At the Daily Caller, Alex Pappas reports on the fallout of yesterday’s announcement that Northrop-Grumman has pulled out of the competition to build the next-generation air tanker, which is the single most pressing military need for the Air Force and the most-watched procurement contract in history. U.S. Rep. Jo Bonner of Mobile has the most telling response, noting that President Obama has often promised to get rid of sole-source contracts, but that without Northrop competing, the tanker procurement now becomes a sole-source contract. Back on Feb. 5, in fact, Rep. Bonner wrote the president to warn about just such an occurrence. “History shows,” wrote Bonner, “that sole-source contracts simply do not work very well — they cost significantly more than they should and very often produce mediocre results.” Also: “The Department of Defense, in structuring the new [bid requirements], significantly altered the competitive balance to the point that one company no longer believes it can fairly compete. To be clear, this lack of competition… would not be the result of a change in military requirements, but, instead, because of a change by the acquisition team in the way the competitors are evaluated. Mr. President, the bottom line is this… if the [tanker] — projected to be one of the largest programs in our nation’s history by replacing some 550 tankers, many of which are older than you or me — ultimately becomes a sole-source, no-bid contract, this would be anathma to your administration and would be a wound that is self-inflicted.”
After a lengthy discussion of relevant details, Rep. Bonner wrote: “I hope to hear from you soon.”
This rude, arrogant president never responded to Bonner’s letter. And now his toadying secretary of defense, Mr. Gates, is set to award a sole-source contract which by its very nature will be bad news for taxpayers and airmen alike.
But that’s okay: Boeing, which will build the plane, is headquartered in Chicago, in the district of White House chief of staff/nude chest poker Rahm Emanuel and the political base of one Barack Hussein Obama. This is the Chicago Way — a deal the Pentagon (in mob-speak) could not refuse.
What does all this mean? The incomparable James Hasik explains: The Pentagon is “stuck with that awkward problem of double monopoly: one buyer, one interested seller, and a Kabuki dance of bilateral contracting relations on the way…. Sure, it’s a fixed price contract, but Boeing must disclose both its costs and its profit margin, so even without competition from Northrop and EADS, the government will get a good deal, no? Eh, no. The problem is that effective regulatory regimes are generally elusive, and for four reasons:…  Auditors and regulators can set rules, but smart people will always find a way around them. … Regulators are very frequently observed to go native in the firms they regulate. The problem is particularly severe in technologically intensive industries where the regulators, by virtue of the domain knowledge required to participate in the regulatory process, most frequently hail from the industry itself. Sooner or later, factions within the KC-X program office, the DCAA, and AFCAA, and any other organization with what people on Capitol Hill like to call “oversight” would come to think about Boeing’s interests as synonymous with the Air Force’s interests….  Finally, the regulatory burden itself is costly, which contributes to the overall cost of the project, even if no further rents accrue to Boeing. Ultimately, the Air Force has to pay for those squadrons of bean-counters and fact-checkers, and all those clipboards and green eye shades cost money. But more significantly, at a certain point, the managerial cost of the added oversight, through gummed-up processes and drawn-out schedules, exceeds its marginal returns.”
This also isn’t without costs to the economy. Mobile County Commission Stephen Nodine notes: “I’m disgusted at the way our southern workers have been treated as second class citizens by organized labor which fought so hard to protect its power structure at the cost of 48,000 jobs nationwide that the KC-45 program would have supported.”
If there is one thing John McCain is reliable on, and deeply honorable about, it is his insistence that the men and women of our armed forced be given the best material to work with and that the Pentagon eliminate corruption. Now is the time for McCain to shine again. Now is the time for him to raise holy hell about the coming sole-source contract. Now is the time for him to ask if there were any shenanigans of the sort that sent Boeing executives to jail earlier in the decade, over the same tanker project.
Now also is the time for swing House members such as Steve Driehaus, Zack Space, Charlie Wilson, Gary Peters and Dan Maffei to play the same hardball that the White House has been playing. Their “rust belt” states will lose jobs because of the White House decision to screw over Northrop. They should let it be known that in return, they owe the White House no consideration on the coming Obamacare vote. Their constituents don’t want Obamacare anyway. So why not switch their previous “yes” votes to no, and serve their constituents well both on health care and on the tanker at the same time?
For that matter, Northrop is trying to decide where to locate its new corporate HQ. One big option is northern Virginia, right next to the district of endangered freshman Democrat Gerry Connolly. Why shouldn’t Connolly stick up for Northrop by telling the White House “no” on Obamacare unless it rules out the sole-source tanker contract for Boeing?
This White House has bullied enough people for long enough. On the matter of the tanker, it has now gotten the worst possible deal for taxpayers and airmen alike. It is time for it to be bullied back — until it allows simple fairness back into the tanker mix.
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