Defense Contracting: Who’s in Charge?

October 1st, 2008 | Sources: Wall Street Journal

Subjects: ,

The Pentagon just postponed until after the elections a $40 billion competition to determine which company will supply aerial refueling tankers to the US Air Force.

The Air Force has tried for 7 years replace its tankers which average nearly 50 years old.

The Pentagon’s decision represents victory for Boeing Co. Boeing has held the tanker contract for decades, but it apparently lost the contract earlier this year to a JV involving European Aeronautic Defense and Space Co. (EADS, makers of the Airbus) and Northrop Grumman Corp.

At the time, Boeing wouldn’t go quietly. It protested to the GAO that the selection process was flawed. It called in favors from politicians who decried the decision to award the contract to a team including, gasp! A foreign country! And before you can say “fasten your seatbelt,” the contract was voided.

Then, Boeing grew concerned that its bid on the revised contract also wouldn’t pass muster, so it threatened to pull its bid altogether unless it was given more time to prepare. If Boeing doesn’t bid, the Pentagon is left with only one bidder. This is unacceptable, especially in an election year, so the Pentagon punted the competition all the way to next summer.

Ironically, Top Gun McCain could be president then. McCain, it happens, is a longtime critic of Boeing. His office helped open the competition to EADS/Northrop in the first place.


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