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Outrage Is Wasted on Boeing's Snub by the Air Force

By Steven Pearlstein
Friday, March 7, 2008

Boeing is one of the great American companies -- an export powerhouse, a technology leader, the creator of hundreds of thousands of high-paying jobs and a source of U.S. military power. For those who've stuck with it, its also has been a great long-term investment.

So it's rather disappointing to watch as the company and its loyal crew of Washington allies resort to jingoism, protectionism and outright hypocrisy as they seek to overturn the Pentagon's decision to choose another team to build a badly needed fleet of refueling tankers for the Air Force.

Disappointing, yes, but not surprising. For over the years, Boeing has also developed a reputation as the one of the biggest corporate whiners in Washington, incessantly complaining about how the playing field is tilted unfairly against it but that all would be rectified if the government could demand an end to foreign subsidies, or award it one more contract or tax break or trade treaty, or give it permission to buy up one more competitor.

Yet, no matter how much Washington does for it, no matter how much money it is making, how large its backlog or how big its market share, Boeing keeps coming back for more.

The latest complaint from Boeing & Friends is that the Air Force had the temerity to conclude that taxpayers could get more for their money by awarding the $40 billion tanker contract to the team of Northrop Grumman and Airbus, Boeing's major rival in the commercial airplane industry.

This is the contract, you may remember, that Boeing lobbyists thought they arranged as an unusual sole-source lease agreement several years back. The company's argument at the time was that the sweetheart deal was necessary to prevent Boeing from closing its 767 production line and laying off thousands of blue-collar workers.

Only later, thanks to the persistence of Sen. John McCain, did we find out that Boeing had wired the whole thing from the inside, first by having the Senate Appropriations Committee lay down criteria that only Boeing could meet and then by offering a plum job to the Air Force's top procurement official. Once it all came out, the chief executive of Boeing had to resign, the procurement czar was sent off to jail and the tanker contract was put out for competitive rebidding.

Even then, however, the contract looked like it was Boeing's to lose. Once Northrop and Airbus had a chance to study the draft request for proposals, they concluded that the proposed criteria all but guaranteed a Boeing victory, and they threatened to pull out. Under pressure from McCain, the Air Force added new criteria that gave some weight to the added capabilities offered by the larger A330 air frame that the team was offering. Northrop-Airbus decided to give it a shot. In the end, it wasn't even close, with the upstarts scoring higher than Boeing on all but one of the key criteria, including cost, capability and track record on other contracts.

Now that the decision has been made, Boeing's congressional allies, who for months vigorously defended the sweetheart lease agreement, are suddenly deeply concerned about the integrity of a selection process that looks to this former defense contracting reporter as clean and open as any in Pentagon history.

They are outraged that Boeing -- a global company that relies on exports for much of its business and now outsources a good chunk of its production to foreign plants -- might actually have to compete in its home market with importers and outsourcers.

They are furious that Boeing has lost a contract at a time when it has a record backlog of orders and more business than it can handle.

And although Boeing routinely profits by selling its military hardware and technology to U.S. allies, its boosters are suddenly gravely concerned that by importing wings and fuselages from Spain, France and Germany, the Air Force is creating a grave threat to national security.

"We should not be beholden to the French for parts and maintenance for the defense of our nation," roared Sam Brownback, a Republican senator from Kansas, where Boeing, not coincidentally, has a big plant, "and we should not require our military personnel to learn to speak French to be able to operate our refueling tankers."

Sacre bleu!

Overturning this contract decision would set a terrible precedent. It would signal to allies that while their governments are expected to buy our stuff, we won't buy theirs. It would mean that Boeing would become the monopoly supplier of transport planes to the U.S. government, with the power to dictate prices and terms. And the message it would send to every contracting officer in every government agency is that if they know what is good for their careers, they will put political considerations ahead of getting the best value for the American taxpayer.

If members of Congress want a Pentagon contract to complain about, this isn't it. They might focus, instead, on the contract to replace Marine One, the helicopter that shuttles presidents and other dignitaries on trips from the White House to Camp David and the like.

This is a classic example of what happens when, under the guise of national security, military planners are allowed to dream up so many military requirements that you wind up with gold-plated systems that nobody can afford.

What started out as a simple task of replacing 40-year-old choppers has, in the post-9-11 security paranoia, grown into a two-phase extravaganza involving 28 aircraft that can travel 350 miles without refueling; evade radar detection and missile attacks; withstand nuclear blasts; and engage in simultaneous super-secure video, audio and digital communication with every head of state, constitutional officer and field commander anywhere in the world. And oh, yes, don't forget the plush carpet.

Total cost: $11 billion, according to the latest estimate, or nearly $400 million a pop. Just yesterday, the Pentagon's No. 2 official, Gordon England, ordered Lockheed Martin, the prime contractor, to proceed with the program despite the 67 percent increase in the estimated cost, declaring that there is "no other alternative."

Now that's something to get outraged about.

Steven Pearlstein can be reached atpearlsteins@washpost.com.

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