Team Infidel
Forum Spin Doctor
New York Times
April 3, 2009
Pg. B1
By Christopher Drew
During the last eight years, the Air Force has twice botched efforts to award one of the Pentagon’s richest contracts, a $35 billion order for tankers that can refuel warplanes in midair.
But now, as the Pentagon prepares to reopen the competition, some leading lawmakers and military analysts are suggesting a seemingly heretical notion: split the giant contract between the two rivals — Boeing and a joint venture involving Northrop Grumman and the European company that makes the Airbus planes.
Defense Secretary Robert M. Gates opposes dividing the contract, which could be extended for decades and eventually cost $100 billion for more than 400 tankers. He said it would be “an absolutely terrible idea” to set up two production lines, and his aides estimate that such a move could add $14 billion to the cost in the next five years.
But Representative John P. Murtha, a Democrat from Pennsylvania who is chairman of the House defense appropriations subcommittee, and Representative Neil Abercrombie, Democrat of Hawaii who heads another panel that oversees Air Force programs, say that may be the only practical way to break the impasse.
Over time, they say, the Air Force could shift a greater share of the business to whichever company provided the best deal. And they say that even though the plan would cost more in the short run, the continuing competition — and the ability to increase production rates and replace the aging tanker fleet more quickly — could eventually save billions in purchasing and maintenance costs that the Pentagon has not fully considered.
The congressmen also say that the process has been so flawed, and both sides have such powerful political backers, that it could be impossible to go forward without having the losing bidder file a protest, as Boeing did last year.
Government auditors decided the protests had merit and blocked the award of the contract to Northrop Grumman and an affiliate of the European Aeronautic Defense and Space Company, known as EADS, even though their bid was almost $3 billion lower than Boeing’s.
Congressional aides say Mr. Murtha, who discussed his proposal with Mr. Gates on Thursday, could add $400 million to a planned defense supplemental bill to start the work on two contracts if he believes that the Pentagon has not come up with a better bid process.
“It’s hard to believe that after all these years, the Air Force hasn’t come up with one already,” Mr. Abercrombie said in an interview. He said that the basic, no-frills nature of the plane should have made the process less cumbersome.
“It’s just a flying gasoline tank,” he said. “It’s not the F-22 or the Battlestar Galactica.”
Under Mr. Murtha’s plan, the Air Force would buy 24 tankers each year, starting with 12 from each company, compared with the 12 to 15 projected from a single contract. Most of the current tankers date from the Eisenhower and Kennedy eras, and replacing them is the Air Force’s biggest acquisition priority.
“There is a lot of empirical history that says you can get higher performance at lower costs with this kind of competition,” said Jacques S. Gansler, who was in charge of the Pentagon’s acquisition programs during part of the Clinton administration.
“If you divide the first group of planes on a 50-50 basis, then you might go to 60-40 on the next batch, and you might vary it even more after that based on quality and price,” Mr. Gansler said.
But building more planes would not sit well with the White House Office of Management and Budget, which recently floated the idea of delaying the tanker deal to save billions of dollars.
“There’s a fair amount of sense in Murtha’s plan,” said Loren Thompson, a defense consultant. “But in the kind of fiscal situation the government is in, it is a really hard sell.”
Spokesmen for Boeing and EADS, which said it would build an Airbus factory in Alabama if it won the contract, said they were waiting to hear what Mr. Gates and Congress want to do.
Some of Boeing’s supporters, like Senator Patty Murray, Democrat of Washington, oppose dividing the business. Senate leaders have not commented on Mr. Murtha’s idea.
The Air Force’s first effort to obtain new tankers collapsed in 2004 amid corruption charges involving a proposed leasing deal with Boeing. Northrop Grumman and EADS then teamed up to compete with Boeing, the Chicago aerospace giant that built most of the tankers now in use.
The companies have waged an almost operatic struggle since then, with pronouncements of national pride and strained trans-Atlantic relations mixed in with sniping over the capabilities of each other’s planes.
Secretary Gates said that splitting the contract would also add to the costs of training crews and buying spare parts.
Both companies’ tankers are variations of commercial jets. Analysts said a contract would enable Boeing to keep a production line open, while EADS has been pushing hard for more military business.
Still, some analysts said EADS would benefit more than Boeing from a split contract. If it built the factory in Mobile, it would also make up to 40 commercial freighter planes there each year, letting it compete more fiercely with Boeing in the United States.
“That could be a showstopper in terms of Boeing’s potential support for a dual-source Pentagon contract,” said Mr. Thompson, the defense consultant.
April 3, 2009
Pg. B1
By Christopher Drew
During the last eight years, the Air Force has twice botched efforts to award one of the Pentagon’s richest contracts, a $35 billion order for tankers that can refuel warplanes in midair.
But now, as the Pentagon prepares to reopen the competition, some leading lawmakers and military analysts are suggesting a seemingly heretical notion: split the giant contract between the two rivals — Boeing and a joint venture involving Northrop Grumman and the European company that makes the Airbus planes.
Defense Secretary Robert M. Gates opposes dividing the contract, which could be extended for decades and eventually cost $100 billion for more than 400 tankers. He said it would be “an absolutely terrible idea” to set up two production lines, and his aides estimate that such a move could add $14 billion to the cost in the next five years.
But Representative John P. Murtha, a Democrat from Pennsylvania who is chairman of the House defense appropriations subcommittee, and Representative Neil Abercrombie, Democrat of Hawaii who heads another panel that oversees Air Force programs, say that may be the only practical way to break the impasse.
Over time, they say, the Air Force could shift a greater share of the business to whichever company provided the best deal. And they say that even though the plan would cost more in the short run, the continuing competition — and the ability to increase production rates and replace the aging tanker fleet more quickly — could eventually save billions in purchasing and maintenance costs that the Pentagon has not fully considered.
The congressmen also say that the process has been so flawed, and both sides have such powerful political backers, that it could be impossible to go forward without having the losing bidder file a protest, as Boeing did last year.
Government auditors decided the protests had merit and blocked the award of the contract to Northrop Grumman and an affiliate of the European Aeronautic Defense and Space Company, known as EADS, even though their bid was almost $3 billion lower than Boeing’s.
Congressional aides say Mr. Murtha, who discussed his proposal with Mr. Gates on Thursday, could add $400 million to a planned defense supplemental bill to start the work on two contracts if he believes that the Pentagon has not come up with a better bid process.
“It’s hard to believe that after all these years, the Air Force hasn’t come up with one already,” Mr. Abercrombie said in an interview. He said that the basic, no-frills nature of the plane should have made the process less cumbersome.
“It’s just a flying gasoline tank,” he said. “It’s not the F-22 or the Battlestar Galactica.”
Under Mr. Murtha’s plan, the Air Force would buy 24 tankers each year, starting with 12 from each company, compared with the 12 to 15 projected from a single contract. Most of the current tankers date from the Eisenhower and Kennedy eras, and replacing them is the Air Force’s biggest acquisition priority.
“There is a lot of empirical history that says you can get higher performance at lower costs with this kind of competition,” said Jacques S. Gansler, who was in charge of the Pentagon’s acquisition programs during part of the Clinton administration.
“If you divide the first group of planes on a 50-50 basis, then you might go to 60-40 on the next batch, and you might vary it even more after that based on quality and price,” Mr. Gansler said.
But building more planes would not sit well with the White House Office of Management and Budget, which recently floated the idea of delaying the tanker deal to save billions of dollars.
“There’s a fair amount of sense in Murtha’s plan,” said Loren Thompson, a defense consultant. “But in the kind of fiscal situation the government is in, it is a really hard sell.”
Spokesmen for Boeing and EADS, which said it would build an Airbus factory in Alabama if it won the contract, said they were waiting to hear what Mr. Gates and Congress want to do.
Some of Boeing’s supporters, like Senator Patty Murray, Democrat of Washington, oppose dividing the business. Senate leaders have not commented on Mr. Murtha’s idea.
The Air Force’s first effort to obtain new tankers collapsed in 2004 amid corruption charges involving a proposed leasing deal with Boeing. Northrop Grumman and EADS then teamed up to compete with Boeing, the Chicago aerospace giant that built most of the tankers now in use.
The companies have waged an almost operatic struggle since then, with pronouncements of national pride and strained trans-Atlantic relations mixed in with sniping over the capabilities of each other’s planes.
Secretary Gates said that splitting the contract would also add to the costs of training crews and buying spare parts.
Both companies’ tankers are variations of commercial jets. Analysts said a contract would enable Boeing to keep a production line open, while EADS has been pushing hard for more military business.
Still, some analysts said EADS would benefit more than Boeing from a split contract. If it built the factory in Mobile, it would also make up to 40 commercial freighter planes there each year, letting it compete more fiercely with Boeing in the United States.
“That could be a showstopper in terms of Boeing’s potential support for a dual-source Pentagon contract,” said Mr. Thompson, the defense consultant.