Boeing May Withdraw from $35 Billion Air Force Contract Contest

After months of legal and political wrangling to reopen bids for a $35 billion U.S. Air Force tanker contract, U.S. aerospace firm The Boeing Co. (BA) is considering entering a “no bid” plea versus the joint-venture bid of rivals Northrop Grumman Corp. (NOC) and Europe’s EADS NV (EADSY.PK).

“Company officials are strongly considering the option of not submitting a proposal as the company’s Integrated Defense Systems sector tries to respond to the draft [request for proposal] within the government’s speedy timeline," the aerospace industry magazine Aviation Week reported Monday, citing “multiple” anonymous sources close to Boeing’s ongoing deliberations.

However, Boeing representatives declined to comment on the report, stating that the firm would be meeting with Pentagon officials Tuesday to discuss the bid. Any comment prior to the meeting would be “premature,” said Boeing spokesman Dan Beck, Reuters reported.

If Boeing decides to withdraw itself from the tanker race, it could prove embarrassing to the Air Force, which has gone to great pains to ensure a fair and open proposal process after the Government Accountability Office [GAO] backed a petition brought by Boeing that the U.S. Air Force altered the auction for a $35 billion aerial-tanker contract in the initial bid that was awarded to the Northrop Grumman/EADS joint venture in February.

Boeing filed a complaint in early March, claiming that the Air Force misled the company and modified its specifications to accommodate models made by Northrop and Airbus S.A.S.

The GAO found that there were discrepancies in the bidding process and recommended the Air Force re-conduct the bidding. However, GAO rulings are only advisory in nature, and the Air Force did not have to comply.

The Air Force was given 60 days to respond to the GAO’s ruling, and the speedy return of a decision to reopen the bid was seen as a good sign for Boeing.

But Boeing supporters were critical of the revised bid, which was released last week, claiming it favored the larger tanker model originally proposed by its rivals. Some members of Congress have been quite vocal about the U.S. defense contract going to a European firm.

The new criteria “appear to favor a tanker larger than any real-world scenarios would require,” said Rep. Norm Dicks, a Washington state Democrat, Reuters reported, implying that the new requirements give the edge to Northrop Grumman and EADS.

California-based Northrop feels the new bid process is more than fair.

“We are reviewing the draft RFP with an eye toward ensuring that it addresses the issues raised by the GAO in a way that facilitates a fair and non-political evaluation of the competing bids,” said Northrop vice president Randy Belote, AFP reported.

The new deadline for bid submissions is October 1.

Original post

Comments

[Bugs:]

Glad to see Boeing playing hardball with the Bush administration and their desire to contract with Air Bus. Congress will probably not grant a contract to Air Bus with no other bids. This pushes it all off to The Obama or McCain Pentagon. Very Smart indeed as a new, SUPERIOR, Presidency begins.

2008 Aug 13 05:58 PM

[Bugs:]

Illinois & Washington State are Obama strongholds. And Boeing country. He'd be best for our new President to end this Air Bus garbage.

2008 Aug 13 06:25 PM

[bimbr:]

Remember: The Air Force wanted Airbus.
The Air Force sited 10 reasons why it was superior to its Boeing rival's version of the air tanker.
But predictably: there are those who will feel betrayed because our US Air Force wants to acquire something 'not American' even though it's better.
Isn't The USAF entitled to the best?
And arn't they the best experts to decide what's best?
I hope none of you critics are riding around in BMW's or Mercedes instead of Dodge's and Caddy's.

2008 Aug 18 12:52 AM

[Pilot_151:]

The Air Force may have wanted Airbus, but there is the problem. The only reason the Air Force wanted Airbus, is because McCain and company stopped the original deal which was Boeing. So they thought if they went the other direction that it would fly (pardon the pun).

Now if anyone has ridden on an Airbus you would know that this plane is not build as well as Boeing. Not sure if I was piloting the tanker I would want to land with a nose wheel that won't be facing forward (Jetblue).

We could go on all day about this. What we really need is to get the Air Force's requirements and then hire an independent firm to do the analysis. Somehow we need to keep the fat lobbyist and the corrupt politicians out of the mix.
.

2008 Aug 18 01:05 PM

[bimbr:]

Pilot's last comment is right, except: how do you find an independent firm 'not influenced by political lobbyists.

I doubt McCain has that much influence in this deal.
And remember how Jet Blue was in past years sited for having some of the worst maintenance performance records in the industry.
One more thing: The Air Bus will be equiped with Rolls Royce Trent engines. No competitor can touch them for reliablity.

Its also worth remembering that our very good Phantom F4 Fighter 'was not very good for a long time. The Navy gave up on it; the Airforce didn't want it. Then it was saved, and became one of the best fighter planes in the world because someone made the brave decision to equip it with Rolls Royce Merlin engines 'which were very powerful and stable at high altitudes. Exactly what the plane needed.

Lets not forget lessons learned from the past.
Bimbr.

2008 Aug 18 08:12 PM

[Trciky Dicky:]

Given that it is the Armed Forces, USAF include, role is to defend the sovereign nation status of the United States…., it would seem that DoD/USAF would employ every strategy possible? Cost being just one variable. Does the USAF need a new tanker? Yes, Must it be US built? Maybe, Is the USAF obligated to do or find or undertake the very lowest dollar approach? No, (That might be nice and play well politically). However, the Armed Force’s purpose is to defend the country in the best possible manner at a reasonable, budgeted cost.

Now let’s say the real tanker program will be more like $100B when all is said and done. A 200% overrun on any DoD program is the norm, so the $35B number is simply political and USAF propaganda. Below is a recommended USAF Tanker award profile and funding split that will provide the best multi-engine Bomber defense for the US for the next 50-75 years.

An award of 60% ($60B) to Boeing to insure the viability of superior multi-engine aircraft design and technology for the US during the foreseeable future.

An award of 30% ($30B) to Airbus/NG to ensure deep USAF involvement in any large multi-engine aircraft program in Europe that could result in advance knowledge regarding bomber technology.

An award of 10% ($10B) to Sukhoi or Ilyushin to ensure deep USAF involvement in any large multi-engine aircraft program in Russia that could result in advance knowledge for bomber technology.

Imagine this: a Pentagon located three star USAF General at the helm of the USAF Tanker Program. A Deputy two star USAF General and Staff resident at Boeing, a Deputy two star USAF General and Staff resident in Europe at Airbus facilities and a Deputy two star USAF General and Staff resident in Russia at their major multi-engine aircraft manufacturer. Europe and Russian Deputies and Staff would be rotated routinely to ensure maximum knowledge and retention of foreign multi-engine design and technology is available to the US military.

USAF logistics and maintain of three tanker configuration would perhaps add another 0.15 cent to each $1.00 dollar spent supporting a single Tanker configuration. But this added expense would likely pay for itself by eliminating the need for a host of CIA agents to track and analyze foreign multi-engine developments.

I for one would gladly pay an additional 15-20% more for a USAF Tanker Program that would place our US Military in a position to know, influence and weigh, first hand, world-wide multi-engine aircraft developments, in Europe and Russia. US Employment aspects, no worse or better than NAFTA.

Come on USAF…, spend our defense money wisely. A one aircraft logistic cost scenario is small potatoes compared to having the USAF directly involved in funding, design & development of all world-wide multi-engine aircraft programs.

2008 Aug 20 02:02 PM

[bimbr:]

Tricky's solution brings to mind that military expression: cluster ...k.
In other words... completely unworkable.

Can't anyone get beyond national pride and focus on what makes best practical sense?
I think the Airforce is trying to do that.
And if it breaks the stranglehold of a few 'fatted calves' for a while, so much the better.

2008 Aug 21 01:39 AM