November 11, 2009
US Senator John McCain, whose investigation helped derail an earlier USD$23.5 billion Air Force plan to lease and buy 100 Boeing tankers, has raised serious concerns about the Pentagon’s latest attempt to replace its fleet of KC-135 aircraft.
In a letter to Defence Secretary Robert Gates dated October 29, McCain asked a series of detailed questions about how bids for the programme would be evaluated, how decisions were made about requirements for the new planes, and whether the new rules would favour mostly smaller planes.
Northrop Grumman and its European partner, Airbus parent EADS, won the last competition with their larger A330-based tanker, beating the smaller 767-based tanker offered by Boeing.
Northrop has complained that the draft rules for the next competition, released by the Air Force in late September, are give Boeing and its smaller plane an unfair advantage.
Boeing and its supporters, meanwhile, question why the Air Force has decided to disregard a preliminary World Trade Organisation ruling that found that Airbus benefitted from billions of dollars of illegal subsidies.
Boeing supporters argue the subsidies give Northrop and EADS an unfair cost advantage in the US competition.
In his letter, which echoed concerns McCain raised in October, the senator questioned why the Air Force decided to focus on fuel-rate usage and military construction costs when assessing total ownership costs, instead of including the broader costs generally considered.
He asked how the planned process would assess the relative developmental and integration risk among the offerings, noting that Congress recently passed an acquisition reform law aimed at minimising discovery of problems late in the process.
McCain also asked how the Air Force decided which of the previous 800 requirements to make mandatory or non-mandatory, and whether the Pentagon’s Joint Requirements Oversight Council had been involved in those decisions since it had validated the same requirements that underpinned the last competition.
Northrop has argued that the Air Force’s decision to pare the requirements to 373 mandatory and 93 non-mandatory ones puts significant issues such as the fuel offload rate for the planes on the same level with less serious issues such as water flow rate in on-board toilets.
Finally, McCain asked Gates to explain how he intended to ensure “robust, independent oversight” of the competition, given the history of the programme.
Defence analyst Loren Thompson of the Virginia-based Lexington Institute first reported McCain’s letter in a column published on Monday, saying he had weighed in “on Northrop’s side,” but the letter’s content was not disclosed until now.
Thompson also raised a potential conflict of interest in a November 6 blog posting. He said employees of the Government Accountability Office, which rules on federal contract protests, were recently organised by the International Federation of Professional and Technical Engineers union, which is part of the AFL-CIO and represents 85,000 white collar workers, including some at Boeing.
“So if Northrop loses the next round of competition and lodges a protest, couldn’t it allege that GAO is conflicted and thus not a suitable arbiter of the protest?” he wrote.
The union issued an 11-page pamphlet supporting Boeing’s bid and its protest of the last tanker contract, which was initially awarded to Northrop/EADS before being overturned.
(Reuters)
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