jnhay Posted March 2, 2008 Share Posted March 2, 2008 I haven't seen this posted, and was wondering what you guys thought of the Air Force giving a $35 billion contract to a foreign company. Rather than creating 44,000 jobs in the U.S., Northrup Grumman is estimating about 1,800 US jobs will be created. Tanker deal loss staggers Boeing Airbus-based jet wins $35 billion contract By Julie Johnsson and Aamer Madhani, TRIBUNE REPORTERS Julie Johnsson reported from Chicago and Aamer Madhani reported from Washington March 1, 2008 WASHINGTON - In a shocking move, the U.S. Air Force awarded a $35 billion contract to replace its aging fleet of aerial tankers to a consortium led by a France-based defense contractor rather than Boeing Co. The Air Force decision is a stinging blow to Chicago-based Boeing, which had built most of the tankers in the Air Force fleet and was widely considered the front-runner for the contract, among the three largest ever awarded by the Pentagon. Boeing had won an earlier version of the contest, only to be stripped of its prize amid an ethics scandal when the Air Force purchasing official who had overseen that process wound up on Boeing's payroll. Related links * Boeing's low-key Mr. Fix-It undertakes biggest challenge That sordid episode played no role in the decision announced Friday, Pentagon officials insisted. Rather, they were wowed by the newer and larger airplane, built to haul fuel and cargo, offered by Los Angeles-based Northrop Grumman Corp. and European Aeronautic Defense and Space Co., parent of Boeing rival Airbus SAS. The winning proposal gives the military "more passengers, more cargo, more fuel to off-load, more availability, more flexibility, more dependability and it can carry more patients," said Gen. Arthur Lichte, commander of the Air Force's Air Mobility Command. By landing the contest to supply the first 179 aerial tankers in the government's fleet, Northrop and EADS are in a prime position to win two later contracts, potentially worth more than $100 billion, to replace all of the Air Force's 600-odd Eisenhower-era tankers. It is also the first major defense contract in the U.S. notched by EADS and should provide cash that the European aerospace and defense company badly needs to offset losses from delays to its A380 superjumbo jet and to fund a midsize competitor to Boeing's 787 Dreamliner, analysts said. Boeing said in a statement Friday that it hasn't decided if it would protest the Air Force decision. Boeing short in all areas Air Force officials declined to say where Boeing's proposal came up short. However, they rated the Northrop/EADS plane superior in every one of the five categories used to assess the tanker offerings. "The fact that the Air Force thought there wasn't a single measure where the Boeing proposal was ahead suggests their chances of an appeal aren't good," said Loren Thompson, defense analyst with the Lexington Institute, a public-policy think tank. Boeing and its congressional supporters could pressure the Pentagon into splitting the contract between the two suppliers, although doing so would be far costlier for the government. Boeing also may benefit from a congressional backlash over awarding such a large program to an overseas contractor, especially since Boeing estimated its proposal would create 44,000 jobs. "I am very concerned that this decision means that the women and men in our military will not get the best tanker to meet our nation's security needs," said Rep. Rick Larsen (D-Wash.), whose district includes Boeing's factory in Everett. Lichte bristled at the suggestion that the program could face a political firestorm over outsourcing. "This is an American tanker," Lichte said. "It's flown by American airmen. It has a big American flag on the tail, and every day it'll be out there saving American lives." For Alabama, where the final assembly of the plane is to be completed, the surprise victory was "stunning," said Sen. Richard Shelby (R-Ala.) The state stands to gain about 5,000 jobs. Airbus plans to build a factory in Mobile to assemble the new tankers and their commercial cousins, A330 freighters. "We're in a global economy," said Shelby, who noted that Boeing and other aerospace companies contract work to other nations. "A lot of this work will be done in the good old U.S. of A." Protest discouraged Read more: http://www.chicagotribune.com/business/chi-sat-tanker-boeingmar01,0,3720882.story Link to comment Share on other sites More sharing options...
Skinsfan1311 Posted March 2, 2008 Share Posted March 2, 2008 I haven't seen this posted, and was wondering what you guys thought of the Air Force giving a $35 billion contract to a foreign company. Rather than creating 44,000 jobs in the U.S., Northrup Grumman is estimating about 1,800 US jobs will be created.Tanker deal loss staggers Boeing Airbus-based jet wins $35 billion contract http://www.chicagotribune.com/business/chi-sat-tanker-boeingmar01,0,3720882.story Read the article. It's because the Boeing plane is inferior in every way. It does not meet Air Force specifications. The contract isn't about creating jobs, it's about choosing the best for our troops. Thought the article downplayed it, the fact that Boeing cheated, certainly didn't help. Boeing did it to themselves. Instead of congressionsal backlash directed towards the Air Force about giving away jobs, they should be pissed at Boeing for submitting an inferior product and cheating to try to get the contract. There will be thousands of jobs, created, as a result of the contract win for EADS/Northrop. If you read the article, you'll also see that this win puts Northrop in the drivers seat for a couple of upcoming contracts which will also create thousands of jobs. Link to comment Share on other sites More sharing options...
Mark The Homer Posted March 2, 2008 Share Posted March 2, 2008 Great. My sister works for Boeing. So does her husband. Link to comment Share on other sites More sharing options...
TheKurp Posted March 2, 2008 Share Posted March 2, 2008 First, let me disclose that I work for Lockheed Martin. That out of the way, any time there is competition for the military's business, tax payers ultimately win. Boeing's biggest sin was their arrogance. They thought that just because they have supplied the Air Force with tankers over the last 50 years that they had the inside track on winning this contract in spite of the Air Force opening it up for bid. They also counted on politics, meaning the creation of 44,000 jobs in the U.S., to play in their favor. This arrogance led to them to dictate to the Air Force the design of the tanker rather than listening to what the Air Force really wanted. Boeing need not look anywhere but to themselves in placing blame for losing the bidding war. Link to comment Share on other sites More sharing options...
Skinsfan1311 Posted March 2, 2008 Share Posted March 2, 2008 First, let me disclose that I work for Lockheed Martin.That out of the way, any time there is competition for the military's business, tax payers ultimately win. Boeing's biggest sin was their arrogance. They thought that just because they have supplied the Air Force with tankers over the last 50 years that they had the inside track on winning this contract in spite of the Air Force opening it up for bid. They also counted on politics, meaning the creation of 44,000 jobs in the U.S., to play in their favor. This arrogance led to them to dictate to the Air Force the design of the tanker rather than listening to what the Air Force really wanted. Boeing need not look anywhere but to themselves in placing blame for losing the bidding war. I probably should've disclosed that I work for Northrop. Even though you work for the evil empire I'm inclined to agree with your statement. Boeing's job statement is BS, check out the quote, from the Sun. The EADS/Northrop Grumman team plans to perform its final assembly work in Mobile, Ala., although the underlying plane would mostly be built in Europe. And it would use General Electric engines built in North Carolina and Ohio. Northrop Grumman, which is based in Los Angeles, estimates a Northrop/EADS win would produce 2,000 new jobs in Mobile and support 25,000 jobs at suppliers nationwide. "I've never seen anything excite the people of Mobile like this competition," Sen. Jeff Sessions, R-Ala., said. "We're talking about billions of dollars over many years so this is just a huge announcement." Here's the link to the article http://www.baltimoresun.com/business/nationworld/ats-ap_business12mar01,0,3569230.story Link to comment Share on other sites More sharing options...
TheKurp Posted March 2, 2008 Share Posted March 2, 2008 I probably should've disclosed that I work for Northrop.Even though you work for the evil empire I'm inclined to agree with your statement. Boeing's job statement is BS, check out the quote, from the Sun. The EADS/Northrop Grumman team plans to perform its final assembly work in Mobile, Ala., although the underlying plane would mostly be built in Europe. And it would use General Electric engines built in North Carolina and Ohio. Northrop Grumman, which is based in Los Angeles, estimates a Northrop/EADS win would produce 2,000 new jobs in Mobile and support 25,000 jobs at suppliers nationwide. "I've never seen anything excite the people of Mobile like this competition," Sen. Jeff Sessions, R-Ala., said. "We're talking about billions of dollars over many years so this is just a huge announcement." Here's the link to the article http://www.baltimoresun.com/business/nationworld/ats-ap_business12mar01,0,3569230.story Guilty. However, I also know it's in Lockheed's best interest, as well as mine, for Northrop and Boeing to survive. Besides, LM has positioned themselves to rely mostly on non-military business to prosper. What Boeing also neglects to mention is that had they won the contract, much of the work would also be performed overseas. Link to comment Share on other sites More sharing options...
Larry Posted March 2, 2008 Share Posted March 2, 2008 (Hoping that the price isn't set in dollars.) Link to comment Share on other sites More sharing options...
jnhay Posted March 2, 2008 Author Share Posted March 2, 2008 Read the article. It's because the Boeing plane is inferior in every way. It does not meet Air Force specifications. The contract isn't about creating jobs, it's about choosing the best for our troops. Thought the article downplayed it, the fact that Boeing cheated, certainly didn't help. Boeing did it to themselves. Instead of congressionsal backlash directed towards the Air Force about giving away jobs, they should be pissed at Boeing for submitting an inferior product and cheating to try to get the contract. There will be thousands of jobs, created, as a result of the contract win for EADS/Northrop. If you read the article, you'll also see that this win puts Northrop in the drivers seat for a couple of upcoming contracts which will also create thousands of jobs. "That sordid episode played no role in the decision announced Friday, Pentagon officials insisted." I found one of the comments left on the page interesting: David PerrySeattle, WA The 767 and 330 are completely different airframes with the 330 being larger. If it is size the Air Force wants, the 777 airframe would have provided the services with even more capability. You can bet that the Air Force specifically asked for the 767 airframe. Had they asked for more fuel/payload capability than the 767 can provide Boeing would have bid the job with the 777. In these competitions it is generally understood that no extra credit be given for capability beyond that which is specified in the requirements document. In this case it appears that "extra credit" was awarded. Come on people. How can an airframe built in Europe with very high labor rates be competitive with one built in the US? Government subsidies thats how. So now we have France, Germany, and the UK subsidizing the US military. The price America pays for the favor is paid in the currency of the middle class worker. One final note. I'll bet a nickel that cost overruns will total at least 25% of the project. That's how Northrop operates - they were prime on the B-2 - remember how that one turned out? I find it hard to believe that Boeing wasn't able to compete. And in regards to Northrup getting more contracts and creating more jobs, wouldn't that be the case with Boeing except that they'd create even more jobs? Link to comment Share on other sites More sharing options...
Prosperity Posted March 2, 2008 Share Posted March 2, 2008 I thought one of the benefits of the military industrial complex was that it was one of the few things that was still manufactured in America. Link to comment Share on other sites More sharing options...
TheKurp Posted March 2, 2008 Share Posted March 2, 2008 I can't really comment on the 777 other than to say that it certainly is closer in size to the Airbus 300 that ultimately won out. Off the top of my head, with no real inside knowledge, I have to wonder though about the risks of going with a relatively new production 777 as a tanker (yes, I know the plane has been flown commercially for some time) verses a proven Airbus 330 that enjoys a substantial backlog of customers. We all know that a Ford Taurus and a Toyota Camry are close in size and considered to be in the same class of vehicle, but which one has the better record for dependability? Link to comment Share on other sites More sharing options...
jnhay Posted March 2, 2008 Author Share Posted March 2, 2008 I can't really comment on the 777 other than to say that it certainly is closer in size to the Airbus 300 that ultimately won out.Off the top of my head, with no real inside knowledge, I have to wonder though about the risks of going with a relatively new production 777 as a tanker (yes, I know the plane has been flown commercially for some time) verses a proven Airbus 330 that enjoys a substantial backlog of customers. We all know that a Ford Taurus and a Toyota Camry are close in size and considered to be in the same class of vehicle, but which one has the better record for dependability? "they were wowed by the newer and larger airplane" I don't know if those are the military's words, but if they are, why wouldn't the 777 at least be proposed? Link to comment Share on other sites More sharing options...
TheKurp Posted March 2, 2008 Share Posted March 2, 2008 "they were wowed by the newer and larger airplane" I don't know if those are the military's words, but if they are, why wouldn't the 777 at least be proposed? Well for one, and this goes back to Boeing's arrogance in thinking they had the contract in the bag, the 767 that was bid is nearing the end of production. Meaning, they have no more customers in sight. Rather than shut down the shop floor and scrap all of the production machinary and hardware - in effect, take a loss - they were hoping to extend the life of the 767. Again, just my thoughts with no real inside knowledge. Link to comment Share on other sites More sharing options...
jnhay Posted March 2, 2008 Author Share Posted March 2, 2008 Well for one, and this goes back to Boeing's arrogance in thinking they had the contract in the bag, the 767 that was bid is nearing the end of production. Meaning, they have no more customers in sight. Rather than shut down the shop floor and scrap all of the production machinary and hardware - in effect, take a loss - they were hoping to extend the life of the 767. Again, just my thoughts with no real inside knowledge. I really don't know how business works, but I would think the Air Force would say "We don't want that, got anything better?" IMO, the American Air Force should also be thinking about creating American jobs and giving American manufacturers the ability to match foreign offers, but the Air Force has said that they weren't even thinking of it that way. Link to comment Share on other sites More sharing options...
Raub Posted March 2, 2008 Share Posted March 2, 2008 EADS also got the contract for the Army's new helicopter, the UH-72. Starting to become a pattern? Link to comment Share on other sites More sharing options...
TheKurp Posted March 2, 2008 Share Posted March 2, 2008 I really don't know how business works, but I would think the Air Force would say "We don't want that, got anything better?" The bidding process doesn't work that way, and for good reason. When a contract is opened for bid, companies are welcomed to offer their best shot. Would you trust a company that didn't put their best foot foward when trying to win your business? Now, at the end of the contract, if the work is still needed, a company may rebid. If they get all their ducks in a row and put forth the best product at the best price, then by design, they should win the contract. Of course kickbacks and other underhanded and illegal negotiations can derail the bidding process. IMO, the American Air Force should also be thinking about creating American jobs and giving American manufacturers the ability to match foreign offers, but the Air Force has said that they weren't even thinking of it that way. You and MSF. However, if you're like most consumers who work hard for their money you want the best product for the best price - regardless of where it's made. In terms of the military, their highest priority should be the safety of their troops and the success of their missions - not American jobs. Link to comment Share on other sites More sharing options...
Sarge Posted March 2, 2008 Share Posted March 2, 2008 These tankers are loooong overdue. And I'm sorry to see Boeing couldn't get their **** together enough to win the contract. But they just didn't offer what the Air Force needed. It's kinda like going Lowes needing a philips head screw driver and all they had was a flathead Do you buy it to make due, or do you go somewhere else? Keep in mind that these new tankers will quite likely be in service for 50+ years, the same as our current tankers have been Link to comment Share on other sites More sharing options...
SkinsHokieFan Posted March 2, 2008 Share Posted March 2, 2008 The easiest way to lose a contract with the federal gov't, complacency. Once something is open for a re-compete, you better have A) done a damn good job in the past and put forth a damn good proposal The Feds aren't, and haven't been for a few years to be honest, tossing around money like candy (And full disclosure, I work for Computer Sciences Corporation) Link to comment Share on other sites More sharing options...
jnhay Posted March 2, 2008 Author Share Posted March 2, 2008 These tankers are loooong overdue. And I'm sorry to see Boeing couldn't get their **** together enough to win the contract. But they just didn't offer what the Air Force needed. It's kinda like going Lowes needing a philips head screw driver and all they had was a flatheadDo you buy it to make due, or do you go somewhere else? Keep in mind that these new tankers will quite likely be in service for 50+ years, the same as our current tankers have been I totally agree with you there, but I'm not sure if that is the case. Commenters on that website are saying how Boeing actually has better technology with the 777s and 787s they can build, but proposed 767s because they fulfilled what the Air Force specified (yet the Air Force was impressed by the A330s inferior technology?). I'm not sure the entire story is being told, and I don't understand why the Air Force is asking Boeing to just let it go. If anyone here knows a lot about the business, I'd appreciate some clarification about what the two companies can really offer. If our troops safety is all they care about, why not go with Boeing's better planes? Link to comment Share on other sites More sharing options...
mjah Posted March 2, 2008 Share Posted March 2, 2008 If our troops safety is all they care about, why not go with Boeing's better planes? The Air Force obviously doesn't see the 767 as "better." Procurement judgment battle: Internet comments vs. the US Air Force. Hmm. You know, I'm gonna take the Air Force on this one. Link to comment Share on other sites More sharing options...
jnhay Posted March 2, 2008 Author Share Posted March 2, 2008 The Air Force obviously doesn't see the 767 as "better."Procurement judgment battle: Internet comments vs. the US Air Force. Hmm. You know, I'm gonna take the Air Force on this one. So you're saying everything the Air Force does has to be right? What about internet comments against new laws? I guess they hold no weight as well? Link to comment Share on other sites More sharing options...
Sarge Posted March 2, 2008 Share Posted March 2, 2008 I totally agree with you there, but I'm not sure if that is the case. Commenters on that website are saying how Boeing actually has better technology with the 777s and 787s they can build, but proposed 767s because they fulfilled what the Air Force specified (yet the Air Force was impressed by the A330s inferior technology?). I'm not sure the entire story is being told, and I don't understand why the Air Force is asking Boeing to just let it go.If anyone here knows a lot about the business, I'd appreciate some clarification about what the two companies can really offer. If our troops safety is all they care about, why not go with Boeing's better planes? Well, I've always compared the Air Force with the Indians on Manhatten Island "OHHHHHHHHHH! Lookey here! Shiney beads! And we'll trade you these awsomely shiney beads for this miserable island!" "OK!!!!!!!!!!!!" The Air Force has been that way with a lot of things, especially computer systems. On more than one occasion we've been saddled with systems that aren't really what we needed, but by God they looked snazzy and really, really cool Kinda like danny playing fantasy football with a real team I hope this isn't the case Link to comment Share on other sites More sharing options...
mjah Posted March 2, 2008 Share Posted March 2, 2008 So you're saying everything the Air Force does has to be right? What about internet comments against new laws? I guess they hold no weight as well? :doh: No, I'm saying the Air Force probably was pretty thoughtful about the quality of the planes their personnel will be staking their lives on. The Kurp put it perfectly: In terms of the military, their highest priority should be the safety of their troops and the success of their missions - not American jobs. If technological gee-wizardry or better quality meant that the Boeing tankers were going to be twice as reliable as the Airbus tankers, or that they'd cost half as much to maintain, then great. But I'm willing to bet that the situation is just the opposite on the technology side, as the 767 is 30 years old and the Airbus is a more advanced design. And isn't Boeing offering a 767 configuration that has never actually been built? Sounds like risk to me, not some kind of quality advantage. Finally, you definitely picked and chose the Internet comments you wanted to read, whether you knew it or not. The full spectrum includes a bunch of Internet comments from USAF folks saying "Yeah, the 330 is probably the better airframe." I'm all for being skeptical of the government. But given that none of us were sitting at the negotiation table, giving the Air Force benefit of the doubt over a statistically nonrepresentative and biased sample of pro-Boeing quotes is a no-brainer. Link to comment Share on other sites More sharing options...
jnhay Posted March 2, 2008 Author Share Posted March 2, 2008 Here you go then: MitsRaleigh, NC I'm happy that Boeing got slapped since they actually won the contract several years ago by lying, bribing and fraud and then got caught. The 767 is a old relic and can not compete against the A330's technology. The A330 is going to have parts made in Britain (US ally), Germany (US ally), France (US ally) and assembled in Alabama (1000's of new jobs). The European's have bought hundred's of billions of dollars worth of US military goods and if they took the same narrow minded and chauvanistic views like some people on this blog then Boeing would be worse off. MarksSan Antonio, TX Reply » | Report Abuse | #16 17 hrs ago Crimes happened is why John McCain got involved. Competition is good in all things. This forces Boeing to be more flexible in their plans, next time. Saying 777 easily could be offered can't be true or they would have done it. They have "desperation" to sell the 767. It doesn't help when politicians shame the competition, THEY can't build a tanker, THEY haven't ever built a tanker. That's too much ego by politicians. They can build tanker, they haven't done it yet. We are arguing CHANGE right now in a lot of industries. Change the way plans are offered, be more flexible in the application idea, treat the customer better and listen to them. The Air Force thinks Northrup has a better idea. It's a different way to build the KC-X. Left to decide with two plans, Air Force picked what they think is a BETTER RELATIONSHIP for this project. It's a more personal decision than engineering specifics. The 330 is a more modern airframe, while the 767 has an ending date in a few years. It will be different than dealing with Boeing. America didn't have the jobs, still has to be creative trying to replace them. In my mind, government has to tell the car manufactures, no more. No more gasoline and oil based engines by 2012. Force industry to change the way they create these machines. Boeing was told to change. I didn't choose quotes to support my opinion, I chose them to show they confused me since I'm not in the industry. If the Air Force says, "We want the best plane" and then proceed to give a contract to a company that won't provide the best plane, that confuses me. Also if the Air Force just wants Boeing to roll over and not dispute the decision, that's pretty naive and unfair. This decision doesn't just affect our soldiers. Link to comment Share on other sites More sharing options...
mjah Posted March 2, 2008 Share Posted March 2, 2008 Alright! If the Air Force says, "We want the best plane" and then proceed to give a contract to a company that won't provide the best plane, that confuses me. Agreed -- that would confuse me, too. It sounds like that probably didn't happen here. But in that theoretical scenario, it would be confusing. Also if the Air Force just wants Boeing to roll over and not dispute the decision, that's pretty naive and unfair. Again, I agree. But I imagine there are probably some back-room stories that we aren't hearing about, and the Air Force is saying, "Give it a rest Boeing. Just stop." I'm not a rah-rah Air Force guy, by the way. But I know how suppliers work, especially with this much money on the table. There is a lot of arm-twisting and ridiculous shadiness going on, and you never know who's lying right to your face. If I had to put money down on this one, I'd bet on my conjecture that the Air Force has heard more than enough from Boeing in private and is ready to move on without a lengthy appeal that they know won't change their decision. All it will do is cost money and drag up a bunch of dirty launfry that nobody wants to air. Link to comment Share on other sites More sharing options...
jnhay Posted March 2, 2008 Author Share Posted March 2, 2008 I'm not a rah-rah Air Force guy, by the way. But I know how suppliers work, especially with this much money on the table. There is a lot of arm-twisting and ridiculous shadiness going on, and you never know who's lying right to your face. If I had to put money down on this one, I'd bet on my conjecture that the Air Force has heard more than enough from Boeing in private and is ready to move on without a lengthy appeal that they know won't change their decision. All it will do is cost money and drag up a bunch of dirty launfry that nobody wants to air. I'll interested to hear about some of those things. Link to comment Share on other sites More sharing options...
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