March 9th, 2010
01:42 PM ET

Is Boeing's all-but-assured tanker bid as good for America as it seems?

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David Gewirtz | BIO
AC360° Contributor
Director, U.S. Strategic Perspective Institute

You may not know it, but yesterday the earth shook in America's military-industrial complex. The largest procurement deal in Air Force history now seems a lock for Seattle-based Boeing.

This is a story of American lives and livelihood, where nothing is truly as it seems.

Let's first look at what's at stake. When American military planes fly long distances, they need to be refueled in the air. This extremely dangerous dance is part of what gives America its advantage in the skies, but many of the KC-135 tankers we use are 50-years-old.

For the past decade, the Air Force has been trying to buy itself some new tankers. The price tag is the single largest in Air Force history, ranging from some $35 billion up to $100 billion dollars.

As you might imagine, with up to $100 billion at stake, a lot of companies will want a piece of the action. And it's here that things start to get ugly.

Boeing was America's favorite. But the European maker, Airbus, had some innovative design features that might make for a better solution. Of course, Airbus is European, so selling that kind of outsourcing wasn't easy.

Enter Northrop, an American military contractor that promised to build the Airbus design in California and Alabama, bringing in thousands of much-needed jobs.

You want messy? I'll give you messy. Boeing actually won the contract originally in 2004, but the whole thing fell apart when it turned out they procured the Air Force's procurement officer.

An Air Force procurement staffer, one Darleen A. Druyun, was negotiating for a job at Boeing while awarding the first stage of the contract to - you guessed it! - Boeing. She was sentenced to nine months in jail. Boeing Chief Financial Officer Michael Sears was sentenced to four months. Boeing CEO Philip Condit resigned.

Northrup jumped in and actually won the contract in 2008. But this time, the GAO nixed the deal because Boeing didn't get enough credit for some features in the bidding process.

Meanwhile, our air crews are docking ancient planes in mid-air and pumping volatile cocktails of explosive gas through tubes in the sky.

It took another few years for the Air Force to revise its requirements, which it published a few weeks ago. Today, Northrop pulled out, saying essentially that the requirements spec written by the Air Force could pretty much only be met by Boeing.

Some pundits are heralding this as a victory for America, since Boeing is American and Airbus is not. But it's not necessarily that clear, as I found during the year I spent doing research for How To Save Jobs.

In 2008, John Young, the Air Force's undersecretary for acquisition, technology and logistics claimed the Northrop/Airbus bid for the first delivery of 68 aircraft was $3 billion cheaper than Boeing's.

And $3 billion is a lot of money.

Aircraft like the proposed Boeing KC-767 or Northrop/Airbus AC330 mid-air refueling tankers have tens of thousands to hundreds of thousands of parts. Heck, the old KC-135 has more than 32,200 steel fasteners and 19,500 aluminum rivets alone, according to Boeing.

While Boeing is an American company, Northrop expected to add more than 7,500 jobs in Southern California, alone.

And it's not like Boeing is buying everything from America. According to the Web site GlobalSecurity.org, "Boeing's proposed tanker includes parts manufactured in Japan, United Kingdom, Canada and Italy," and "Northrop Grumman's tanker includes parts built in the United Kingdom, Germany, Spain and France - countries exempt under the Buy America Law."

The Air Force's decision to revise its specs apparently in favor of Boeing will do some good. Since Boeing is now all but assured to get the gig, the process should start to move along quickly and our air crews now have a chance of getting a new plane before Chelsea Clinton runs for president.

But we'll never know if it was really the best decision. We'll never know if more American jobs would have been created by Northrop. We'll never know if our air crews would have been safer in the Airbus design. And we'll always wonder if Boeing pulled another behind-the-scenes stunt that's going to send more people to jail.

Hey, a hundred billion here, a hundred billion there. Pretty soon, you're talking real money

Follow David on Twitter at @DavidGewirtz.

Editor’s note: David Gewirtz is Director of the U.S. Strategic Perspective Institute and Editor-in-Chief of the ZATZ magazines. He is a leading Presidential scholar specializing in White House email. He is a member of FBI InfraGard, the Cyberterrorism Advisor for the International Association for Counterterrorism & Security Professionals, a columnist for The Journal of Counterterrorism and Homeland Security, and has been a guest commentator for the Nieman Watchdog of the Nieman Foundation for Journalism at Harvard University. He is a faculty member at the University of California, Berkeley extension, a recipient of the Sigma Xi Research Award in Engineering and was a candidate for the 2008 Pulitzer Prize in Letters.

Filed under: David Gewirtz • Economy • Job Market
soundoff (2 Responses)
  1. Michael

    Hey Airbus is based in the United Kingdom, Germany, Spain and France. Shouldn't Airbus be exempt from the Buy America law, too?

    March 9, 2010 at 2:50 pm |
  2. Tim Gibson

    Petty cash right!

    March 9, 2010 at 2:12 pm |