Special Report

Contract Dispute

A new report adds refuel to the "tanker war" fire.

By 7.7.08

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Honest conservative partisans from either side of the KC-X "tanker war" should concede that there were no perfect choices in awarding the contract for the in-flight refueling aircraft earlier this year.

Ruling in favor of European-owned EADS opened the Air Force up to legitimate national security criticisms, not to mention rewarding a foreign state-owned and operated business for unfair practices. Ruling in Boeing's favor would have both enraged free trade purists (with long histories of antipathy toward the Washington defense giant) and re-fired old controversies in the Senate.

The just-released Government Accountability Office report should end the tanker controversy -- at least within the conservative commentariat. After all, the "free market" opinion, expressed by, among others, the Wall Street Journal and several contributors to National Review, rests on the assumption that the tanker competition was fair.

They assumed that the Air Force chose the best refueling tanker for its needs. If a majority-foreign tanker was selected on the basis of its merits, all the better victory for the principles of laissez faire trade.

This is a sympathetic case for many conservatives, who'd sooner die than look like protectionists and strange bedfellows with John Murtha, Patty Murray and the AFL-CIO. Of course, today's liberal democrats and unions (as well as Lou Dobbs and Pat Buchanan) are forthrightly protectionist. However, there's plenty reason to favor Boeing in the "tanker war" that has nothing to do with jingoism.

Here, the GAO report describes why:

We find that the agency's selection… as reflecting the best value to the government was undermined by a number of prejudicial errors that call into question the Air Force's decision that Northrop Grumman's proposal was technically acceptable…. In addition, we find a number of errors in the agency's cost evaluation that result in Boeing… as the offeror with the lowest evaluated most probable life cycle costs to the government.

The report could read as a primer on the tanker row thus far (admittedly, though, a dry one), from the initial request for proposals to unlocking the criteria on which the decision should've been based.

In detail, it refutes most conservatives' assumptions about the tanker process in two ways. First, it makes clear -- embarrassingly so, to the Air Force -- that the process was corrupt. Whether by accident or design, procurement officials misled Boeing regarding the basic criteria on which the award would be given.

The report shows that the tanker decision was rife with irregularities and questionable decisions.

SECONDLY, THE REPORT should go a long way toward correcting the rumors and propaganda disseminated by EADS in the days following the announcement of the award.

In an effort to hurriedly establish talking points to leverage the debate, whisper-campaigns from unnamed sources leaked misleading information to the press about a so-called lopsided victory on the part of the EADS tanker, including that, in the eyes of the Air Force, Boeing was beaten "by a mile."

The GAO contradicts these talking points, and then some. While most of the proprietary information is blacked-out, the report contends that the Air Force assessed the Boeing and Airbus tankers very differently.

Not only were the two proposals "very similar" in quality, but there's reason to believe the Air Force overlooked several of the primary requirements in the case of the EADS tanker -- which possibly would make it ineligible for the award -- including the fact that the proposal failed to prove the tanker could actually refuel all currently compatible planes using Air Force procedures.

A key requirement for the KC-X tanker is its ability to meet, among others, overrun and breakaway performance standards. This has to do with a plane's dive speed and ability to refuel in complex situations and at high speeds. After admitting the Airbus tanker was unable to pass this threshold without an additional "fix," the GAO report found that the Air Force made no effort to verify that the "fix" would work at all.

Another assumption shattered by the GAO report is just as damaging to the free market case: that the Airbus A330 tanker was chosen because it was a larger than Boeing's K-767 and, hence, offered more room for cargo and personnel.

While this is undoubtedly true, the report makes clear that the Air Force's intention was to look for a replacement for a medium-sized tanker first, with two procurements for the larger planes just over the horizon. In other words, the chief criterion on which the Airbus tanker was selected was irrelevant to the request for proposal at hand.

WE CAN NOW SEE that, by awarding EADS/Airbus with the tanker contract, the Air Force didn't select the best plane for the job. Even professional earmark fighters, long suspicious of Boeing, should be able to make peace with a re-evaluation based on a very clear and disinterested reading of the original criteria.

After all, there's no virtue in choosing the wrong $35 billion product just to show your free trade bona fides.

The GAO report on the Air Force's KC-X tanker decision ought to put to rest the "tanker wars" for all but the most entrenched, bitter partisans. Independent pork-fighting groups -- or conservatives concerned with the integrity of competition in government procurement -- should re-evaluate their stance based on this new information.

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