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06.18.2008 9:02 pm
Boeing: Vindicated
Editorial Board

Congress’ watchdog agency Wednesday took a bite out of the Air Force, ruling that the service botched its February decision to award a $40 billion aerial tanker deal to Northrop Grumman and EADS, the European parent of Airbus.
The decision was at least a partial vindication for Boeing, which cried foul after losing the massive contract. Although the Boeing tanker program would not create many jobs in St. Louis, it would be overseen by Boeing’s Integrated Defense Systems unit, which is based here.
The Government Accountability Office was brutal in its verdict: “The Air Force conducted misleading and unequal discussions with Boeing,” it found. The service assured Boeing it had met some performance criteria, but then changed its mind and neglected to tell Boeing. Meanwhile, Air Force officials still were talking to EADS about how it might meet the standards.
The Air Force overestimated the cost of adopting the Boeing proposal and underestimated the cost of the EADS offer, the GAO said. The agency used the words “unreasonable” and “improper” to describe much of the Air Force’s decision-making on the contract.

Boeing argued that it was blindsided by Air Force procurement officers who changed several of the selection criteria in midstream and sometimes didn’t bother to clue in Boeing. The government had asked for a mid-sized tanker but ended up choosing a design based on a much larger Airbus 330 instead. Boeing had submitted a design based on its mid-sized 767 airliner.
“It was a severe denunciation of Air Force acquisition policies,” said Loren Thompson of the Lexington Institute, a defense think-tank in Arlington, Va. The report indicates “bias against Boeing” at the Air Force, he said.
It’s not hard to imagine the origin of such bias. The Air Force was severely embarrassed four years ago when its chief procurement officer and Boeing’s chief financial officer both went to jail in a scandal involving a deal to lease new tanker aircraft from Boeing. Among the biggest critics of that proposal was a man who could be the next commander in chief: Sen. John McCain, R-Ariz.
The GAO recommended that the Air Force go back to square one and ask for new proposals from Boeing and EADS.

The Air Force doesn’t have to follow that recommendation, but its new senior officials would be fools not to. The service awarded a multi-billion-dollar deal to a European-led consortium that will create jobs in Europe instead of in the United States. That fact alone generated a wave of protest in Congress. The GAO report will make that wave a tsunami.
Besides, given how the Air Force originally described its needs, the Boeing tanker was superior: It’s cheaper to operate and can land at more air fields closer to potential battle zones.
Defense Secretary Robert Gates recently replaced the secretary of the Air Force and its chief of staff. Mr. Gates said their removal stemmed from lapses in the handling of nuclear weapons.
The service’s new bosses now should take a close look at the Air Force’s procurement process. Something about it stinks.


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