In a highly contentious bid the United States Air Force has chosen America’s Boeing Corporation over Europe’s Airbus to build the next generation aerial refueling tanker. Political advisories Senators Richard Shelby (Republican of Alabama) and Patty Murray (Democrat of Washington State) joined forces with the European Aeronautic Defense and Space Company (EADS Airbus’ parent) and Boeing lobbyists respectively, in an all-out campaign to woo governmental procurement officers.
Europeans have argued that the American process resembles protectionism while US protagonists complain that Airbus subsidies unfairly reward the Europeans. In the end, price determined the winner according to Pentagon officials; however, not until the bidding process was redesigned and both companies rebid. Boeing now has the lucrative contract that could approach $100 billion over its life according to Christopher Drew of The New York Times.
Political Fight
Lobbying efforts intensified last summer when Boeing officials paid nearly $5 million on commercial advertising in the Washington DC area compared to Airbus’ $1.7 million effort according to Evan Tracey, president of the Campaign Media Analysis Group. High powered Senators also got into the fray as Senators Shelby and Murray fought to have the companies in their districts win the project. Alabama estimated the EADS bid would generate 45,000 US jobs while Boeing said they would employ an additional 50,000 American workers, according to a BBC report on February 25, 2011.
The war of words and innuendos did not end with the Pentagon’s award to Boeing. Angered over the loss, (Airbus promised to use an assembly facility in Alabama) Shelby is seen as the company’s most vocal protagonist. The New York Times article, reported the Alabama Senator, derogatorily said, “Only Chicago politics could tip the scales in favor of Boeing’s inferior plane.” EADS entered the fray and argued that its plane was “proven, more capable” and the Air Force chose a “high-risk, concept aircraft.”
However, Dennis Muilenburg, president of Boeing Defense, Space and Security, countered Airbus’s accusation and insisted, the award was "a tribute to the air force and defense department officials who…[selected] the right plane for the mission.” On the economic side, Drew quoted Senator Murray, “Our economy has been struggling, and this…we really needed.”
Protectionism verses Subsidies
Boeing chief executive, Jim McNerney, said of the award, “the air force had chosen ‘an American-built’ solution,” according to Dominic Rushe of the Guardian Newspaper on February 25, 2011. Rushe states In this article that Senator Murray maintained the decision was "a major victory for the American workers, the American aerospace industry and America's military.” European response was swift as EADS, jointly owned by the Spanish, French and German governments, accused the US government of protectionism. Fearing the loss of thousands of jobs and billions of euros in revenue, European officials indicated they were “likely to press Washington to revisit the decision,” Rushe claimed.
On the other hand, Boeing officials feel Airbus had an advantaged gained by illegal grants and unfair competition. The Times presented that in June 2010 the World Trade Organization ruled that “Airbus had benefited from four decades of improper subsidies...from European governments….” Partisan congressional leaders argued Pentagon officials should consider these effects when deciding on which aircraft to purchase. Nonetheless, government officials reiterated they would buy the most competitive product.
Deja Vu All Over Again
The Pentagon’s decision seems to have ended a decade long process, started three times since 2001, to replace its aerial refueling tankers. Embarrassed, it seems the government will finally allow the US Air Force to replace her aging fleet of flying gas stations ordered during the Kennedy administration.
- The first attempt to rebuild a tanker fleet ended in 2001, when Arizona Senator John McCain discovered a corruption plot in the Boeing proposal and forced cancellation.
- Bid number two was awarded to EADS in conjunction with US manufacturer Northrop Grumman in 2008; however, US auditors discovered the government’s evaluation was too subjective and unfairly favored Airbus. This conclusion required another proposal.
- In 2010 Northrop dropped out of the undertaking, thus prompting government officials to extend the time for EADS to rebid. Boeing appeared to have given up hope of winning because the “Pentagon had…implemented several evaluation rules that seemed to favor the European company,” The Times article contended. Boeing won.
Not Only the Sales Price
In the end, deputy defense secretary William Lynn said, “ Boeing was the clear winner” by the formula the government used. The air force challenged the war-fighting capabilities of both aircraft as well as their forty year operating costs in reaching their decision. But alas, the tipping point was that Boeing’s price was over 1 percent lower than Airbus. Lynn told The Times, “If the bids had been within 1%, the Air Force would have considered…a tiebreaker…[which was] widely thought to favor…EADS.”
Boeing has won an extremely antagonistic battle for the next group of US Air Force aerial refueling tankers over arch rival EADS’s Airbus Industries. The lobbying tactics and political alliances both companies made saw each business put forth separate assertions. Airbus claimed the US was protectionist while Boeing contended Airbus had illegal support from European governments. Ultimately, the Pentagon chose “the best aircraft” for the price and operational capabilities. That is until the next bid, if there is one?
Frank W. Hardy - Frank has 36 years of airline experience navigating every ocean & continent. Flying 25,000 hours in 42 years presents a rare historical ...
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