D. Dowd Muska

 

Politics and Protectionism by the Tankerful

April 14, 2016

Congressional auditors’ latest update on the KC-46A might tempt one to think, “Hey -- here’s a Pentagon procurement that works.”

The Government Accountability Office reports that for the third consecutive year, Boeing’s “widebody, multirole tanker” has “reduced its acquisition cost estimate.” The total-spending projection “has decreased $3.5 billion or about 7 percent -- from $51.7 billion to $48.2 billion -- since the program started in February 2011.” The KC-46A’s managers, at Wright-Patterson Air Force Base, believe that their contractor “will meet performance goals.” The GAO’s glowing report card is due, in part, to “stable requirements” and “fewer than expected engineering changes.”

Good news. But let’s look at a little history.

In December 2001, conservative journalist Robert Novak highlighted remarks Sen. John McCain (R-AZ) made before a “deserted Senate and an inattentive nation.” The solon was enraged over an attempt to use “the Department of Defense as an agency for dispensing corporate welfare.” As described by Novak, the no-bid plan was to have the Air Force “lease 100 of Boeing’s 767 airliners and return them 10 years later to the airplane manufacturer, with the U.S. taxpayer paying for conversion to military tankers and reconversion back to civilian airliners.”

Left-right opposition quickly coalesced, with Citizens Against Government Waste, Public Citizen, Americans for Tax Reform, the Congressional Accountability Project, the National Taxpayers Union, the Project on Government Oversight, and Taxpayers for Common Sense signing a letter that decried “this specific siphoning of taxpayer money to the Boeing company.”

But the sweetheart deal -- crafted even before 9/11 decimated Boeing’s 767 sales -- proved tough to kill. One guess as to where the Evergreen State’s congressional delegation stood. Speaker of the House Dennis Hastert (R-IL) was a fan. So was Deputy Defense Secretary Paul Wolfowitz. It took almost two years to reach a buy 80/lease 20 compromise. By then, a senior Air Force acquisition officer involved with the imbroglio, who had since gone to work for Boeing, was under suspicion. She eventually pleaded guilty to one count of conspiracy, and received a prison sentence, for negotiating a job with her soon-to-be-new employer at the same time as Boeing was pursuing its original lease contract.

In 2004, Defense Secretary Donald Rumsfeld scrapped the buy some/lease some deal. RFPs were requested in 2007, with Boeing and a partnership between Northrop Grumman and Europe-based Airbus submitting bids. In 2008, Boeing lost. Predictably, the company’s powerful congressional patrons, with the assistance of the International Association of Machinists and Aerospace Workers, launched a paroxysm of patriotic poppycock. And Boeing formally protested the DOD’s contract award.

Writing in The Washington Post, far-left columnist Steven Pearlstein warned that reversing “this contract decision would set a terrible precedent. It would signal to allies that while their governments are expected to buy our stuff, we won’t buy theirs. It would mean that Boeing would become the monopoly supplier of transport planes to the U.S. government, with the power to dictate prices and terms. And the message it would send to every contracting officer in every government agency is that if they know what is good for their careers, they will put political considerations ahead of getting the best value for the American taxpayer.”

The Wall Street Journal’s editorial page agreed: “The Pentagon’s job is to defend the country, which means letting contracts that best serve American soldiers and taxpayers, not certain companies. Defense Department rules explicitly state that jobs cannot be a factor in procurement and that companies … must be treated as if they are U.S. firms in contract bids. Such competition ensures that taxpayers get the best value for their money and soldiers get the best technology.”

But the GAO sustained Boeing’s protest, on technical grounds. (Auditors stressed that their finding “should not be read to reflect a view as to the merits of the firms’ respective aircraft.”) The Pentagon wasn’t obligated, but it agreed to a rebid, then delayed the competition until after the 2008 presidential election. Boeing whined about not having enough time to prepare a fresh proposal. Northrop Grumman walked away, leaving Airbus on its own.

In 2011, DOD made the “right” decision. It went with the “American” company. Airbus declined to protest. Boeing’s had some hiccups along the way, but it is scheduled to deliver 18 planes by August of next year.

Politics, corruption, incompetence, protectionism -- it’s been a decade and a half of constant embarrassments for the effort to modernize Washington’s geriatric fleet of aerial refueling tankers. For now, the program seems to be on track. It’s about time.

D. Dowd Muska (www.dowdmuska.com) writes about government, economics, and technology. Follow him on Twitter @dowdmuska.

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