Team Infidel
Forum Spin Doctor
Financial Times
June 19, 2008
Pg. 1
By Demetri Sevastopulo in Washington and John Thornhill and Peggy Hollinger in Paris
EADS suffered a heavy blow on Wednesday when US congressional investigators urged the US Air Force to reopen a $35bn refuelling tanker deal the European defence company had won over Boeing.
The Government Accountability Office, the oversight arm of Congress, agreed with Boeing that there were flaws in the air force process used to choose EADS and Northrop Grumman, its US 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. On Wednesday, 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 who had lambasted the air force decision to award the deal to EADS.
Mr Aboulafia said that 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 that the outcome was now likely to be decided by the next administration. John McCain and Barack Obama, the Republican and Democratic presidential nominees both urged the air force to reopen the competition.
The GAO stressed that it had not evaluated the tankers’ merits but only the selection process. But the ruling will likely 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 US defence market was closed to Europeans as prime contractors.
Louis Gallois, EADS chief executive said: “Though we are disappointed, it is important to recognise 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, while Northrop said it was reviewing the decision.
The GAO ruling is also a huge setback for the air force, which has been trying to recover from a previous tanker-related scandal that sent a senior air force official and Boeing executive to prison.
June 19, 2008
Pg. 1
By Demetri Sevastopulo in Washington and John Thornhill and Peggy Hollinger in Paris
EADS suffered a heavy blow on Wednesday when US congressional investigators urged the US Air Force to reopen a $35bn refuelling tanker deal the European defence company had won over Boeing.
The Government Accountability Office, the oversight arm of Congress, agreed with Boeing that there were flaws in the air force process used to choose EADS and Northrop Grumman, its US 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. On Wednesday, 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 who had lambasted the air force decision to award the deal to EADS.
Mr Aboulafia said that 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 that the outcome was now likely to be decided by the next administration. John McCain and Barack Obama, the Republican and Democratic presidential nominees both urged the air force to reopen the competition.
The GAO stressed that it had not evaluated the tankers’ merits but only the selection process. But the ruling will likely 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 US defence market was closed to Europeans as prime contractors.
Louis Gallois, EADS chief executive said: “Though we are disappointed, it is important to recognise 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, while Northrop said it was reviewing the decision.
The GAO ruling is also a huge setback for the air force, which has been trying to recover from a previous tanker-related scandal that sent a senior air force official and Boeing executive to prison.