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The Tanker Decision Goes to Boeing—and Smears Fly

1:47 PM, Feb 28, 2011 • By GARY SCHMITT and THOMAS DONNELLY
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Perhaps it was inevitable. After ten years of contentious wrangling and with tens of billions of dollars going to the winner of the competition to build the U.S. Air Force's next fleet of tankers, no matter who won there would be recriminations and charges that the fix was in. If the European Aeronautic Defence and Space’s (EADS) bid had won, Boeing’s supporters would have pointed to the fact that the European-based company’s initial low price for its plane, the Airbus 330, was made possible by unfair government subsidies. And because Boeing has won, EADS’s fans are now pointing to Boeing’s lobbying campaign on behalf of its offer based on Boeing’s 767.

The Tanker Decision Goes to Boeing—and Smears Fly

But some critics of the Pentagon’s choice of Boeing’s offer have gone further, suggesting that because Boeing’s headquarters are in Chicago and Obama is from the Windy City that somehow “Chicago Politics” determined the outcome. As the Wall Street Journal editors opined: “The fuel tanker debacle has undermined a competitive and open market for defense purchases free of political pressure.” Or as one Washington Times and American Spectator writer penned even more acidly: “Boeing gets the tanker contract. I smell a rat.  A crooked rat.” Pretty serious charges, if true. But is there any evidence to support them?

The fact is, the effort to procure a new tanker­ now going on for a decade ­has been something of a mess since day one. With a tanker fleet procured during the 1950s and 60s badly in need of replacing, but a bill to do so possibly totaling $100 billion, the Air Force leadership initially hoped to square that circle by leasing 767s from Boeing rather than procuring them outright. The goal was to get planes on line sooner and for less up-front cost. Congress had its doubts about the strategy but those doubts turned to an emphatic “no” when investigators discovered that a senior Air Force official involved in negotiating the terms of the lease was using her position in those talks to, among other things, get a high-paying job at Boeing. Soon after, Congress passed legislation that required the Pentagon to conduct a formal competition to choose a new tanker and to make the procurement a regular purchase instead of a lease-to-buy arrangement.

And in the abstract, the competition made sense. However, there was one big problem: The airplane that best fit the Air Force’s standing requirements was the Boeing 767, an airframe not matched by any other manufacturer. But Boeing and EADS, the two companies that eventually wound up offering bids, did so with airframes that are significantly different. And the proposed EADS tanker would be based on the Airbus 330, a commercial passenger jet it manufactures, which is a good deal larger and flies longer distances than the 767.  

The Air Force had a Sisyphean task from the get-go. Keeping two very different planes in the competition forced the service to make the requirements vague enough, promising that any final judgment would be and could be questioned. Nor was it the case that bigger would necessarily be better. Because of the 330’s size, for example, it was judged to be too big for a number of the airfields a tanker would be expected to operate from; yet, keeping that requirement would have eliminated the Airbus from the competition from the start. It would have also angered Congress, which had insisted on the competition without fully understanding what the consequences might be. As the Pentagon began to modify its requirements to keep the EADS-Airbus bid in the game, it inevitably began to give an edge to the larger plane. Hence, when Boeing challenged the Pentagon’s choice of the Airbus in 2008, the company could reasonably claim that the rules had been changed in midstream—a challenge that the General Accounting Office upheld.

The underlying reality was that it was virtually impossible to establish a set of parameters to judge the two planes that did not favor one over the other; the real competition was over the “requirements.” Broadly speaking, if the premium was on how much a tanker could carry and what else it could do, then the larger Airbus was the preferred plane. On the other hand, if the issue was operational flexibility as a tanker and cost performance over the life-time of the plane's use, then the smaller Boeing plane would be the pick. While Boeing supporters were worried that European government’s direct subsidies would allow Airbus to low-ball its bid, the real life-time costs of operating and repairing a larger aircraft—costs that the Air Force would have to bear—could never be offset. Few questioned that the A330 offered greater capability on paper, only whether that extra capability was needed, could be utilized operationally, or was affordable.

Alas, the greed of a few Air Force and Boeing officials sparked the congressional intervention and turned the tanker replacement program into a political circus. As a result, the media coverage of the tanker competition moved from the trade press and the business pages to the subject of political reportage. And, in the current environment, it became just another datum to be fit into a conspiracy theory. But the fact is, there is no evidence that the initial decision, the appeal, or this most recent decision in favor of Boeing was a product of insider politics or shenanigans of any sort.

No doubt given the money involved and ongoing congressional interest in the tanker competition, the oversight committees of both the House and the Senate will be scrubbing this latest decision with a fine toothcomb. And given the thousands of jobs involved in Washington where Boeing will produce its tanker, and the thousands of jobs lost in Alabama where Airbus was going to manufacture its plane, it is to be expected that the senators and congressmen from those two states will look, respectively, to either defend or critique the Defense Department’s decision. And, of course, there is always a chance they will find something amiss again. But shouldn't the Journal and others wait until they do? 

And shouldn’t the coverage of the politics of the tankers be supplemented, at least, by an explanation of the military and budget realities that drove the Pentagon to make the decision it did? However, if this tangled tale must be reduced to a sermonette, shouldn’t the real moral of the story be about the overreaction by Congress to the original scandal? A simpler and wiser course would have been simply to prosecute the offenders, send them off to jail (which happened) and move on with the lease strategy that would have begun providing the replacement tankers far sooner and more affordably in light of the dire budget constraints the Air Force is now operating under. As Secretary of Defense Gates recently remarked, he’s not sure there will be sufficient money in the future even to complete the tanker buy.

Thus the real tragedy is that our pilots continue to climb into cockpits of Eisenhower-era KC-135 tankers—known in the civilian world as the Boeing 707 and a plane long ago retired from commercial service. So, while members of Congress have every right to look at how the Boeing 767 was chosen over the Airbus 330, they should nevertheless keep in mind that they were the ones most responsible for delaying the replacement of these antiques of the air and that further delays will only raise costs and risk lives.

Thomas Donnelly is director of the Center for Defense Studies at the American Enterprise Institute. Gary Schmitt is director of AEI’s Program on Advanced Strategic Studies.

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