

"The GAO recognized the process was not properly followed and that is a victory for Boeing workers, American taxpayers, and the men and women in our armed forces," said Cynthia Cole, president of the Society of Professional Engineering Employees in Aerospace. "We hope the Air Force now recognizes which aircraft really won the bid process."

In its report, the GAO watchdog faulted the way the Air Force awarded the Northrop Grumman/EADS proposal extra credit for offering a larger aircraft that could carry more fuel, cargo, and troops than the 767.

Boeing only has orders for eight 767 refuelling tankers from Italy and Japan and the company has invested more than $1bn in the program in the hope of winning the U.S. Air Force contract.

Boeing has only another 48 of the commercial versions of the aircraft still to build, although that number might increase as Boeing struggles with delays on its planned replacement -- the 787.

Without the Air Force contract, the 767 is likely to be closed down by about 2012.

Boeing said yesterday it was too early to speculate on whether the company would re-submit the same proposal or whether it would change its bid to the larger 777 -- more comparable in size to its rival's offer. When the contract was awarded to its rival, Boeing told the FT it would have offered the 777 had they thought it better matched the requirements.

GOVERNMENT CITES LITANY OF ERRORS IN TANKER AWARD
By Dana Hedgpeth and Robert O'Harrow Jr.

The Air Force bungled its biggest procurement deal to spend $40 billion to buy new aerial refueling tankers to replace its aging fleet, federal investigators declared last week. But what wasn't publicly known until yesterday was just how badly they did so.

In a 67-page review, the Government Accountability Office sharply criticized the Air Force for a litany of contracting transgressions, including everything from failing to follow its own evaluation criteria to miscalculating the maintenance costs, size, and amount of fuel a plane could carry and holding unfair discussions with one of the bidders.

The competition featured Northrop Grumman and its partner, European Aeronautic Defence and Space, which won the deal Feb. 29, beating out Boeing. It was a bitter loss for Boeing, which built the Air Force's existing tanker nearly 50 years ago. It lodged a protest.

When they announced the winner, Air Force officials said repeatedly that they'd run an "incredibly open and transparent" process that would withstand any legal challenges.

But the GAO report made public yesterday differed about as sharply as could be imagined.

It found that the Air Force's selection process was so misguided that it was "undermined by a number of prejudicial errors that call into question the Air Force's decision."

Along the way, the Air Force seemed to guide Northrop through some pitfalls. In one instance, the Air Force first told Boeing that it had satisfied one set of objectives, but later, after discussions had been closed, decided that it had not. But the Air Force told Northrop about objectives it had not met, allowing that company to change its proposal and meet the requirements.

"It is a fundamental precept of negotiated procurements that discussions, when conducted, must be meaningful, equitable, and not misleading," the GAO said in its assessment. The GAO said the Air Force "treated the firms unequally" in holding discussions with one but not the other.

"This is a damning report," said David Berteau, a senior defense analyst at the Center for Strategic and International Studies. "It is baffling to me: how did so many smart people at high levels at the Pentagon come to the conclusion that the process was so well done and announce a winner, and then we see a GAO report that gives them a black eye in running a smooth, fair procurement process."

The GAO's report is not an evaluation of the merits of the two aircraft; it is essentially a technical critique of the Air Force's acquisition process. It sharply criticized the Air Force for not following the evaluation criteria it set out and said that "judgments in the evaluation of proposals must be reasonable and must bear a rational relationship to the announced criteria."

Top Pentagon and Air Force acquisition officials met with Defense Secretary Robert M. Gates yesterday to discuss how to deal with the contract. The GAO has essentially recommended that the Air Force start the procurement process from scratch.

After the Air Force awarded the contract, which could be worth as much as $100 billion over the next two decades to the Northrop team, Boeing filed a protest with the GAO on March 11, arguing that its aircraft was unfairly evaluated. Congressional leaders, many of whom represent areas where Boeing has major operations, have rallied to get the Air Force to reconsider its decision and have threatened to withhold funding from the tanker program.

"This decision boils down to the fact that the Air Force ran a tanker competition that was neither transparent nor fair," said Sen. Patty Murray (D-Wash.). "This decision is as damning as it is unprecedented. I want to know how the Air Force got this so wrong. Whether it was incompetence or impropriety, clearly the process was completely mishandled."

The GAO said Boeing should be reimbursed for its attorneys fees and the costs of filing the protest.

"But for these errors, we believe that Boeing would have had a substantial chance of being selected for award," the document concluded.

The planned splash into the U.S. defense market by European planemaker EADS has been thrown into doubt following a scathing report by the U.S. Congressional watchdog -- but the company is putting on a brave face.

Once a week, usually on Fridays, EADS employees in Munich receive a high-level visit. That’s when CEO Louis Gallois, 64, takes a regularly scheduled flight to the German headquarters of Europe’s largest aerospace and defense company so he can keep tabs on everything in his office on the southern outskirts of the city. The Frenchman makes these short trips to demonstrate that the employees in Germany are just as important as their colleagues at other Airbus and EADS locations in Paris and Toulouse.

Late last week Gallois made another lightning visit to Bavaria, despite the fact that many EADS employees were expecting the top manager to cancel his trip at the last minute.

Just a few hours beforehand, news had broken in the U.S. that a congressional watchdog, the Government Accountability Office (GAO), had ruled that “significant errors” had been made in awarding a lucrative defense contract for 179 aerial refueling tankers to a consortium consisting of U.S. defense giant Northrop Grumman and EADS subsidiary Airbus. In their 69-page non-binding decision, the auditing arm of the U.S. government even recommended that the U.S. Air Force reopen major areas of the bidding process.

In such a situation, other business leaders would have retreated to the company headquarters with their closest advisors and planned a counteroffensive. But Gallois, whose diplomatic flair is even praised by archrival Boeing, made a decidedly relaxed impression.

In his office on the 5th floor of the main administrative building in Ottobrunn, Germany, the ascetic-looking Frenchman sat with a friendly smile on his face last Friday and patiently answered questions -- as if he had nothing more important to do. He said he regretted that he could not provide a clear assessment for the time being because he and his colleagues had not been provided with the GAO’s final report.

“We are still under contract and are convinced that our aircraft are the best,” Gallois reminded those present. He said that U.S. government auditors had not evaluated the quality of the proposed aircraft, but had only examined whether bidding rules had been respected.

Presumably, the multilingual Frenchman has only revealed the true extent of his disappointment in the boardroom. Top executives there are already debating whether the company should participate if it comes to a new round of bidding -- at the risk of coming up empty-handed in the end.

What at first glance appears to be merely the latest episode in a long series of mishaps, misfortunes, and missed opportunities at Europe’s showpiece corporation could actually shake the company more deeply than the wiring problems plaguing its A380 superjumbo. EADS and Airbus managers intended to do more than just break into the U.S. defense market. The Europeans were planning to use a new plant in Mobile, Alabama, to solve one of their most serious problems, namely their dependency on the ailing dollar, which is the key global currency for the sale of aircraft.

In addition to the fuel tankers, there are plans to use the U.S. facility -- which has not yet been built -- to assemble cargo aircraft and, perhaps at a later date, other long-range jets. The U.S. location would make it possible to pursue these projects without the usual annoying protests from the governments of the countries that partly own EADS and Airbus: Germany, France, and Spain. So the mood in the company was positively euphoric when the U.S. Air Force made the surprise announcement in late February that it had decided to award the Europeans and their U.S. partner Northrop Grumman with the coveted contract to replace its aging fleet of tanker aircraft.

"If you can make it there, you can make it everywhere!" Airbus CEO Tom Enders said in late April, borrowing a line from Frank Sinatra as he geared up for the big breakthrough in the U.S. defense market. He and his colleagues were already dreaming of a range of follow-up contracts around the world.

Amid the general spirit of rejoicing, EADS and Airbus managers seemingly forgot embarrassing setbacks such as the wiring fiasco on the A380 and the late delivery of the A400M military transport aircraft. Even the investigation into 17 high-ranking managers -- on suspicions of insider trading before the production delays of the A380 were announced -- faded into the background for the time being.

But virtually overnight Gallois and his crew have been hauled back to earth by a reality that is far more sobering than many of them would like to admit. Anyone who takes the time to carefully read the list of objections by the U.S. congressional watchdog will realize that it is hardly imaginable that the next U.S. administration under Barack Obama or John McCain will again select the Europeans and their U.S. partners Northrop Grumman as the sole suppliers of their flying fueling stations.

The U.S. Air Force now has 60 days to respond to the GAO's complaints. The German government assumes that the U.S. Department of Defense will attempt to sweep aside all reservations. Reopening the competition for the tanker aircraft contract would delay delivery by months, if not years.

Officially, the German government is keeping a low profile. The issue is a delicate one, particularly so since Boeing announced a few days ago that it would compete in Brussels for contracts connected with the European satellite navigation system Galileo -- even though, after years of intensive political wrangling, it looks as if the contracts have essentially already been awarded.

When it comes to the bidding for the U.S. tanker aircraft, Boeing feels that it has been treated unfairly right from the beginning -- and it says that the findings of the government auditors have confirmed this. For instance, according to the original specifications, the maximum possible discharge capacity of the tanking hose supposedly had no influence on the evaluation of the bid. However, it was precisely this criterion that helped clinch the contract for EADS.

In addition, according to analyses by the GAO, procurement officials at the Pentagon let Boeing believe for a long time that it had fulfilled certain requirements, although in fact they had growing doubts. An even more serious allegation is that Air Force experts used a faulty calculating system. This showed that the EADS fleet would be cheaper to operate over the long term than the competing model from Boeing. It now appears, however, that Boeing would probably produce the aircraft with the more cost-effective life cycle.

Now it’s up to the Air Force to explain whether the Europeans were given preferential treatment, and if so, why this occurred. “We haven’t yet heard the Air Force’s response to the GAO decision,” says Gallois.

One thing is certain: The tanker deal is destined to go down in U.S. history as the major defense project with the most ignominious track record. Back in 2003, the coveted contract, which at first went to Boeing, had to be reopened for competition after it emerged that the Seattle-based aircraft manufacturer had enticed a worker at the Pentagon with the prospect of an attractive job in the company. If it turns out that in the second round of bidding a number of tricks were used to give the winner a helping hand, it would deal a serious blow not only to the U.S. government, but also to EADS and especially Northrop Grumman, which is highly dependent upon contracts with the Pentagon.

At this point in time, it is totally unclear what will happen with the planned new assembly facility in Alabama. The city government in Mobile had planned a large cornerstone ceremony on the premises destined to be the new plant for next week. This has now been postponed for the time being.

Even local politicians have expressed doubts over whether the new plant will ever be built and generate, as announced, some 2,000 new jobs: “I cannot believe that in the most highly scrutinized procurement in the history of the United States Air Force the GAO found so many errors,” said Alabama Senator Richard Shelby.

In addition to EADS and Airbus employees, the pilots of the U.S. Air Force must be bitterly disappointed. They will probably have to continue flying far into the next decade with aircraft that date back to the middle of the Cold War.

“Without a new tanker,” warned General Arthur Lichte, the commander of the Air Mobility Command, “this capability -- and our nation's ability to project power and humanitarian assistance in the future -- is in significant jeopardy."

By contrast, Airbus workers at the company's plant in Dresden, eastern Germany, took the bad news from the U.S. last week in stride. Their plant specializes in converting passenger aircraft into freight planes. Recently, the first prototype of the Airbus tanker with the production number D-1 was nearly completed here. Over the coming months, there are plans to build another three aircraft as demo jets for production later on in Alabama.

Up until now, the workers in Dresden have remained convinced that everything will go ahead as scheduled. If, however, there is a change in plans, the D-1 certainly won’t end up in a museum. Sooner or later, it will be converted for use as a normal freight aircraft.

The demand for such jets is currently enormous because manufacturers can’t deliver the aircraft as fast as the orders roll in. Perhaps instead of flying from trouble spot to trouble spot to refuel fighters for the U.S. Air Force, the EADS model will one day fly between major trading centers around the globe -- with a load of toys, fruit, or exotic animals on board.