Boeing Got What it Deserved
In 2001 the USAF selected the Boeing KC-767, a modification of their commercial 767 aircraft, to replace 100 KC-135s, the oldest tankers in USAF service. However, not satisfied with landing a major contract to manufacture aircraft for the USAF, Boeing had to milk even more cash out of DoD. Rather than buy the tankers, the procurement contract was arranged to lease the aircraft, at significantly greater expense. Criticism of this contract began in Congress, with one of the leading critics being Republican Presidential candidate and Arizona Senator John McCain. The Congressional Budget Office joined the rising chorus of condemnation for the more expensive arrangement of leasing the aircraft, instead of purchasing them outright. Then in 2003, a DoD procurement officer who had worked on the tanker deal and later went to work for Boeing was indicted and later convicted on corruption charges. The fallout from the scandal felled Boeing's CEO and CFO. In 2006, the KC-767 deal was canceled, and bidding on the 100 KC-135 replacements was re-opened.
By January 2007, the tanker contract had become even more lucrative: it now called for the purchase of 179 tankers and was worth an estimated $40 billion. The only two competitors for the contract were Boeing, with its KC-767, and a revamped proposal for a modified Airbus A-330, to be assembled in the United States by the American defense contractor Northrop Grumman. On February 29th, the USAF announced that the modified Airbus, designated the KC-45, had won the contract.
Boeing deserved to lose. They had originally won the contract under terms that were slanted to be favorable to their KC-767. Being too greedy to accept a fat defense contract when they got one, they sleazed their way into an even more lucrative deal that essentially scammed American taxpayers. Their greed literally cost them the contract, and every indignant politician on Capitol Hill should remember that.
Those indignant lawmakers are now tossing on the economic protectionist warpath, claiming that American jobs and money are going to a European company, when European governments would never buy an American product in a similar case. This is a bald faced lie, as Boeing themselves can tell you: among the customers for their KC-767 is the Italian Air Force, with the British Royal Air Force recycling British Airways 767s into KC-767s under contract with Boeing. The facts of the case is that the USAF is getting an arguably better plane at an indisputably better price, and Boeing is being punished for their effort to fleece the American taxpayer in the bargain. To counter the legislators thundering about economic hard times and security in time of war, this writer would point out that the American people need their tax dollars efficiently spent in hard times, not scammed away; and the US military needs the best equipment possible, chosen in fair and open bidding. The deal to buy the KC-45 looks pretty good on both counts.
Published by Rich Thomas - Featured Contributor in Travel
A Kentuckian and longtime resident of Washington, DC with an MA in international affairs, Thomas splits his time between American and Portugal. He works as a freelance writer both in print and online, writin... View profile
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6 Comments
Post a CommentBoeing should NOT be granted another shot at this contract. This has dragged on long enough. The original contract that Boeing won for this new aircraft for the USAF was overturned because it was determined that "gross corruption" had taken place with regard to Boeing obtaining the contract. Now, they want to have this contract overturned because it partially involves aircraft from Europe? EADS intends to open a factory in Mobile, Alabama to manufacture these aircraft. How is that causing us to lose jobs? It seems to me that it is creating jobs. Northrop Grumman will continue to employ thousands and need to hire thousands more in the United States to the fulfill the contract. What is the problem? The senators and congressman most opposed and vocal about Northrop being awarded the contract are from the states where Boeing has large plants. This just wreaks of more corruption to me and of more waste in time and money. Boeing created this situation for themselves.
I'll email the link to this article to my dad, he's an aircraft engineer (not at Boeing :-) and will be interested in this. Good job.
You are absolutely right! Boeing did not have the best bid and to have awarded it to Boeing would have looked corrupt. Thanks for making me feel better about the workers, also. Very good points. While the federal government is busy doing the right thing - let's have them also look at alternatives to Halliburton :) I love your writing - very thought provoking and factual.
Yes, I know the employees of Boeing did not do anything to deserve this, but they will be alright. They might not get the tanker deal with the USAF, but they have one with the Italians, Japanese, and UK. Also, business for the 787 is booming. However, even with particular officials gone, to have still given Boeing what amounted to a no-bid contract would have been encouraging all other government contractors to pad contracts whenever they could possibly get away with it: why not try to milk Uncle Sam, because even if you get caught you'll get the contract anyway? The "punishment" was to subject Boeing to fair, free market competition, and they lost.
Very informtive article presenting the other side of the story, Rich. Great job. When I first heard of this, I took the same road of - oh my gosh, how could they award this to a foreign company? Your facts about the fleecing of America by Boeing's greed and corruption sheds a new light on the topic. My only concern is that those Boeing execs are no longer there and the workers in the trenches of Boeing need their jobs. Too often in American companies, the workers are the ones who suffer for the bad acts of greedy execs. Somehow we have to stop THAT behavior - NOT punish the workers for it.
Well said. As if contracting companies don't make enough off of the government as it is. Its a greedy industry. Im happy to see that for once, the government employed some sense in using our tax dollars.