Tanker Flap Reflects Pattern Of Bias

Issue Brief

The Air Force’s latest mistake in managing its star-crossed tanker competition appears to be a simple clerical error. But look a little closer at how the service responded to its mistake, and something more serious begins to emerge: the latest instance in a subtle pattern of bias against the Boeing team. A similar pattern of bias aborted the original tanker competition by handing the aerospace giant the basis for a successful protest. Perhaps you think that after that first debacle, the Air Force changed course and stopped skewing its deliberations. Read on.

The latest manifestation of bias is reflected in how the Air Force reacted to its error in sending sensitive ratings of each competing aircraft’s warfighting effectiveness to the wrong team. Once it realized it had erred, the service sought to minimize the significance of the mistake. Air Force Chief of Staff Gen. Norton Schwartz stated that the two companies had reacted similarly to receipt of the sensitive information, and no proprietary data were disclosed. Both statements were wrong. The EADS recipient had viewed the information, whereas the Boeing recipient had not. Furthermore, the Boeing mission-capable rates reflected in the tables viewed by the EADS employee were indeed based on proprietary data.

Gen. Schwartz may have thought his formulation of what transpired was necessary to keep the tanker competition on track for an award early next year, but when that behavior is just the latest instance in a continuous pattern that always favors one side, the foundation for a legal protest is created. So far in the current competition, the Air Force has: delayed a deadline to help EADS complete its proposal; modified the request for proposals to eliminate secure communications requirements EADS could not meet; permitted EADS to deliver late responses to engineering questions posed by evaluators; employed modeling scenarios that enable the EADS plane to use basing options not available to the Boeing plane; and now mischaracterized the significant competitive advantage EADS received through the improper release of sensitive information.

More fundamentally, the Air Force has refused to consider a World Trade Organization ruling that the aircraft EADS is offering in the tanker competition probably would not exist at all were it not for the use of $6 billion in illegal “launch aid” from European governments. Those subsidies have enabled EADS subsidiary Airbus to unfairly produce and price its planes, and the planes therefore should be subject to countervailing measures that would adjust their cost to eliminate the advantage conferred by predatory trade practices. But the Pentagon refuses to consider the trade body’s findings in its tanker deliberations, effectively rewarding EADS for its illegal behavior.

The Air Force thus persists in a pattern of bias that stretches all the way back to the beginning of the first tanker competition in 2007, when the service modified its request for proposals in response to a threat by the Northrop-EADS team to withdraw. Apparently, the service is so intent on having two bidders that it is willing to bend rules and ignore wrongdoing to keep the competition going. The amazing thing is how little it has gotten in return from EADS: even as the company’s U.S. leader was publicly downplaying the significance of the latest Air Force mistake at a media event last week, offstage he was advancing the cause of a split tanker buy. The inefficiencies of dividing production between both teams would undermine Air Force plans to buy a reasonable number of new tankers each year, but it has long been a cornerstone of EADS strategy for selling its tanker to a misguided Pentagon.