FLASH: NO Tanker RFP Til Next Admin

Defense Secretary Robert Gates, clearly worried that the atmosphere is so poisoned by the battle between Boeing and Northrop and tainted by the poor performance of the Air Force, has decided to punt and leave any tanker RFP to the next administration.

“Rather than hand the next Administration an incomplete and possibly contested process, Secretary Gates decided that the best course of action is to provide the next Administration with full flexibility regarding the requirements, evaluation criteria and the appropriate allocation of defense budget to this mission,” the Pentagon release said this morning..

The release quoted Gates, saying that “It is my judgment that in the time remaining to us, we can no longer complete a competition that would be viewed as fair and objective in this highly charged environment. The resulting ‘cooling off’ period will allow the next Administration to review objectively the military requirements and craft a new acquisition strategy for the KC-X.”

The first congressional reaction was positive, from one of the Capitol’s most important money men. “I believe that Secretary Gates made the right decision in providing the next Administration with the opportunity to review the requirements and proceed with a new solicitation. Our committee advised the Defense Department to ensure that there was enough time for legitimate competition. This decision will allow for that,” Rep. John Murtha (D-Penn.) said in a statement. He signalled pretty clearly that the House Appropriations defense subcommittee would come up with whatever money might be needed to keep the tankers flying. “Now our job will be to work with the Department to make certain that our current tankers, that are over 40 years old, will be rehabilitated to ensure we have tankers available for world-wide Air Force missions,” he added.

Read the rest of this story and more updates from DoD Buzz.

-- Colin

Pentagon Issues Gag Order on Tanker Talk

For those who wonder just how worried the Pentagon is about stumbling into or somehow sparking a second protest in the tanker wars, here’s a baseline.

John Young, undersecretary of Defense for acquisition, technology and logistics, issued a July 31 memo requiring that all communications outside of the Defense Department be approved by the Pentagon’s general counsel’s office and by Shad Assay, director of defense procurement, acquisition policy and strategic sourcing.

This means that anyone who wants to talk to the press or to industry must first get Air Force clearance and then get OSD clearance, including the department’s top lawyers. The source who provided the memo described it as a “gag order.” That may be a little strong but is conveys pretty clearly just how concerned the Pentagon’s senior leadership is with shaping and controlling the messages it sends as it conducts the tanker rebid. In effect, this is pretty close to a gag order given that no lawyer is likely to approve any statement to anyone unless it’s either utterly innocuous or there is very good reason for the department to say something. After all, $35 billion is a fair amount of change and the department’s handling of the tanker deal has been remarkably inept over the years.

[Editor: Loren Thompson must be sobbing right now...]

-- Colin Clark

Break--Break

Click HERE for the new, amended RFP for the KC-X tanker.

(Gouge: CC)

-- Christian

More Tanker News About to Pop

We're covering the Pentagon presser today at 3pm on the new tanker RFP. Here's a bit of what Colin has reported over at DoD Buzz.

A few items of interest, for perspective. former Air Force Secretary Mike Wynne and I spoke recently about the options the Pentagon has. They are very few if John Young, undersecretary of defense for acquisition, technology and logistics, stuck with what he said he would stick with. First, the requirements would not change. So the Northrop Grumman team would seem to come out ahead on this score since all the OSD and Air Force personnel who have talked about this agree that Northrop does the best job overall of meeting or exceeding the requirements..

Second, Wynne agreed that since Young made clear a dual buy would just be too expensive that also tips things in Northrop’s favor. Young said several times after the GAO ruling that buying tankers from both companies would add substantial costs, costs the Pentagon was not willing to shoulder.

Still, Wynne professed to like the idea of a dual buy. But I think that’s because he believes Boeing couldn’t get enough planes in the air and certified quickly enough and believes it would, in the long run, just strengthen Northrop’s position.

Finally, while it may not be “factual,” the swagger of senior EADS personnel before and during the Farnborough Air Show was palpable. They have little doubt they will not lose to Boeing, amended RFP or not. Boeing personnel, on the other hand, were clearly on the defensive during Farnborough. More after the briefing.

We did just receive a note from the office of Rep. Norm Dicks who's already crying foul about the new RFP...

Note that there is an obvious change inserted into the System Requirements Document in the revised tanker RFP that clearly favors the larger aircraft even though it is not necessarily connected to any real-world use of tanker. The original RFP said no extra credit beyond “threshold” requirement, which both planes had met and exceeded in the first competition. New RFP says there is value in exceeding. Is this a competition for a KC-10 replacement or a KC-135 replacement?

So, the Air Force shouldn't get what it wants, right Mr. Dicks? Seems to me if they're asking for more fuel capability then they should be able to buy the tanker that gives it to them. Boeing asked for this rebid, they've gotten it, and now its backers are already complaining that it's unfair?

Is there anyone out there that believes this will be a "fair" process anymore?

Stay tuned here, to DoD Buzz and to Military.com for further updates.

-- Christian

Congress: Consider Tanker Industrial Base

This article first appeared in Aerospace Daily & Defense Report.

House defense appropriators have directed the U.S. Air Force to consider "industrial base concerns" in its next evaluation of a replacement air refueling tanker.

The directive was contained in the $487.7 billion fiscal 2009 defense appropriations bill approved July 30 by the House Appropriations Committee's defense subcommittee.

Fully funds tanker program

The measure, which is not expected to make it to the House floor before the summer recess that begins Aug. 4, is $4 billion below President Bush's budget request and $28.4 billion above the fiscal 2008 defense spending measure enacted.

The bill, which must clear the full Appropriations Committee before consideration by the full House, fully funds the tanker program at $893 million. Lawmakers also directed USAF to comply with findings by the Government Accountability Office (GAO), which sustained Boeing's protest of the decision to award a $35 billion contract to a team headed by Northrop Grumman and Airbus parent EADS.

Boeing supporters and Buy America advocates in Congress complained that the Air Force failed to take U.S. industrial base issues into consideration when it picked the Northrop Grumman-EADS offering. Air Force officials insisted the law did not require them to do so.

Redistributes F-35 funds

The fiscal 2009 spending bill also fully funded the F-35 Joint Strike Fighter but redistributed funds within the program. Airframe production funding was cut $786 million and $430 million was directed to continue development of an alternative engine. The measure also includes $320 million for risk mitigation in the test program, including the restoration of two test aircraft eliminated by the Defense Department last year.

Read the rest of this story, see what makes a "kick ass missile," a "submerged" USAF bomber and the MAV's antics from our Aviation Week friends on Military.com.

-- Christian

Senate Tough Hump for Boeing Tanker Language

Rep. Norm Dicks (D-Wash.) and the panoply of Boeing supporters must have been whooping it up as they read the upbeat news stories about language inserted into the 2009 defense spending bill to give Boeing a better chance of winning the tanker contract.

[Photo: Boeing/Defense Tech]

I checked with some staff and a few other sources on the Hill and the early gouge is this: the Senate is unlikely to support language redrawing the rules of the competition or doing anything — like a split buy — that would probably lead to a substantial cost increase.

One knowledgeable source pointed out that the tanker’s “back-stop” supporters in the Senate were to be Sens. Daniel Inouye (D-Hawaii) and Ted Stevens (R-Ala.). Stevens has dropped his position as ranking member of the Senate Appropriations defense subcommittee until his seven charges are settled one way or another, in compliance with Senate Republican Conference rules. And I understand Inouye, chairman of the defense subcommittee, has indicated he would prefer to stay out of this fight. Also, Sen. Richard Shelby (R-Ala.), a member of the defense subcommittee, would fight tooth and claw to keep any such language out of the Senate bill. Should such language get in somehow, Sens. John Warner (R-Va.) and John McCain (R-Ariz.) are likely to oppose it as the bill moves to the Senate floor.

Of course, the average taxpayer would never know about the tanker language in the bill. Rep. John Murtha (D-Penn.), chairman of the House Appropriations defense subcommittee, issued a press release yesterday simply stating that the bill:

“Provides full funding ($893 million) for the aerial refueling tanker program. The Committee directs the DoD to comply with the GAO findings concerning the tanker award protest, and directs that industrial base concerns be included in the evaluation of the tanker contract award.”

Read the rest of this story and the actual language of the Senate bill over at DoD Buzz.

-- Colin Clark

Dude, What's With the Moping?

Colin still on the case...

That rasping sound you hear is the cumulative grinding of teeth from Boeing and its supporters in the wake of yesterday’s announcement of a rebid on the tanker contract.

They are worried — and we all know we grind our teeth when we’re worried — because the Pentagon’s basic criteria for the plane apparently will not change when the new request for proposal is issued. The clearest expression of Boeing’s unhappiness came late yesterday from that bellwether of Boeing sentiment, Rep. Norm Dicks (D-Wash.), who has and will fight relentlessly for the company to get at least some part of the KC-X tanker money.

The press release Dicks put out yesterday said he "has serious doubts about the ability of the Defense Department to conduct a renewed competition that is fair and open and that meets the 'real world' requirements of refueling U.S. military aircraft."

Dicks spoke yesterday morning with John Young, undersecretary of Defense for acquisition, technology and logistics, and was told “that the criteria for the new tanker will favor a larger tanker from the outset, assigning additional credit to a bigger plane.” That is a no-no for Boeing supporters, who say that the requirement for a larger plane unfairly skews the competition in Northrop Grumman’s favor.

"Last month the GAO issued a report that was unusually critical of the tanker selection process conducted by the Air Force for unfairly favoring a tanker that was larger than needed, most costly to maintain and that would require substantial amounts of construction money for new facilities," Dicks said in the press release. "In its harshly-worded report, the GAO said that the Air Force failed to evaluate proposals based on its stated requirements and it demonstrated favorable treatment toward the EADS/Northrop Grumman A-330 tanker over Boeing’s KC-767."

[Read more of Colin's analysis at DoD Buzz.]

-- Christian

Groundhog Day

FYI:

Boeing Co. and Northrop Grumman Corp. will submit new offers for a disputed $35 billion Air Force tanker contract, and the Pentagon will pick a winner by the end of the year.

Defense Secretary Robert Gates said Wednesday that his office - not the Air Force - will oversee the competition between Boeing and the team of Northrop and Airbus parent European Aeronautic Defence and Space Co.

The plan, which hands control to the Pentagon acquisition chief John Young and sets up a dedicated source-selection committee, shows that senior civilians at the Defense Department have lost confidence in the Air Force's ability to manage the contract.

"I think it's better," said Rep. Norm Dicks, a Washington Democrat. "No one has any faith in the Air Force."

We're going to have more analysis from Colin over at DoD Buzz in a few. He's truckin' it back from the Pentagon even as we speak.

Stay tuned...

-- Christian

Tanker Decision (Again) Due Today

Several sources say the Pentagon will announce its way forward on the KC-X tanker contract [today].

The last I heard from sources close to the issue was that John Young, undersecretary of Defense for acquisition, technology and logistics, wanted to go with a fly off. Boeing and Northrop Grumman would have to build and fly one or more test models. Whoever best met the requirements and demonstrated capability would win the contract. Given that Defense Secretary Robert Gates has made it pretty clear that he is uncomfortable relying on Young’s office about the tanker deal — after all, Young signed off on and then defended the Air Force choice — there seems to be a good chance that the fly off idea will be stillborn.

With [Wednesday's] announcement Gates may be trying to get ahead of any congressional steamroller on this one, since the House Armed Services air and land forces subcommittee has its tanker hearing scheduled for Thursday afternoon.

Several lawmakers close to Boeing have clearly signaled they expect the Pentagon to rebid the contract. One argument they offer is that Boeing is likely to sue the Pentagon unless the bidding is reopened and Boeing would use information in the GAO report as evidence. That would be perhaps the worst outcome, delaying any decision for years as things ground through the legal system and positions hardened.

Read the rest of this story, and more exclusive coverage of the Tanker Tango, at DoD Buzz.

-- Colin Clark

Fists Bared In Congress Over Tanker Tango

From our boy Colin Clark over at DoD Buzz:

UPDATE: The House Armed Services airland subcommittee will hold a July 10 hearing at 2 p.m. in Rayburn 2118 on the tanker contract at which John Young, undersecetary of Defense for acquisition, technology and logistics, Sue Payton, assistant secretary of the Air Force for acquisition, and a representative from the Government Accountability Office will testify. ALSO, see below for information about a closed meeting today with House lawmakers, a GAO rep and one from the Pentagon.

That enormous sucking sound you heard at the Pentagon Thursday was the intake of breath by the senior OSD and acquisition officials who handled the tanker contract when they heard Defense Secretary Robert Gates offer almost no defense of the contracting process that led to the Northrop Grumman contract.

Gates was asked Thursday point blank if he had confidence in Sue Payton, assistant secretary of the Air Force for acquisition, who led the team that decided to award the contract. "I have confidence in the team until I find evidence to the contrary," Gates said. Given the recent forced resignations of Air Force Secretary Mike Wynne and Air Force Chief of Staff Gen. Mike Moseley, Payton must be getting ready to move out if asked since Gates also said the Government Accountability Office’s report found that the "Air Force team made significant errors.” At the same time, Gates did say he “needs to get a better feel for the nature of criticisms" made by the congressional watchdog and had not made any decisions about the contract yet, adding that the "first indication" he had of trouble with the contract award was the GAO report.

The Defense Secretary has made clear he will be closely watching the decision whether to rebid the deal or not, signaling that he realizes the political sensitivity of the deal, as well as raising questions about his confidence in the handling of the issue by the office of John Young, undersecretary of defense for acquisition, technology and logistics.

"We clearly need to have an approach that has the confidence of the Congress so we are looking at several options," Gates said. Asked if he would personally get involved in the decision, Gates said he did not think that would be "appropriate, frankly."

UPDATE: In other tanker action today, the House Armed Services airland subcommittee met behind closed doors for more than three hours with a representative from the GAO and a fairly low-ranking Pentagon acquisition official to discuss the tanker deal. No one but lawmakers were allowed to attend. We hear that even Northrop Grumman supporters conceded that the GAO report has devastated their case. For those at the Pentagon who would like to relegate the GAO report to the usual trash can they get put in the building, our source said there was unanimity among lawmakers at the meeting that the GAO had done a fine job in its report and had the ear of members.

Keep DoD Buzz in your scan for further updates...

-- Christian

Top OSD Officials Think Tanker Deal Can Go Ahead

Senior Pentagon and Air Force officials who have read the full 67-page report about the tanker bid by the Government Accountability Office think they can still grant a contract before the end of the Bush Administration. John Young, the Pentagon’s acquisition czar, has reportedly drafted a letter for the four congressional committees that oversee defense spending and policy informing them of the Pentagon’s decision to go ahead and award the contract to Northrop Grumman.

There have been reports that the GAO ruling on the tanker contract could add two years or more to the contract award, something that has greatly concerned Air Force leaders eager to start building new tankers after almost a decade of trying.

"Their finding is that the full document is quite different from the summary," issued last Wednesday, said a source familiar with the issue. The source said Air Force leaders believe much of what was challenged is “procedural” and can be resolved without rebidding the deal.

The 69-page report is expected to become public today.

The GAO said in its summary that it found “a number of significant errors that could have affected the outcome of what was a close competition between Boeing and Northrop Grumman” and recommended that the bid be reopened. By law, the Air Force has 60 days to inform the GAO of how it will respond to the recommendations.

Any Air Force decision to press ahead with the contract award to Northrop Grumman is likely to spark outrage on Capitol Hill among supporters of Boeing, who include Rep. Norm Dicks (D-Wash.), the Nr. 2 member of the House Appropriations defense subcommittee, as well as Washington’s two senators and lawmakers from Kansas.

Read the rest of this story over at Military.com's new online defense and acquisition journal, DoD Buzz.

-- Colin Clark

Tanker Ruling Shows Air Force in Disarray

The decision to uphold the Boeing protest of the airborne tanker award to Northrop Grumman Corp. raises fundamental questions about the ability of the Air Force -- and the Pentagon in general -- to buy weapons effectively, according to lawmakers, congressional aides and defense analysts.

"The GAO's decision in the tanker protest reveals serious errors in the Air Force's handling of this critically important competition. We now need not only a new full, fair and open competition in compliance with the GAO recommendations, but also a thorough review of -- and accountability for -- the process that produced such a flawed result," said the Senate's senior defense lawmaker, Carl Levin (D-Mich.), chairman of the Armed Services Committee, in a June 18 statement.

The congressional Government Accountability Office upheld Boeing's protest of a $35 billion Air Force tanker contract awarded to Northrop Grumman and Airbus parent European Aeronautic Defence and Space, and it recommended that the service hold a new competition. The GAO said it found "a number of significant errors" that could have affected the outcome of "what was a close competition."

The contract for 179 aerial refueling tankers is the first of three deals worth up to $100 billion to replace the Air Force's entire tanker fleet over the next 30 years.

The chairman of the House Armed Services Committee was more understated in his criticism.

"The GAO did its work, and the Air Force is going to have to go back and do its work more thoroughly," Rep. Ike Skelton (D-Mo.) said in a statement.

Democratic Sen. Maria Cantwell of Washington state, a vociferous Boeing supporter, said the GAO criticisms "were a scathing indictment of the Air Force's process.

A congressional aide said the Air Force may be on the brink of collapse from the accumulated weight of bad acquisition, personnel and strategic decisions.

"You have to ask how much more can the Air Force take. Are they really that broken? Not just on acquisition but across the board. Are they more broken than any other services or is it just their time in the glass house?" the senior congressional aide said.

This aide, who has been sharply critical of Air Force acquisition practices in the past, said that the ruling by the Government Accountability Office makes the appointment of the next Air Force Chief of Staff "more than a critical appointment. They need a miracle worker."

A defense analyst said the Air Force -- and the military in general -- now faces a crippled system for buying anything.

"At this point the procurement system is so broken … that I believe that we are at a structural disarmament point, and we certainly will not fund a strike Air Force," the analyst said. This source noted that the Air Force lost its bid to buy more F-22s and pointed to the Navy and Coast Guard's broken acquisition efforts as further sign of the crippled state of Pentagon acquisition.

The head of Boeing's tanker programs, Mark McGraw, said the company welcomed the ruling, "fully supporting the grounds of our protest. We appreciate the professionalism and diligence the GAO showed in its review of the KC-X acquisition process. We look forward to working with the Air Force on next steps in this critical procurement for our warfighters."

While the GAO decision is not binding, it puts tremendous pressure on the Air Force to reopen the contract and could help Boeing capture part or all of the award. It also gives ammunition to Boeing supporters in Congress who have been seeking to block funding for the deal or force a new competition.

-- Colin Clark

Back and Forth...

And this from Pentagon spokesman Geoff Morrell...some interesting tidbits (edited for brevity):

There has been absolutely no change in this building's position on that contract. As the secretary has said time and time again, this is the number-one acquisition priority of the Air Force. It has to be. It is 10 years overdue.

The average age of this fleet is 47 years old. These plans desperately need to be replaced, not yesterday, not the year before, but 10 years ago. Any further delay would be a real problem.

And we believe that the acquisition and the contracting process that eventually produced Northrop Grumman and EADS as the winner of this deal was a fair and transparent one. It was very deliberate.

And we believe it provided the American taxpayer with -- we believe it provided our warfighters with the most capable aircraft and the taxpayer the most cost-effective solution to this very real need of replacing the tanker fleet.

Nothing really new here. Of course the Pentagon is going to back their service's decision. But what I think is interesting in Morrell's comment is the idea that the decision was the "most capable" aircraft and the "most cost effective" one. That's more than just a stock endorsement. It's a value decision.

Then it got really interesting...

I think our people felt very secure about the contracting process. Obviously, the eyes of the world were upon the Air Force, as they were pursuing this contract, and in light of what had happened with the previous attempt to award this contract.

Precisely. It's hard to argue any underhandedness here and that somehow the wool was pulled over Boeing's eyes for this very reason.

More:

You know, I know there's been a lot of concern in Congress about this and the impact that this contract may have on the loss of jobs in particular states. And the secretary has told Congress time and again that the only factors that they are allowed to consider when letting these contracts is cost and capability.

And that if they wish to change the contracting criteria to include the impact on jobs, they should be aware of the potential impact that would have on U.S. military companies, because they do an awful lot of business overseas. And you run the risk of opening the door to retaliatory trade restrictions that would ultimately have a far greater impact on domestic jobs than perhaps this one contract will.

Kudos to Colin for recognizing this aspect in yesterday's post. And clearly the Pentagon is worried about the health of the defense sector and its ability to sell systems worldwide.

-- Christian    

GAO Tanker Decision Could Come Tomorrow

A pro-Boeing source sent me the following this AM...

The best indication we have at this point is that the GAO decision on the Boeing protest of the Air Force tanker contract is likely to be announced late Wednesday. The initial announcement in these cases (e.g. the CSAR-X protest) will be somewhat limited, simply stating the GAO’s conclusion, for example, that the Air Force made serious mistakes in conducting the competition. In the CSAR-X case, the announcement said: “GAO sustained the protest on the basis that the Air Force’s actual evaluation of the MPLCC (most probable life-cycle cost) was inconsistent with the required approach as set forth in the solicitation.” GAO recommended that the solicitation should be “amended,” but later recommended that the CSAR-X competition be re-opened.

So it looks like GAO might make an initial call on the tanker deal tomorrow -- a day earlier than planned.

And here's another interesting way of phrasing the controversy from the anti-EADS folks as well:

The Air Force was pressured into altering the program requirements and the decisionmaking models, leading to its subsequent misjudgment of the factors of 1] Mission Capability, 2] Risk, 3] Past Performance and 4] Cost.

The Air Force was pressured? By whom? McCain...who spent little time on this issue once it was recompeted?

The arguments are getting weirder and weirder as this goes forward. We're all sort of holding our breath to see how this shakes out. Colin's piece yesterday was interesting too in noting the cold reception U.S. reps could get at Farnborough if the KC-45 is pulled.

-- Christian

The Real Reason for Boeing's Protest

What's the real reason Boeing filed a GAO protest over the tanker award to Northrop Grumman? After all, the GAO rarely overturns such awards and the Air Force appears to have acted about as transparently as anyone could hope for.

Of course, it's extremely difficult to get a good grip on just how strong -- or weak -- Boeing's case might be since most of the information that would really make that clear is considered extremely sensitive proprietary data.

It looks as if Boeing has two main goals. The first and most easily understood is that Boeing wants to get paid back for the costs it incurred preparing its bid. The second goal is to give the company the 100 days to trumpet its various claims, spread money around Capitol Hill and advertise, advertise, advertise.

I spoke about all this with a lobbyist and a defense finance expert, both of whom have to remain very anonymous. Both have a tight grasp on defense acquisition battles and their dynamics. We concluded that Boeing doesn't really care about the GAO protest, though the finance expert said Boeing may have a stronger case than first appears obvious. They both agreed that the company's main object was to carve out a window to give it time to hammer lawmakers, their staff and the public about just fabulous their plane really is and to create so much white noise that Northrop Grumman/EADS is forced to either share the deal or, best of all, get Congress to award the contract to Boeing.

The lobbyist said he had used a similar strategy on a smaller program several years before and it worked like a charm.

The finance person said there are two financial reasons Boeing filed the protest. First, it stands a decent chance of getting back the cost of preparing its bid, which he estimated at around $20 million. But the biggest reason for Boeing's actions may have little to do with its defense business, although $32 billion is not chump change even for one of the big three defense contractors. And the enormously cyclical nature of the civil aviation business may pose enormous long-term risks for the Chicago-based company.

So Boeing would like to guarantee revenue from its reliable government customer. Should the 787 Dreamliner face longer delays than it has already wracked up, our finance expert said the company faces penalties that reach as high as $20 billion.

[PHOTO: Boeing Co.]

-- Colin Clark

Aussie KC-30 (EADS) Needs Mods

This article first appeared in Aerospace Daily & Defense Report.

The Australian Multi-Role Tanker Transport (MRTT), the first developmental Airbus A330-based tanker, has been grounded since March while receiving new parts for its refueling boom system.

The MRTT also is receiving some production configuration equipment, such as the remote air refueling station and other mission systems, during this time on the ground. This follows what Northrop Grumman officials say was the first phase of MRTT flight-test last year and this year.

The MRTT is expected to return to flight by September, according to Tim Paynter, a Northrop Grumman spokesman. He declined to provide dates for when the A330-based boom is expected to transfer fuel in flight to a receiver.

What is actually being done to the boom during this period is a bit murky. The boom will receive some additional parts and modifications while the aircraft is on the ground. The actual structure of the boom on the MRTT will remain on the aircraft. But, EADS is switching out some parts and bringing it up to a “full production configuration,” Paynter said.

This is the same boom that was showcased by EADS during last year’s Paris Air Show. EADS has developed this boom specifically to compete with Boeing in the international tanker market. The boom on the A330 has not yet been extended during flight.

The boom system has been flying on an A310 test bed conducting various risk reduction activities. It first passed fuel to a receiver, an F-16, on Feb. 29 (Aerospace DAILY, April 4).

William Welser, Northrop Grumman Air Mobility Systems vice president, discussed the plans for MRTT during a luncheon April 29 in Arlington, Va., hosted by the National Aeronautical Association. Until this briefing, Northrop Grumman and EADS North America, its U.S. tanker partner, had been tight-lipped about the system’s status.

The Australian tanker program was previously restructured to allow more time for development, though a slide in Welser’s briefing says the program is now “on schedule, on performance [and] on cost.” It is slated for delivery to Australia in March 2009.

The Northrop Grumman/EADS North America team won the U.S. Air Force’s contract for development of a future tanker in February, but work has been stopped on the program since last month when Boeing, its rival, filed a protest of the award with the Government Accountability Office. GAO is expected to rule on the matter June 19.

Read more on this story, Lockheed's Vulture UAV, threats to LCS2 and the big fighter comp in India from our friends at Aviation Week over on Military.com.

-- Christian

Boeing and Air Force In Lovers Spat

A great analysis on the tanker deal from my old friend Loren Thompson of the Lexington Institute who's name is "Mud" to pro-Boeing lawmakers...

If you want to understand how former allies end up going to war -- or former lovers end up getting divorced -- take a look at how Boeing and the Air Force are treating each other in their angry confrontation over the award of a next-generation tanker program to Northrop Grumman. Boeing expected to win the contract, and now finds itself facing the prospect of losing a 50-year aerial refueling franchise (and $100 billion in sales) while its main rival in the commercial airliner business sets up shop on Boeing's home turf. Boeing is convinced it should have won, and is spending millions of dollars on lawyers and advertising to press its case in a formal complaint to the Government Accountability Office.

Air Force leaders, on the other hand, believe that Boeing is willfully mis-stating the facts in a bid to obscure the inferior performance of the plane it proposed. A marathon session of Air Force acquisition experts two weeks ago concluded that none of the 200 issues raised by Boeing in its complaint to GAO was likely to be upheld, and that whatever minor problems the accountability office might uncover would be far from sufficient to overturn a competitive outcome the service says was not close. Beyond the merits of Boeing's case, Air Force officials are insulted by the tone of the company's public statements, which have used phrases such as "deeply flawed" and "severely prejudiced" to describe the tanker selection process.

The deterioration of Boeing's relationship with its biggest government customer hit a new low last week, when Air Force insiders began hinting darkly that the company had encouraged Missouri Senator Claire McCaskill to question the ethics of the service's chief of staff in a letter concerning an unrelated contracting matter. The notion that Boeing would do such a thing seems exceedingly unlikely, since the chief was widely believed to favor Boeing's tanker bid and the company's relationship with McCaskill is lukewarm at best (even though its defense unit is headquartered in her state). But the tone of Boeing's tanker campaign has led at least some service officials to believe the worst about the company, a feeling that is spreading far beyond tankers. For instance, the service has probably delayed announcing award of the GPS III satellite contract in part because it fears another Boeing protest.

What's fascinating about this confrontation is that the two parties embrace completely contradictory views of reality, and yet the partisans on each side are absolutely convinced that their version of the facts is the only true account. If there's anyone inside Boeing who thinks the tanker competition was rigorous and transparent, I can't find them. And if there's anyone inside the Air Force that thinks Boeing's protest has any merit, they're hiding from me. The stark difference in how the combatants see the same events seems more like a case study in Balkan politics than the button-down world of defense acquisition.

A sage observer of human nature commented in the Wall Street Journal some years ago that the great achievement of American capitalism was to channel impulses that led to rape and pillage during earlier civilizations into constructive forces for economic progress. That's an important insight, but sometimes in the rough and tumble of competition we see hints of how recently mankind emerged from the jungle. When rival cultures begin hating each other, their behavior can easily spill beyond the bounds of rationality. So Boeing and the Air Force need to catch their breath, tone down their rhetoric, and realize that they both still need each other to succeed.

And Reuters reports the same day Boeing exec agrees to shave down the "sharp elbows."

-- Christian

Some New Tanker Gouge

Ok, so I met today with a senior Northrop Grumman official who chatted with me about the ongoing Tanker Tango from the NorGrum/EADS perspective.

Sure, a lot of the conversation was about KPPs this, and job opportunities that. But he dropped a couple news tidbits I thought I'd throw your way.

First of all, the official told me the Air Force had formally submitted a request to the GAO to throw out the Boeing protest on Wednesday.

This is different from an earlier request to dismiss. That one concerned issues Boeing had brought up in their protest that the Air Force considered invalid, such as WTO conflicts and government subsidies.

GAO rejected that request for dismissal, so the Air Force compiled its case against the Boeing protest on the merits of the company's specific allegations, this official told me. The service has asked the GAO to dismiss the protest in its entirety.

I asked for a copy of the AF protest, but couldn't get it because the companies need to redact any proprietary information before it can be released.

Second, and kind of along the same lines, it turns out the Air Force, stung by the last tanker implosion that forced its secretary out of office and jailed two Boeing officials, Red Teamed the heck out of the tanker award before it was announced. I've been thinking all along that it seems to me the Air Force wouldn't risk a mis-dotted "i" or an un-crossed "t" given its previous experience.

Well, the NorGrum official told me that for a month and a half, the Air Force convened a Red Team of the Army and Navy's top procurement officers, staffers from Pentagon acquisition chief John Young's office and Pentagon IG officials at Wright Patterson Air Force base. The team was tasked with poking holes in the contract process to make sure there could be no protest from either side on how the Air Force handled the competition.

So it seems, on the face of it, that if proponents of the protest are trying in some way to impugn the Air Force on a slip shod process, assuming this Red Team happened, it doesn't hold much water.

Again, I just thought I'd pass along the info. And, I'd be happy to speak with Boeing's tanker team any time to get their side of the story if they offer.

-- Christian

Boeing: AF Had Worries About EADS Boom

This article first appeared at Aerospace Daily & Defense Report.

Members of the U.S. Air Force's source selection group raised concerns about the performance of the EADS refueling boom design during the KC-X tanker competition, according to Mark McGraw, Boeing's tanker executive.

The Air Force officials were "speaking loudly" behind closed doors in meetings about their worries, and this information found during the discovery phase of Boeing's protest of the award to Northrop Grumman/EADS is "very encouraging" support for the company's protest, McGraw told reporters during an April 3 teleconference.

McGraw says, based on Northrop Grumman documents reviewed by Boeing lawyers, that it is unclear whether EADS would reuse the boom for the Australian tanker on the U.S. tanker or use a modified design. The boom program has experienced delays and a restructuring. Northrop Grumman says the boom is the same one now on the Australian Multirole Tanker Transport and is being tested for fuel passage on an Airbus A310 test platform.

Air Force worries about the risk associated with EADS' boom performance, however, weren't included in the final assessment of scoring for the team, McGraw says. This is one reflection of how McGraw says the Air Force unfairly docked Boeing's proposal for cost and risk while ignoring potential pitfalls with the Northrop Grumman/EADS North America KC-45 design.

Boeing filed its protest March 11, and the company plans to file a fourth supplemental protest document by April 4. The supplemental filings expand what Boeing sees as evidence of its claims. During this period, Boeing's lawyers are "firewalled," and able to examine Air Force and Northrop Grumman documentation. The full extent of the documents hasn't been made public, and McGraw says he doesn't have access to it.

Read more on the tanker boom, Frenchies coming to Red Flag, bloated heavy lifters and an amazing Coast Guard rescue from Aviation Week on Military.com

-- Christian

An Objective View of Tankers?

Is it un-American to want the U.S. Air Force to purchase the primarily European-built EADS Airbus A330 aircraft for its next-generation tanker aircraft? Speaker of the House Ms Nancy Pelosi and several members of Congress, Republicans as well as Democrats, believe that to procure a foreign aircraft is reprehensible.

The A330MRTT was selected in a second competition for the next-generation tanker -- to be designated KC-45 -- winning out against the Boeing KC-767. There was great irony when the Air Force announced selection of the A330MRTT in late February 2008. Boeing had been awarded a contract for its KC-767AT to serve as the next-generation tanker in a 2002 lease-buy agreement. That deal was to provide 100 tankers at a cost of more than $20 billion.

But several members of Congress as well as Department of Defense officials and analysts questioned that deal. It unraveled with the Principal Deputy Assistant Secretary of the Air Force for Acquisition -- who took a job with Boeing shortly after the contract award -- going to jail and several Boeing officials stepping down. 

A new competition for the tanker contract was held with a rigorous and transparent process. The A330MRTT was selected on the basis of cost and, in most selection categories, superior performance. The A330MRTT has operated as a tanker and has been selected for that role by Great Britain (14 aircraft), Australia (5), the United Arab Emirates (3), and Saudi Arabia (3).

(While the KC-767AT has not yet operated as a tanker, four have been ordered by Italy and Japan has ordered four convertible freighter variants.)

Boeing has protested the tanker award and several members of Congress have declared that the foreign buy (1) would cost American jobs,(2) was possible only because of European governments subsidizing the aircraft’s development, and (3) secret American technology would be lost. These issues dominate the debate as this blog is written.

Yes, American jobs will be lost. Boeing would have to work harder to sell more aircraft to compensate for the loss of tanker aircraft. Airbus, owned by EADS, and its American partner -- Northrop Grumman -- will assemble the aircraft in Mobile, Alabama, creating new jobs in what the firm calls "a new aerospace manufacturing corridor in the southeastern United States." This could strengthen the overall U.S. aerospace base.

The argument that European nations, especially France, help pay for the lower-cost A330 is great. An aircraft that costs less for the same (or superior) performance is good for American taxpayers. We have previously procured foreign-developed and even foreign-built aircraft in the past-the British AV-8 Harrier, the French HU-25 Guardian and HH-65 Dolphin, and the Italian MH-68 Stingray; the U.S. services have also bought foreign-developed missiles, fire control systems, uniforms, and even ships. At the same time, foreign nations -- often under "buy-back" agreements -- use American-built aircraft, missiles, torpedoes, communications gear, and more. Indeed, the French Air Force flies Boeing-built KC-135 tankers as does Turkey and Singapore.

It is difficult to understand what "secret" American technology would be lost if the U.S. Air Force uses foreign-built tankers. Today the U.S. Air Force refuels foreign tactical aircraft, and the U.S. military aircraft regularly refuel from foreign tankers. And, the various services have regular personnel exchanges and share technical data on their tankers.

The KC-45 tanker buy will see the procurement of up to 179 aircraft for approximately $35 billion.

The Air Force selection used a "best value" determination to select a winner on the basis of mission capability, proposal risk, past performance, cost/price, and an integrated fleet air refueling assessment. The Vice Chief of Staff of the Air Force, General Duncan J. McNabb, has said, "The tanker is the number one procurement priority for us right now."

The new aircraft is needed. The competition was fair and transparent. For several reasons, the A330MRTT was the right selection. Time to move on.

-- Norman Polmar

First KC-45 in Germany

This article first appeared at Aviation Week.com.

The first Northrop Grumman/EADS North America A330 for the U.S. Air Force has been sent to Germany in preparation for a cargo modification, though work stopped on the project before it got under way.

The first developmental KC-45, called D-1, was sent to Airbus's passenger-to-cargo conversion facility in Dresden March 4. Work on the cargo modification was to begin March 12.

However, Northrop Grumman/EADS's rival, Boeing, protested the $1.5-billion developmental contract award. Per standard procedure, the Air Force issued a stop-work order to Northrop Grumman on March 14, and work on the D-1 conversion came to a halt before it began, according to a company official.

The Government Accountability Office has 100 days to review it and a motion from the Air Force to dismiss some of Boeing's protest claims.

The Air Force obligated $60 million to the winning team prior to the protest.

Northrop Grumman has been coy about what work is under way, largely because of Boeing's protest. The company only acknowledged the transfer of the aircraft late last week.

The cargo conversion is the first in a series of steps to modify the aircraft to fill the Air Force's KC-45 requirements. The aircraft will get its refueling systems at CASA's plant Madrid and later its military specific items, like defensive systems, will be added at Northrop Grumman's Melbourne, Fla., facility.

The first test flight was slated for February 2010 prior to the protest.

More photos of D-1 arriving in Dresden are posted at Aviation Week's Ares defense blog.

Check out more from our Aviation Week friends on ASAT weapons and V-22 money at Military.com.

-- Christian

Boeing Dives into the Blogosphere

Now Boeing's gone all "new media" on us, putting together a web log that focuses on its Tanker Deal protest.

Good on 'em for recognizing that blogs like DT and Ares and The Dewline are a force to be reckoned with in shaping the debate and often cross-reference within the blog world. But I've always found it kind of pathetic when "big business" tries to blog.

I mean, isn't the appeal of Defense Tech and our other blog friends the fact that we're not tied to any corporate interests in the defense world? That's what blogs are for; and the idea that Boeing -- or NorGrum/EADS, for that matter -- can pump out investigative insights on the subject instead of market-tested bullet points is preposterous. There won't be any candor. There won't be any objectivity.

While we have our protest in with the GAO, we wanted Americans to know that the KC-X acquisition process was flawed and clearly understand our reasons for protesting. Boeing firmly believes that changes were made to the bid requirements and evaluation criteria that led the Air Force away from a highly capable, mid-sized tanker and pushed them into selecting a less capable, less survivable tanker.

With a GAO decision on the protest due in twelve weeks, we will continue to tell our story throughout the country in order to leave no doubt that Boeing offered the most capable tanker, at the lowest risk to the warfighter and taxpayer.

Mark McGraw Vice President & Program Manager 767 Tanker Programs.

Oh well.

But that's okay. Since the blogosphere is open to everyone, everyone seems to think they need a presence in it. We'll take the info for what it's worth and move on.

Let's just keep an eye on the internet jockeying and where it lands.

-- Christian

NorGrum/EADS Fights Back

The Northrop Grumman/EADS tanker team has posted a new Web site to fight back against Boeing protests. The "America's New Tanker" site has a near daily scrape of pro-NorGrum coverage that tries to paint a picture of a done deal (which is may very well be).

Here's the latest:

Reuters this morning, citing Air Force documents, is refuting one of Boeing's major false statements about Northrop Grumman’s win of an Air Force contract to construct America’s next generation of aerial refueling tankers.

According to Reuters, Air Force documents and interviews with Northrop Grumman officials make clear that the Northrop Grumman KC-45A can refuel the V-22 Osprey operated by the Marine Corps. In its challenge to the Government Accountability Office, Boeing claims, among other things that one of the shortcomings of Northrop Grumman's win is that it cannot refuel the V-22.

Reuters writes that Air Force documents show that Air Force officials chose Northrop Grumman in part because "Northrop Grumman's aircraft was better suited for refueling tilt-rotor aircraft" like the V-22.

And Reuters also quotes Northrop Grumman director of business development Marc Lindsley as saying Boeing's claim is false, and that the V-22 can be refueled by the KC-45A.

Additionally, Northrop Grumman has already built, flown and tested its refueling tanker, while Boeing has only conceptual plans; it has yet to construct even one such aircraft. Reuters reports that the Air Force assigned a higher risk to the Boeing proposal because it is so far behind Northrop Grumman in aircraft development.

What Others Are Saying:

On Sunday, the Tacoma News Tribune published an editorial urging Boeing to respect the Government Accountability Office’s review of its appeal of Northrop Grumman's win.

Calling the GAO "the right umpire" to resolve the dispute, the News Tribune said "The company's political allies...should agree to abide by the GAO's respected judgment."

"Their refusal to do so would make it all too clear that the protests are all about protectionism."

"Real patriotism argues for giving the (U.S.) military the best equipment possible," the newspaper said. "If (Northrop Grumman) has offered the tanker that best meets the needs of the Air Force, so be it."

"The GAO, not Boeing's friends in Congress, can best be trusted to make that call."

-- Christian

USAF Tanker Firewall

By Amy Butler

Fire-walling procedures to fence off data in a modeling tool used in selecting a Northrop Grumman/EADS refueling tanker design for the U.S. Air Force prevented any unfair advantage for the winner, even though the tool used to assess the bidders was designed by eventual winner Northrop Grumman, according to the Air Force.

Boeing raised concerns about this and other issues, including changes to the assumptions for operational scenarios used in the modeling tool, in a March 7, 2007, letter to Sandra Palmatier, a contracting officer for the KC-X program office at Wright-Patterson AFB, Ohio. These factors gave an advantage to Northrop Grumman/EADS’s A330-based tanker, which is larger than the 767-based Boeing design, officials on the losing team contend.

The Government Accountability Office is reviewing a March 11 protest of the Air Force’s Feb. 29 decision to award the $35 billion contract to Northrop Grumman/EADS.

Aviation Week & Space Technology obtained a copy of the March 7 letter and the U.S. Air Force’s March 29 response. This correspondence was taking place privately between Boeing and the Air Force. Although both competitors said publicly that the competition was expected to be fair, the letters show that concern over how the competition was proceeding began setting in far earlier at Boeing, once thought to be the shoo-in, than its executives had let on publicly.

The correspondence also shines light on the internal workings of a process that forced the Air Force to walk a fine line. The service was trying to craft a competition between two dissimilar commercially derived products, and establishing requirements for the duel proved to be a complex balancing act between the opposing contractors -- both of which considered dropping out.

The Combined Mating and Ranging Planning System (Cmarps) was designed for the Strategic Air Command in the 1980s and is now used by planners in Air Mobility Command. It helps operators assess how many tankers are required for a variety of missions, where they can be based and how many receivers -- fighters and intelligence aircraft, for example -- can be serviced by the available refuelers. It is one of various modeling systems used by the Air Force.

Boeing points out in its March 7, 2007, letter that Cmarps was designed by, and has been used by, Northrop Grumman, giving its competitor an advantage due to its experience using the system. Boeing complained of “problems we have experienced in Cmarps, including difficulties operating the model, the need for manuals and the need for training on the Cmarps tool.” One industry official not affiliated with either Boeing or Northrop Grumman says that Cmarps is known to be manpower-intensive and demands a learning curve before operating successfully.

The Air Force tried to assuage Boeing’s concerns. Dedicated computers were purchased to “ensure no inadvertent electronic transfers occur” between analysts at the system program office evaluating the proposals and Northrop Grumman, says a March 29, 2007, letter from Joseph Leising, another contracting officer in Ohio, to Boeing.

During the early part of 2007, USAF also made changes to some of the operational assumptions used to gauge the performance of the offerings from Northrop Grumman/EADS. These changes form a large part of the basis for Boeing’s protest of the decision.

Two “major combat operations” scenarios were tweaked to add additional ramp space in the Cmarps model that doesn’t actually exist. This allowed for the KC-30 to gain enough access at a “priority base,” according to Boeing officials, that it otherwise would have been too large to achieve. Limited ramp space can make operations with larger aircraft more difficult, because of tight parking and ground maneuver space. Though company and Air Force officials didn’t identify that location -- the operational scenarios are actually classified -- it could be Al Udeid Air Base, Qatar. According to an earlier Air Force analysis of various tanker models, only four A330-based tankers can operate from that base assuming 30 ft. of space between rows of parked aircraft and interior taxi ways as well as a standard 50 ft. wingtip-to-wingtip distance between for aircraft parking.

Space between parked aircraft, however, was another change made by the Air Force during the competition, Boeing says. The service cut the space between parked tankers in half, to 25 ft., according to Boeing. The company says this change doesn’t accurately reflect operations in the field as articulated in the Mobility Capability Study 2005, a classified assessment of mobility needs by the Pentagon. The Air Force countered in its March 29 letter, saying that the shift to 25 ft. separation between parked aircraft “accurately reflects contingency operations at constrained employment bases.”

Read more on the tanker firewall and other aeronautical scoops from our friends at Aviation Week.

-- Christian

How Boeing Doth Protest

On Tuesday, the Boeing Company formally submitted its protest of the NorGrum/EADS tanker award to the Government Accountability Office. The process takes like 60-90 days supposedly, but have we yet to resolve the CSAR-X protest? No. So I don't have much hope for this one ending any time soon.

And that's a shame, because more than a new CSAR, the Air Force has got to replace the oldest of its KC-135s very soon, or metal fatigue will seriously hamper aerial refueling ops. It seems that this argument has been firmly planted in the political arena and that Boeing's arguments on the technical flaws they find in the award are an outgrowth of prodding from Capitol Hill and the unions.

I could be wrong, of course, and maybe there was a grand conspiracy here to award the deal to Airbus. But it seems to me -- and call me crazy -- that after the last tanker fiasco (which cost an Air Force Secretary his job) the Air Force would have been SUPER careful about its award. I mean, the Air Force has professional acquisition officers who do nothing their entire careers but buy stuff and work contracts to the "T." With such a high-stakes contract and its shady history, don't you think the folks who decided this worked the angles backwards and forwards? It doesn't make sense to me that the Air Force would have been slip shod on this one.

Secondly, I need to say outright here that Sue Payton, the Air Force's top acquisition official, is about as professional and honest as any civil servant can come. I interviewed her a couple times over the years and have found her honest, forthright and enthusiastic about her service and responsibilities. I just don't see her letting anything be taken to chance.

And lastly, I find it humorous that Boeing is using the same argument to protest the tanker award that Sikorsky and Lockheed Martin are using in their protest of Boeing's win in the CSAR-X contract: that the service asked for a medium-sized tanker and awarded a heavier one.

Here's a release from Boeing forwarded to me yesterday after a conference call with reporters (that I missed because my email server was down dammit!) explaining the logic behind their protest:

• The contract award and subsequent reports ignore the fact that in reality Boeing and the Northrop/EADS team were assigned identical ratings across all five evaluations factors: 1) Mission Capability, 2) Risk, 3) Past Performance, 4) Cost/Price, and 5) Integrated Fleet Aerial Refueling Assessment. Indeed, an objective review of the data as measured against the Request for Proposals shows that Boeing had the better offering in terms of Most Probable Life Cycle Costs, lower risk and better capability.

• Flaws in this procurement process resulted in a significant gap between the aircraft the Air Force originally set out to procure - a medium-size tanker to replace the KC-135, as stated in the request for proposal - and the much larger Airbus A330-based tanker they ultimately selected. It is clear that frequent and often unstated changes during the course of the competition - including manipulation of evaluation criteria and application of unstated and unsupported priorities among the key system requirements - resulted in selection of an aircraft that was radically different from that sought by the Air Force and inferior to the Boeing 767 tanker offering.

• Because of the way the Air Force treated Boeing's cost/price data, the company was effectively denied its right to compete with a commercial derivative product, contrary not only to the RFP but to federal statute and regulation. The Air Force refused to accept Boeing's Federal Acquisition Regulation-compliant cost/price information, developed over 50 years of building commercial aircraft, and instead treated the company's airframe cost/price information as if it were a military-defense product. Not only did this flawed decision deny the government the manufacturing benefits of Boeing's unique in-line production capability, subjecting the Air Force to higher risk, but it also resulted in a distortion of the price at which Boeing actually offered to produce tankers.

• In evaluating Past Performance, the Air Force ignored the fact that Boeing - with 75 years of success in producing tankers - is the only company in the world that has produced a commercial derivative tanker equipped with an operational aerial-refueling boom. Rather than consider recent performance assessments that should have enhanced Boeing's position, the Air Force focused on relatively insignificant details on "somewhat relevant" Northrop/EADS programs to the disadvantage of Boeing's experience.

• Boeing offered an aircraft that provided the best value and performance for the stated mission at the lowest risk and lowest life cycle cost," said McGraw.

"We did bring our A-game to this competition. Regrettably, irregularities in the process resulted in an inconsistent and prejudicial application of procurement practices and the selection of a higher risk, higher cost airplane that's less suitable for the mission as defined by the Air Force's own request for proposal. We are only asking that the rules of fair competition be followed.

Come on, everyone, including Boeing, knew from the VERY BEGINNING that Airbus was going to offer up the A330. It seems a little strange for Boeing to complain about some misconception of the criteria now.

But, again, I think this is getting more political than contractual. We'll see. And keep an eye out for more coverage here on the attempt to hang the lost contract on the Republican presidential nominee...

-- Christian

...Boeing Goes Nuclear

As predicted...

CHICAGO, March 10, 2008 -- The Boeing Company [NYSE: BA] will file a formal protest on Tuesday asking the Government Accountability Office (GAO) to review the decision by the U.S. Air Force to award a contract to a team of Northrop Grumman and European Aeronautic Defence and Space Company (EADS) to replace aerial refueling tankers.

"Our team has taken a very close look at the tanker decision and found serious flaws in the process that we believe warrant appeal," said Jim McNerney, Boeing chairman, president and chief executive officer. "This is an extraordinary step rarely taken by our company, and one we take very seriously."

Following a debriefing on the decision by the Air Force on March 7, Boeing officials spent three days reviewing the Air Force case for its tanker award. A rigorous analysis of the Air Force evaluation that resulted in the Northrop/EADS contract led Boeing to the conclusion that a protest was necessary.

"Based upon what we have seen, we continue to believe we submitted the most capable, lowest risk, lowest Most Probable Life Cycle Cost airplane as measured against the Air Force's Request for Proposal," McNerney said. "We look forward to the GAO's review of the decision."

Boeing said it would provide additional details of its case in conjunction with the protest filing on Tuesday.

And so it begins.

-- Christian

Tanker Weekend Roundup

Controversy over the tanker deal continues to snowball as Boeing quietly waits for momentum against NG/EADS to build in its favor before launching a public assault on the deal.

Rep. John Murtha's hearing last week was downright embarrassing, with the HAC-D chairman lecturing Air Force officials on his ability to kank the deal on a whim -- "We appropriate the money, so you can't do anything if we tell you you can't" he basically said. Then Murtha went on to compare the Boeing loss to the Dubai Ports World deal, saying the reflexive, jingoistic, anti-trade reaction that scuttled that deal could rear its ugly head here again too.

Never shying away from a tap dance on the fringes of political polemics, he then pushed the start button on hanging the whole nefarious deal with NG/EADS on McCain's head:

"Because of the individual in the other body stopping what the Air Force had already approved to do ... is costing billions of dollars and we're at a point where we don't know how long it's going to take to get these things [KC-135s] out of the air..."

Lemme get this straight: You thought the Boeing lease deal that McCain exposed was a better idea than an open and fair competition for the replacement? Do you remember, Mr. Murtha, that deal lead to jailing of a Boeing official and the resignation of a couple more? Unbelievable.

Here's what our friends at Aviation Week had to say about the affect of the deal on Boeing bigwigs:

Arrogance about its relationship with the U.S. Defense Dept., lack of focus on customer requirements and reluctance to provide detailed pricing data contributed to Boeing's stunning loss late last month of a Pentagon contract to build aerial refuelers. "Boeing 'knew more than the customer' what the customer wanted, and in its arrogance it didn't listen," says a source close to the 767 tanker team. The proposal's executive group spent a lot of time "doing some soul-searching" as a result.

The defeat could bring on a wave of personnel changes for top executives involved in crafting the proposal. And it could reshape Boeing's business strategy for capturing U.S. defense work. The company lost the $300-billion Joint Strike Fighter program to Lockheed Martin in 2001 and, while it still has an active F/A-18 product line, it is unlikely to break back into the fighter market. Last year, Boeing's unmanned combat air system design lost to Northrop Grumman's X-47 in a Navy project.

While the company still has strong rotorcraft, space and missile defense businesses, its place among airframers is unclear.

And the New York Daily News has gotten into the fray:

Angry Boeing supporters are vowing revenge against Republican presidential candidate John McCain over Boeing's loss of a $35 billion Air Force tanker contract to European plane maker Airbus.

Boeing supporters in Congress are directing their wrath at the Arizona senator for scuttling an earlier deal that would have let Boeing build the next generation of Air Force refueling tankers.

"I hope the voters of this state remember what John McCain has done to them and their jobs," said Rep. Norm Dicks (D-Wash.), whose state would have been home to the tanker program and gained about 9,000 jobs.

McCain said he is keeping an open mind on the contract, but in the past he has boasted about his role in blocking a 2004 version that gave the contract to Boeing.

He has run ads touting his role in fighting "pork" such as the tanker project and cited it in a recent debate.

So let me get this straight...It is McCain's fault for exposing what many consider a criminal deal between the Air Force and Boeing? Why isn't the wrath being directed toward Boeing for its earlier finagling and for its loss based on the merits of the two competitors this time? Politics, my friends, politics...

And here's a Machiavellian strategy for you: maybe there won't be a resolution to this debate/con