So Boeing lost fair and square because Airbus offered the better package. Why did I knew they couldn't give it a rest? So of course the state will help them now. That's some special form of capitalism. Boeingism-communism maybe.
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http://www.nytimes.com/2008/06/19/bu...4/Y6XoJpHDk1FA
Audit Says Tanker Deal Is Flawed
Northrop Grumman, via Reuters
EADS and Northrop Grumman won out in February with plans for a refueling tanker, in a rendering above with a B-2 bomber.
By LESLIE WAYNE
Published: June 19, 2008
In a stunning turnabout for the Boeing Company, government auditors on Wednesday upheld the company’s appeal of the Air Force’s decision to award a $35 billion contract to build midair refueling tankers to a partnership of Northrop Grumman and the European parent of Airbus.
In February in Everett, Wash., protesters echoed the calls on Capitol Hill, arguing that Boeing should build the tankers.
The action is yet another twist in the competition for one of the modern military’s most expensive — and most controversial — procurement programs. In February, when the Air Force awarded the contract to the international partnership, it set off a trans-Atlantic battle over jobs and national pride.
Boeing quickly appealed the decision, and members of Congress, arguing that key military contracts should remain in American hands, rallied on behalf of Boeing.
The auditors, with the Government Accountability Office, agreed with Boeing that the Air Force unfairly evaluated the merits and overall cost of the Boeing bid, and urged the Air Force to reopen negotiations. The tanker contract, which could eventually grow to $100 billion to build a fleet of 179 refueling planes, is one of the most lucrative ever awarded by the Pentagon.
“Our review of the record led us to conclude that the Air Force had made a number of significant errors that could have affected the outcome of what was a close competition between Boeing and Northrop Grumman,” said the G.A.O., the agency that Congress has designated to review federal contract disputes. “We therefore sustained Boeing’s protest,” it added.
The agency report, while a major coup for Boeing, is a setback for the Air Force, whose credibility is in tatters over the besieged procurement program and other recent scandals.
In a statement, the Air Force said it would not decide whether to reopen the bidding for the contract until it had fully reviewed the 69-page G.A.O. report. “Once the review is complete, the Air Force will be in a position to determine the best course of action,” said the Air Force statement.
Lt. Col. Karen Platt, an Air Force spokeswoman, said: “We don’t know the way forward right now. It is a huge document, and it will take time to review it.” The Air Force has 60 days to respond to the G.A.O. report.
The controversy spilled over into presidential politics as well. One of the leading players in the tanker contract dispute is Senator John McCain, the presumptive Republican nominee, who scuttled an initial deal between the Air Force and Boeing in 2004 as a member of the Senate Armed Services Committee.
That plan, in which the Air Force was to have leased the tankers from Boeing, collapsed in a corruption scandal that sent two Boeing executives to prison and later cost the chief executive his job.
This setback, in turn, opened the door for a challenge to Boeing from Northrop Grumman and the European Aeronautic Defense and Space Company, known as EADS, eager to do more business with the Pentagon.
Mr. McCain’s top advisers, including a co-chairman of his presidential campaign, were lobbyists for EADS. And Mr. McCain had written to the Defense Department, urging it to ignore a trade dispute between the United States and Europe over whether Airbus received improper subsidies. Mr. McCain said that he was asking the Air Force only to maintain a level playing field as it considered the two bids.
Democrats immediately seized on Mr. McCain’s role on Wednesday, suggesting that his efforts could lead to a loss of American jobs. A press release issued by the Democratic National Committee carried a headline saying that “McCain mimicked EADS every step of the way” on a deal that “sent American jobs abroad.”
Senator Barack Obama, the likely Democratic nominee, did not echo this line of commentary, but said he “applauds” the G.A.O. recommendation and added that the tanker competition “must be reopened to ensure a fair and transparent process.”
At a news conference in Springfield, Mo., Mr. McCain also called for the Air Force to reopen the competition. “Obviously, they need to go back and redo the contracting process again,” said Mr. McCain, adding that he hopes “that this time they will get it right.” He also defended his role in the demise of the Boeing-Air Force deal: “I’m still proud that the first time around, I saved taxpayers $6.2 billion.”
Because of the need to keep some of its report confidential, the G.A.O. released only a three-page summary. In it, the G.A.O. said that the Air Force had made “unreasonable” cost calculations which, when corrected, would make Boeing the lower bidder over time. It also said the Air Force had “conducted misleading and unequal discussions” with Boeing when the Air Force indicated to Boeing that it had satisfied program requirements when, in fact, it had not.
The G.A.O. ruling is only a recommendation and does not mean that Boeing will prevail in the end. But given the strong wording of the report and that the G.A.O. upholds only a small number of contract protests, analysts say that the Air Force is likely to give Boeing a second chance.
“This means a recompete,” said Richard Aboulafia, an aerospace analyst with the Teal Group, a consulting firm in Northern Virginia. “And it gives Boeing a strong chance.”
In Paris, there was disappointment mixed with hope. “Though we are disappointed, it is important to recognize that the G.A.O. announcement is an evaluation of the selection process, not of the merits of the aircraft,” Louis Gallois, the EADS chief executive, said at a Paris reception. He added that he remained confident that the Airbus aerial tanker, which is a version of its A330 commercial plane, was “best suited to meet the Air Force’s critical mission requirements.”
But on Capitol Hill, there was jubilation. Lawmakers from Washington, Kansas and Missouri gathered for an exuberant news conference. Still, they said they would wait to see what the Air Force did before taking any legislative steps. Representative Todd Tiahrt, Republican of Kansas, even went so far as to hold up a banner that said “Vindication!!” and referred to the Airbus offering as a “French tanker.”
“Parents always say it’s not nice to say ‘I told you so,’ but we told you so,” said Senator Pat Roberts, Republican of Kansas, where Boeing has operations. Representative Dave Reichert, Republican of Washington, said Boeing workers were rejoicing. “Over 20,000 of my constituents are Boeing employees,” he said. “And I can almost hear the cheer all the way from Washington State here to Washington, D.C.”
Mark McGraw, Boeing’s vice president for tanker programs, said, “We welcome and support today’s ruling by the G.A.O. fully sustaining the grounds of our protest.” Boeing’s stock rose 27 cents on Wednesday to close at $74.65, while Northrop shares fell $1.08 to $70.01.
Boeing’s decision to lodge a protest was a bold one, and it risked alienating the company’s biggest customer. At the time of the decision, Air Force officials had sent out strong signals that they hoped Boeing would not take the course that it did, arguing that a protest by Boeing would only further delay a needed program in a time of war.
But Boeing did so anyway, mounting a multimillion-dollar advertising and public relations campaign and encouraging members of Congress from states where Boeing provides jobs to rally on its behalf. It has run full-page color ads in major newspapers and in trade publications read by members of Congress and Pentagon officials.
For the Air Force, the tanker competition was also about its own reputation and ability to run a fair and honest competition after the 2004 Boeing-Air Force deal failed amid evidence of a pattern of pro-Boeing favoritism within the Air Force.
On Monday, the Pentagon strongly defended and stressed the importance of getting new tankers into its fleet. Geoff Morrell, the Defense Department spokesman, said: “We believe that the acquisition and contracting process that eventually produced Northrop Grumman and EADS as the winner of this deal was a fair and transparent one. It was very deliberate.”
), I'm not at all surprised that they screwed up in the contracting process. 
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