Boeing to Air Force, "Not So Fast," on EADS Tanker Contract

Boeing said Monday it will formally protest a $35 billion U.S. Air Force tanker award it lost to European Aeronautic Defence and Space and Northrop Grumman Corp.

This will cause delays and frustrate the Air Force's desire to get a replacement tanker by 2011. Although this may frustrate the Air Force leadership, it only has itself to blame for tilting the tables in Boeing's favor in first place in 2003 when the Air Force first tried to award a contract.

At first glance it looks like Boeing has a solid argument.

Representative Norm Dicks, Democrat of Washington who is a member of the defense appropriations subcommittee and a Boeing ally, accused Pentagon officials of asking for a midsize tanker and then switching specifications to favor the bigger A330.

"If they had been transparent and honest, they would have said, 'We want a large tanker.' We got a raw deal," Dicks added, noting that Boeing might have offered a tanker based on its larger and newer 777 jet.

The Air Force's timing of the announced $35 billion KC-45A (sometimes referred to as the KC-30) contract with a foreign plane manufacturer couldn't have been any worse. The US is headed into a recession and angry Americans want to know why the Air Force has decided to send jobs to socialist countries instead of employing thousands of hard working American aircraft manufacturers.

First of all sending jobs overseas is never popular with American politics. Ultimately, congressional members will have to fund this project, and they will also have to get elected again if they wish to continue serving. The hard feelings of Americans is deep. This decision will damage John McCain's presidential bid. Boeing and the Air Force have been furious with John McCain ever since he blew the whistle on a corrupt deal some Air Force leaders were building with Boeing in 2003 when the Air Force first tried to build the next generation tanker. While trying to save taxpayer dollars from corrupt Air Force officials, he ended up costing American jobs. Which is the greater sin? That depends on whether you work for Boeing or sympathize with the plight of the American worker or not.

This is one avenue congress could drive this deal down. Congress stalls the funding for the contract until Boeing has regrouped and put together a better bid on a better aircraft platform (the 777) and congress demands that the Air Force go back and re-evaluate the contracts. Eventually, the Air Force will learn that they will have to go back to the drawing board every timer the answer comes up EADS. There is a benefit to this process though, the Air Force and America will eventually get the best deal it can from Boeing.

This will also incite tremendous bile from the Europeans who lavished praise upon the US when EADS initially won the next generation tanker contract. But the last time I checked, European socialists don't have a vote for anyone in the US Congress.