Reuters published this piece late Thursday about Boeing’s concession that protests over government awards often fail.
Boeing, of course, is talking about its protest to the Government Accountability Office over the USAF award to Northrop Grumman for the KC-45A tanker contract.
This isn’t news–Boeing said as much when it filed the protest in March. But as the clock ticks down to the June 19 deadline for the GAO to release its findings, we’ve noticed something else that’s been ratcheting up significantly: the press, politician and labor activity on Boeing’s behalf.
In recent weeks, there have been an increasing number of Op-Ed pieces, actions by state legislatures condemning the award, calling for investigations, and this week alone the launch of a new pro-Boeing website, the issuance of a “white paper” (see our previous item on this one) and the 180 degree about-face by Loren Thompson of the Lexington Institute, who must be dizzy from about-facing so often. (He was for Boeing before he was for Northrop before becoming for Boeing again.) There was even an e-mail blast to Members of Congress that was all about the dastardly EADS (Northrop’s prime sub-contractor and parent of Airbus) and very little about the attributes of the KC-767, signed by about a dozen military types from several branches of the service of various ranks.
We’ve seen this same pattern of activity before. In the weeks leading up to the February 29 tanker award announcement, similar pro-Boeing stuff was coming from similar constituencies with similar messages. We concluded then that Boeing was laying the groundwork with Congress in case the award went against it (which we, and universally all other observers, did not expect). We believe this ratcheting up of activity is in the expectation that Boeing will lose the GAO protest–and this time Boeing expects that as well. (Which means that we, having called it wrong on the award, won’t be surprised if the GAO upholds the protest.)
We understand that the GAO has completed its work, but don’t know this definitively. Watch for even more activity on behalf of Boeing between now and the June 19 deadline for the GAO to announce its decision.
A labor union of technical engineers issued an 11-page “white paper” today ripping the USAF tanker contract award to Northrop Grumman and the KC-30 over the Boeing KC-767. The two page press release summarizes the white paper findings.
The press release focuses entirely on EADS, parent of Airbus and maker of the A330-200 on which Northrop’s offering of the KC-30 is based. Northrop’s identified as a “minority” partner.
(During a conference several months ago, Northrop acknowledged that about 50% of the contract revenues flow to EADs/Airbus. Engines, in this case provided by GE (an American company), typically represent about 20% of the cost of a commercial airliner. This clearly makes Northrop a “minority partner.” But it’s important that although 50% of the revenues may flow to EADS/Airbus, payments to suppliers to EADS/Airbus also flow back to suppliers, with more than 200 based in the US. Northrop says that about 60% of the KC-30 by value is US-sourced.)
The White Paper is replete with errors and misrepresentations and cites “facts” without sourcing them.
- It claims the KC-30 isn’t as structurally as sound as the KC-767 without backing this claim up.
- It states (accurately) that currently only 1% of all cargo carried by the Air Mobility Command is carried by tankers but ignores statements and conclusions by the Air Force that a new way of carrying troops and cargo is required for the future, requiring a multi-role tanker-transport.
- It claims EADS and Northrop “have conceded” the KC-30 is “much more costly” to operate than the KC-767; they’ve done nothing of the kind. They have conceded the KC-30 burns 6% more fuel than the KC-767, a far cry from the 24% cited by a Boeing-paid consultancy.
- It claims Boeing has delivered 2,000 tankers in 75 years–but ignores the fact that the last Boeing-manufactured tanker, the KC-135, was delivered 42 years ago, and that the last tanker delivered by McDonnell Douglas, now a part of Boeing, was delivered 20 years ago.
- It correctly notes that the KC-30 is in testing but ignores the fact that the KC-767AT proposed by Boeing for the Air Force is only a “paper” airplane; and the the KC-767 tanker delivered to Japan in February and March was years late and still hasn’t entered service; or that none of the KC-767 tankers ordered by Italy have been delivered and are years late.
- It correctly notes that Boeing has designed an delivered five generations of aerial refueling booms but the sixth generation proposed to the Air Force is only a paper design. It correctly notes that the EADS boom is in testing.
- It fairly questions past performance issues with Northrop and EADS but ignores the past performance issues of Boeing, particularly with the Italian and Japanese tanker programs.
- It charges that 44,000 US jobs will be “exported.” This is the flimsiest claim of all. Boeing has never validated how it asserted the KC-767 will support 44,000 US jobs. Northrop initially claimed 25,000 US jobs will be supported, for a net difference of 19,000 jobs that would be subject to “export.” But Northrop later revised its figure that the KC-30 will support 48,000 jobs and “showed its math.” We’re still skeptical of this figure (how can a plane with less US content than claimed by Boeing for its KC-767 (at 85%) support more jobs?), but Northrop at least has been public about how it claims its number while Boeing refuses to do so.
- It visits the claim of “illegal” subsidies to Airbus. Until the World Trade Organization rules in this case, perhaps as soon as next month, these are still allegations–as are the claims by the European Union that Boeing also received “illegal” subsidies. This issue is a red herring all around.
The problems with the White Paper go on and on.
Business Week has this interview with Boeing’s Jim McNerney.
The Collings Foundation is a non-profit group that has four restored, flyable World War II aircraft that tour the US to generate remembrances for the members of the USAF who served, and died, in World War II.
The Boeing B-17, North American B-25 Mitchell, Consolidated B-24 bombers and the North American P-51 fighter will be at Seattle’s Boeing Field June 20-22. Ground tours, and flight-rides, are available for donations.
We’ve had the opportunity previously to ride in Collings’ B-24 (and before that, in the Commemorative Air Force’s B-17). These were thrilling experiences that provide the open-air roar of four piston engines. Merely taking a ground tour provides an amazing experience of just how small and cramped these bombers are–at a time when they were considered giants of the skies.
Check out the Collings Foundation website for the full tour schedule. For those of us in Seattle, take advantage of the ground tours, which are $12/adults, $6/children. The flight-rides are considerably more expensive (credit cards accepted) but well worth the trip and the donations are tax deductible.
Photos may be seen here.