TWB On Hiatus

Dear Tanker War Blog readers:

Due to a number of events including the delay of the tanker rebid process until next year, the strike at Boeing, Hill staff members focus now turning to the financial crisis, and other members still out campaigning for state and national candidates, our blog is on extended hiatus.

We hope to have our core team back together mid to late November, but we will be on hiatus until then.

We will still be monitoring the e-mail occasionally so please continue to send us tanker related information.

KC-30 Supporters Hit New Low

Fresh from swift boating General Handy, KC-30 supporters hit a new low this week by forming a front group called Alabamians to Build American Tankers (ABAT). They are running a smear campaign with radio ads and have set up their own website at bettertanker.org.

Here is the text of the ads:

Ad #1 - Alabamian Confronts Boeing
MAN: Boeing deserves the Air Force Refueling Tanker project because it's an American company employing American workers.
ANNCR: And Alabama where a better tanker would be built isn't in America?
MAN: You know what I mean, no sense creating new jobs in Alabama when we can do the work up in Washington State.
ANNCR: So 2500 new jobs in Alabama wouldn't help our national economy?
MAN: You can't build planes in Alabama.
ANNCR: Your company trusts Alabama workers to build high tech weapons, rockets and space vehicles.
MAN: But our Boeing planes are ready now.
ANNCR: Ready now? You mean the ones you promised Italy four years ago? Are those ready yet?
MAN: Hey, we're Boeing.
ANNCR: And the Alabama plane is newer, with better technology.
MAN: Hey, we're Boeing.
ANNCR: And the Alabama plane can carry more fuel, more passengers and more supplies.
MAN: Hey, we're Boeing.
ANNCR: Is that all you can say?
MAN: What else can I say? Clearly Alabama has a better tanker.
ANNCR: Paid for by Alabamians to Build American Tankers

Ad #2 - Boeing Can't Win
EFCT: Sound of jet engine whining along coming in several times during the ad
ANNCR: It seems like every time we hear about Boeing and military contracts we hear about cheating. The reason we are still trying to replace our aging refueling tankers is because Boeing executives were involved in a scandal of bribery and cheating in the last bid. Our Air Force is working hard to protect our country but it appears that Boeing's corporate policy is "if Boeing can't win no one can"...and that means our troops lose.
EFCT: Engine sputtering
ANNCR: May day may day
ANNCR: Paid for by Alabamians to Build American Tankers

Ad #3 - Alabama Can be Trusted
ANNCR: Boeing says America's in danger if Alabamians build refueling tankers for our troops. Boeing claims military technology will wind up overseas. Boeing's one to talk. Last February their engineer was arrested for sending trade secrets to Communist China. And, in June, the FBI caught a Boeing scientist with top secret defense information on his personal laptop. No telling where those secrets were going.
ANNCR: At lease we can keep a secret in Alabama. Paid for by Alabamians to Build American Tankers.

Just who is ABAT and who is funding them?

We would guess the members are a select group of people who either have been brainwashed by the local papers and pandering politicians or those who would benefit from an Airbus facility in Mobile. This seems to be the case as a news story on ABAT lists Mobile locals Bryan Lee, attorney/lobbyist Palmer Hamilton, real estate developer Paul Wesch, and accountant Mike Thompson as members.

We will not venture a public guess on who is funding them, but we probably all know who that is already.

We do know for sure that a PR firm that is doing work for ABAT is Strategy Public Relations in Mobile Alabama. And, a Ms. Krista Burroughs appears to be running at least the website efforts of this shameful campaign.

On Strategy's website it states Krista has:

"over 17 years experience in public relations, Krista is responsible for supervising our production quality and makes sure client services are delivered on schedule and on budget. In addition, she possesses strong and diversified managerial and administrative skills, over seeing day-to-day agency operations. Krista is also proficient in desktop and graphic design, having developed a number of various collateral and time-sensitive pieces. She is a certified webmaster, specializing in the industrial and entertainment field, and serves on the board of directors for the Mobile International Festival."

Well, she can now add outrageous propaganda director, EADS/Airbus apologist, and corporate attack ad specialist to that resume.

If you would like to comment either for or against her work please feel free to e-mail her at krista@strategy-pr.com, call (251) 432-9200, or even fax (251) 432-9209.

The two other members of the firm can be reached at dave@strategy-pr.com and jon@strategy-pr.com. You can track down the actual ABAT members and contact them on your own if you wish, but remember the old Southern saying about wrestling with a pig. You both end up dirty, but only your opponent enjoys it.

Boeing issued this response to the ABAT ads:

We have no idea who this group is or how it is funded. Boeing is the largest aerospace employer in Alabama. These ads are an affront to our more than 3,000 hard-working, highly-talented employees and their families in the state. They are also clearly a sign of desperation in support of our competitor. The ads do a disservice to our customer, the men and women who serve our country, more than 160,000 Boeing employees, and to Northrop-Grumman/EADS.

The GAO ruled that the recent tanker competition was seriously flawed and that the award to Northrop-Grumman/EADS should be recompeted. Our focus will remain on the new competition and getting the best technology to the warfighter and the best value to the U.S. taxpayer.

It is good to see Boeing taking the high road, but very disheartening to see some KC-30 supporters creating new ways to sink even lower.

(If anyone needs to know who really has the better tanker they can visit us at Tanker War Blog anytime.)

HAC-D Mark-up Analysis

There has been some reporting of the HAC-D bill mark-up tanker language mainly focused on the subcommittee's press release and the statement that it directs industrial base concerns be included in the evaluation.

Chairman Murtha's statement that the subcommittee "directs the DoD to comply with the GAO findings concerning the tanker award protest" is only now being highlighted. It should, as this limitation is probably the more important of the two provisions.

Among the bills provisions, that have already been reported, is limitation language that requires:

No consideration will be provided for exceeding key performance parameter objectives.

That DoD will more accurately determine most probable life-cycle costs over a 40- year life cycle.

The the winner of the competition be able to refuel all current Air Force fixed-wing tanker-compatible receiver aircraft.

Undersecretary Young has previously stated he will give this extra credit; we'll see what happens next.

Wynne: Blinded by Tanker Rage?

Just when we start to think former Air Force Secretary Michael Wynne might have something important to say he comes up spouting gibberish.

Take his latest interview with Air Force Magazine's Daily Report. In it he once again shows how, at the highest levels of the service, there is an alternate tanker reality.

Wynne thinks the service should be meaner to losers of procurement competitions:

Excessively kind language, he said, leads the losers to think they only lost by a hair. In the KC-X tanker competition, “We should have been harsher on the loser,” Wynne said during an interview July 28. However, the service refrained from frank comments. Instead of writing a " 'We don’t want you memo' " to Boeing after it lost to Northrop Grumman, the service crafted a " 'We like you, but you didn’t win' memo," Wynne said. “I just don’t think the write-up was harsh enough.” Boeing was apparently emboldened by the perceived narrow miss to launch its protest, which has put the coveted tanker contract back up for grabs.

From where we stand Boeing was emboldened because they could tell Air Force procurement personnel did not follow the RFP, were duplicitous in their discussions during the competition, and some even sold their integrity to spin public opinion against a Boeing protest. Also, the GAO decision revealed the competition was close; so we wonder how harsh Wynne could have made his comments.

They say hindsight is 20/20, but in Wynne's case it seems to be blind to reality.

[Note: After 30 July the article link will be broken. You must visit the Daily Report archives and pull up the July 30th edition to retrieve it.]

HAC-D Mark-up Today

Today at 11:00AM ET the House Appropriations Subcommittee on Defense will mark-up its FY 2009 Defense Appropriations bill.

If you remember our post in April, the FY09 budget has the Air Force request of $831.759 M for the "Next Generation Aerial Refueling Aircraft", which is a new budget item. (Source: pg 34, line #83 of FY09 RTD&E Programs Budget) There is also available in FY09 $239.8 M from the "Tanker Replacement Transfer Fund," which are funds remaining from FY05 and FY08 appropriations that went unspent.

Since the decision to recompete the contract, SecDef Gates had requested all FY2009 tanker funds be move to the Tanker Replacement Transfer Fund.

We will not opine as to what the Subcommittee will do in mark-up other to say that there should be active discussion on the amount tanker funding the Air Force needs given that the procurement has been delayed. Also, there may be some limitations placed on the tanker funding.

A limitation places a restriction on the expenditure of funds provided in an appropriations bill, either by setting a spending ceiling, or by prohibiting the use of funds for a specified purpose(s). Congress is not required to provide funds for every agency or purpose authorized by law. It may provide funds for some activities or projects under an agency, but not others. Precedents require that the language be phrased in the negative, for example, that none of the funds provided in this paragraph (typically an account) shall be used for a specified activity.(Source: Walter Kravitz, Congressional Quarterly’s American Congressional Dictionary: Third Edition, pp. 139-140)

Limitations included in the text of the legislation are legally binding; limitations provided only in the committee reports and managers’ statements are not legally binding, but are routinely followed.

At this point in the Tanker War nothing is routine, and language short of law will could very well be ignored by DoD. So, we expect the any tanker limitations to be in the legislation not just be report language.

Any cuts to or limitations placed on the tanker funding will be the first legislative action on the tanker issue since the GAO issued its decision. The Senate Appropriations Subcommittee on Defense is not scheduled to mark-up their bill until September.

Wynne Backs Tanker Split-buy

In an interview with Air Force Magazine former Secretary of the Air Force Michael Wynne states his case for awarding contracts for both the KC-767 and KC-30. He believes this may be the only way to resolve the legal impasse surrounding the tanker competition.

A spilt-buy has in the past been regarded impractical due to the increased cost of low rate production of 7.5 aircraft per year:

But Wynne, now out of office, said July 28 there is another way to approach the split buy: have each contractor build at the same annual rate that they would have in the winner-take-all scenario—upwards of 15. Keeping two suppliers would strengthen the industrial base, replace the Eisenhower-era KC-135 tankers “at a faster rate” and maintain competition “well into the future,” not a bad consideration since the Air Force needs to buy about 500 new tankers overall to replace its KC-135s, he said.

As for the higher costs of supporting two tankers lines, Wynne said, when asked, he would support applying some of the $5 billion in added procurement funds that the Air Force will reportedly receive in Fiscal 2010 to cover them.

We at Tanker War Blog think this might be a case of counting your tankers before they are hatched. There are no guarantees on increased funding in 2010. In fact, either candidate for President will probably cut DoD funding when they get into office. Also, if extra funding was available, are extra tankers more important than F-22, C-17, JSF, several space programs, or more ISR?

Wynne may have a point that Under Secretary John Young's solution of an expedited recompete may not get past the draft RFP stage based on the experience with the CSAR procurement:

Wynne said he hopes that the GAO will accept Young’s tack in trying to resolve the KC-X protest. “I worry because it is a very similar tactic to what I tried on the [combat search and rescue replacement vehicle program]—trying to simply address the issues that the GAO has brought forward,” he said.

The GAO did not accept Wynne’s approach to resolving the industry protests on CSAR-X and instead recommended that the Air Force reopen that competition more broadly, which USAF subsequently did.

DoD should issue the new draft tanker RFP this week or next. We will see if Mr. Young can make all sides happy enough to allow for the final RFP to be issued in mid-August without a protest.

We here at Tanker War Blog believe this will an extremely tough order to fill, but Mr. Young has the best chance of anyone in DoD to succeed. If he can't do it, no one can.

More Air Force Resignations

AP is reporting that the Special Assistant for Acquisition Governance and Transparency to the Secretary of the Air Force Kenneth E. Miller has resigned.

Mr. Miller is no stranger to Tanker War Blog and it is report that he is under investigation for leaking procurement information prior to its approved release.

In May we did a post we on him and his role in the tanker war. We had heard he may be retiring this summer, but are still surprised it has taken this long to show him the door.

Also, reported earlier today was the resignation of William C. "Bill" Anderson the Assistant Secretary of the Air Force for Installations, Environment and Logistics.

Mr. Andrerson's office had given some unsatisfactory answers to members of Congress about KC-30 Milcon costs, but this was a minor issue. We do not know of any big tanker related issues connected to his resignation.

At this point, most people here in DC are taking him for his word that the resignation is due to lack of leadership backing "necessary to lean forward to aggressively support" the service's Airmen. Given that Mr. Anderson clashed with a KC-30 supporter on joint-basing it rings very true.

Tanker News 28 July

The following tanker related items caught our eye:

Wash Post: Pentagon Auditors Pressured To Favor Contractors, GAO Says
Key passage:

The Defense Contract Audit Agency, which oversees contractors for the Defense Department, "improperly influenced the audit scope, conclusions and opinions" of reviews of contractor performance, the GAO said, creating a "serious independence issue."

The report does not name the projects or the contractors involved, but staff members on the Senate Homeland Security and Governmental Affairs Committee who were briefed on the findings cited seven contractors, some of whom are among the biggest in the defense industry: Boeing, Northrop Grumman, Fluor, Parker Hannifin, Sparta, SRS Technologies and a subsidiary of L3 Communications.

It is hard for us to understand how KC-30 supporters, both here and abroad, could bash the GAO and label their tanker contract protest decision as biased. Seems like the GAO is not afraid to call either side, or both, out if they think something is wrong.

China.org.cn : 1st Airbus segments arrive in Tianjin
Key passage:

The first aircraft segments for a planned Airbus A320 arrived in the new single-aisle assembly line in Tianjin on Friday from the Airbus production sites in Europe, Xinhua News Agency reported.

The segments include the forward and rear fuselage section, a pair of wings, the horizontal and vertical tailplane and engine pylons.

The assembly process of the first aircraft, which is for Sichuan Airlines, will start in August 2008. Delivery of the aircraft is scheduled for the first half of 2009. It hopes to begin producing four A320 planes a month by 2011.

Heck, why don't we just cut out the Mobile middleman and get Chinese assembled Airbus planes for the new tanker. At least then we can stop having to pretend an Airbus A330 can somehow magically be turned into an American made tanker.

Czech News: Czech Chief of Staff against purchase of EADS CASA planes
Key passage:

In June, Alenia Aeronautica lodged a complaint with the EC, the Czech anti-monopoly office (UOHS) and the Defence Ministry, challenging the Czech government's decision to buy transport planes for the military from EADS.

Alenia Aeronautica's representatives in the Czech Republic said the planned deal had breached the EU's principles of transparency and no discrimination in placing public orders.

Like the article above, this is not a tanker story per say, but it is good to know we are not the only country having procurement transparency problems when buying EADS aircraft.

What do French Men Want?

It is not that we are insensitive to their needs, but TWB has never really wondered what French men want.

But, an alert female reader who was doing some research -for what we did not ask- has informed us of the answer anyway. Or, at least the answer according to Google.

Surprisingly, it turns out that Google thinks that what French men want is Tanker War Blog. If you type in Google search what do French men want (without quotes) the first entry out of 1,860,000 sites is Tanker War Blog. Specifically this post another contributer did about a question a French Air Force officer ask SecDef Gates during a speech.

As you can see below the number two site is AmericanGirlsAreEasy.com while number three is a blog post on why French men wear Speedos.

To be honest though, beyond desiring the Air Force tanker contract, none of us at Tanker War Blog have any idea what French men want. Sorry ladies.

AmericanGirlsAreEasy says picking one up will not be a problem. But, if Sarkozy is any indication, before the French man of your dreams pops the question you will have have to be skinnier, better looking, and taller than him. Being a former model and a heiress is preferred, but not required.

Tanker Selection Breaks More Laws

Not satisfied with breaking just procurement law, by favoring the KC-30, the Air Force may also be breaking the laws of physics.

An article written by Jed Babbin, and published today by Human Events, claims that selecting the KC-30 goes against Newton’s Second Law of Motion and simple geometry. Mr. Babbin states:

According to the General Accountability Office decision overturning the contract award to Northrop-Grumman/EADS for the Airbus 330 tanker, “…there is no documentation in the record setting forth an analysis of whether Northrop Grumman’s proposed aircraft has sufficient operational airspeed when refueling the [deleted by GAO] to initiate an emergency breakaway procedure.”

What the GAO is saying, in its lawyerly language, is that the facts show that the Airbus 330 cannot reach a sufficient speed to pull away from one or more aircraft it’s supposed to refuel. And if it can’t, there could be a mid-air collision

Mr. Babbin then goes on to discuss another area the GAO found fault with the Air Force, overrun:

According to the GAO decision, despite the fact that the Air Force had told Northrop Grumman that the Airbus apparently couldn’t accelerate quickly enough and reach the speed set by Air Force standards to perform an overrun, the Air Force disregarded its own mandatory guideline to keep the Airbus eligible for the contract. And, as the GAO decided, they had no reasonable basis to do so: “…the record does not establish that the [Air Force] had a reasonable basis for concluding that Northrop Grumman’s proposed solution would allow its aircraft to obtain the requisite overrun airspeeds to satisfy this…requirement.”

Mr. Babbin then explains how the size of the A330 could hinder operations:

If the runway is a few feet narrower than the NATO standard, if the Airbus isn’t lined up with its right wheels on the farthest edge of the runway and if a lot of other ifs, the U-turning Airbus gets its nose off the runway and probably gets stuck.

We hope that the KC-30 team has all the documentation that the GAO says is lacking on these issues. Because, somewhere in the final frontier and beyond the grave, we know Scotty is saying, "Ya can't change the laws of physics!"

KC-30 team swift boats General Handy

KC-30 team’s July 11th entry in its “Tanker Truths” series attempts to portray retired USAF General John W. Handy as a flip-flopper on the tanker contract battle in the wake of his July 7th, 2008 Human Events article that details his support for the smaller Boeing tanker.

The central thesis of KC-30 team’s attack is based on their selectively edited quote of Gen. Handy from an August 3rd, 2005 article published in Aviation Week:

"In my humble opinion, the greatest need is a little more strategic-capable aircraft...I'm saying that the need is more in the KC-10-like aircraft."

We’ll sum up our points countering the KC-30 smear, and for those of you who want to delve deeper, we have included many of the links to General Handy’s tanker statements over the years:

First, the 2005 quote that the KC-30 team utilizes demonstrates nothing more than Gen. Handy’s preference that, in addition to replacing the KC-135Es, he also sees a need for more strategic KC-10-like tankers. Gen. Handy could be accused of carrying on the fine tradition of lobbying for more equipment for his pilots and Airmen, but not flip-flopping.

Second, the statement is essentially irrelevant to the current tanker battle, for in its Request for Proposal, the United States Air Force clearly outlined that the competition was for the sole purpose of finding a replacement for the KC-135 tankers. The only argument anyone can validly make using Gen. Handy’s words is that the Air Force was wrong in its decision to replace the KC-135 instead of the first getting more KC-10-like tankers.

Third, the insinuation that the KC-30 is a more strategic-capable aircraft like the KC-10 is just wrong. While the KC-30, as well as the KC-767, can carry more fuel than the KC-135, all these tankers fall far short of the refueling capabilities of the KC-10. (KC-10 w/356,000 lbs of fuel vs. KC-30 w/245,000 lbs of fuel)

Fourth, KC-30 team intentionally manipulates Gen. Handy’s quote in a way that drastically alters its meaning. The actual quote and passage from the Aviation Week article:

"In my humble opinion, the greatest need is a little more strategic-capable aircraft because we do have the R-model 135 to last for many more years," Handy told The DAILY Aug. 2. "I'm saying that the need is more in the KC-10-like aircraft."

Handy said he also favors replacing the KC-135 fleet but would do that after acquiring more strategic tankers. He said "the nation doesn't have an unlimited supply of dollars, and so you have to sequence these acquisitions as best as you possibly can."

From this full quote and passage you easily see Gen. Handy’s thinking. 1) Get more KC-10 type tankers, [Note: these new strategic tankers would not be replacements since the KC-10s are in good working order] 2) Replace the KC-135 Es. 3) Replace the rest of the KC-135 Fleet. As you can see, he qualifies all this by suggesting budget factors play a part in the sequencing.

Fifth, below we have listed other statements Gen. Handy has made on the tanker issue. It is worth noting that not once, in any of these articles, does Gen. Handy say anything that contradicts the statements in his Human Events article or the Aviation Week interview.

The only difference is that in the Aviation Week interview Gen. Handy adds that, in addition to the other tanker needs, he also sees the need for “more KC-10-like aircraft.” This is not a contradiction, but his view of procurement priorities at that time. It, as we have stated before, was also a nice bit of lobbying for more strategic tankers in addition to replacements for the KC-135Es that he was assured of getting.

Nowhere does he suggest the KC-10 fleet needs to be replaced, that the Airbus tanker is a more strategic tanker, or that the Airbus tanker would be a better solution to any of the tanker procurement issues he faced.

The KC-30 team wants you to believe their spin version in which Gen. Handy is flip-flopper and you should ignore everything he has said over a long history of testimony, articles, and speeches. We instead believe that you, the informed Tanker War Blog reader, should be the judge of Gen. Handy’s views.

In closing, we have noticed that several KC-30 supporters have attempted to insinuate that Gen Handy was somehow nefariously involved in the "tanker-lease scandal" because he sent, received or was CC’ed on some e-mails about the deal. Or, that he was somehow being paid by Boeing.

This is nothing more than shameful character assassination. General Handy was not in the procurement chain for the lease deal. Of course, as TRANSCOM Commander, he received updates and was asked his view on tankers, but none of these messages gave indications that someone in the procurement chain was manipulating the cost. Also, Gen. Handy was not paid any money by Boeing for his article; we doubt Human Events even paid him. (The last person we know who did get paid by HE had to write two free articles first.)

You don’t see Tanker War Blog attacking General Horner, let alone his character. Because, even though he is a paid KC-30 team consultant and his article has several glaring errors, to do so would be wrong.

We would advise the KC-30 team and their supporters to conduct themselves more honorably in the future.



Other statements by General Handy on tanker issues:

-A March 6th, 2004 piece for Military Aerospace Technology Online directly states that Handy believes the KC-135 fleet should be replaced before the KC-10’s.

“A reliable air refueling capability is essential to the defense of our nation.

While the KC-10 is still a very viable aircraft, our KC-135 fleet averages over 43 years old, and the oldest KC-135E models have a variety of problems, especially with corrosion in critical areas...”

-Additionally, in the same 2004 interview, Handy proposes his solution to the tanker dilemma. For him, the Boeing 767 is the only answer:

“…We have a validated requirement for more tankers, and if you look at the challenge, the best option we have is the proposed KC-767 lease/purchase. That is the near-term solution to a long-term challenge…”

-At a February 13, 2004 speech at the Air Warfare Symposium in Orlando, Handy expresses his extreme concern over the status of the E-model of the KC-135:

“…Right now, I would like to retire every single KC-135E model as soon as we could make that happen. Get them out of the fleet.”

-In his September 25, 2001 advance policy questions for nomination as Commander in Chief of Transportation Command, Gen. Handy’s prepared statements demonstrates his belief in the need for upgrading the ailing KC-135 fleet:

“Upgrade of our C-5 and KC-135 fleets…are all key pillars of this modernization program.”

-At a March 10, 2004 testimony to the Senate Armed Services Committee, Gen. Handy devotes part of his testimony to call for a “replacement tanker” for the KC-135 and alludes to the “proposed KC-767 tanker” as the vehicle through which new technology will be tested.

The KC-X Files: The Truth on Fuel Cost is Out There

In anticipation of the new X-Files movie to be released this Friday, Tanker War Blog is launching a new series of posts we call The KC-X Files: The Truth is Out There.

Each post in this series will have a topic on which we will ask both sides of the Air Force tanker contract debate to submit information.

We will then release the information in a side-by-side fashion, much like our previous post on Dueling GAO Talking Points.

To start the series we have chosen the very important issue of fuel efficiency/economy/costs of the KC-30 and KC-767 tankers.

We ask that readers, both pro-EADS and pro-Boeing, please submit comments with any links on this issue, or e-mail us your views along with any PDF documents on tanker fuel usage that you might have. We hope to release the results of this inaugural KC-X File on Friday. [Update 7/25/2008: To date we have not received enought input about KC-30 fuel costs. The release of our finding will be delayed because of this.]

Remember, The Truth is Out There and We Want to Believe that DoD procurement will finally purchase the right sized aircraft for the mission.

Anyway, we'll see you at the movie.

Tanker News 23 July

The following tanker related items caught our eye:

Denver Post: Boeing to Display KC-767 Tanker Demonstrator
Key Passage:

The Boeing Company will display its KC-767 Advanced Tanker technology Demonstrator from 9 a.m. to 4 p.m. Mountain time on July 23 and 24 at the American GI Forum National Conference in Denver to showcase why the KC-767 is the best aircraft for the U.S. Air Force's KC-X aerial refueling program.

The tanker ground game continues on as Boeing builds grassroots support for their tanker by touring organization conferences across the country.

Washington Post: The McCain Budget Plan
Key passage:

Balance the budget requires slowing outlay growth to 2.4 percent...The roughly $470 billion dollars (by 2013) in slower spending growth come from reduced deployments abroad ($150 billion; consistent with success in Iraq/Afghanistan that permits deployments to be cut by half -- hopefully more), slower discretionary spending in non-defense and Pentagon procurements ($160 billion; there are lots of procurements -- airborne laser, Globemaster, Future Combat System -- that should be ended ...

So the campaign's senior economic adviser, Douglas Holtz-Eakin names three Pentagon procurements that should be cut and guess what? They are all Boeing programs. Coincidence or more grist for the temper and grudge rumor mill?

KC-30 Press Release:Tanker Boom Completes In-flight Contact
Key passage:

The test mission fulfilled several key flight and program milestones for the KC-45's all-electric, fly-by-wire Aerial Refueling Boom System, including sustaining one of the tanker-to-receiver aircraft contacts to simulate large offloads. The continued successful testing of the ARBS is further indication of the boom system's maturity and readiness for the U.S. Air Force's next generation KC-45 Tanker.

One observation and several questions are in order: 1) It looks like the Air Force is going to have to pry the KC-45 designation from the EADS crew's cold, dead hands. They seem to have grown quite fond of improperly referring to themselves as the KC-45. 2) If we are to believe the KC-30 hype that it is ready now, then why do they keep announcing all these new tests? 3) Is that not an A310 based tanker in the photo and not an A330 tanker like they are trying to sell to the US Air Force? 4) How much outside EU nation support is EADS getting free of charge? There is a stop work on the US tanker work. And, since Australia is not a NATO country, we know they are not supporting this testing with their military aircraft. So who is footing the bill? Or, is this another type of government subsidy beyond the Airbus ones being protested at the WTO or the Katrina bonds that were funneled to them?

Air Force Nominations Hearing Analysis

At the Senate Armed Services Committee nominations hearing today, a number of questions on the tanker were asked.

Senator John Warner (R-VA) juxtaposed Donley’s statement that the Air Force’s procurement system was not “fatally flawed” with the GAO’s recent report of the procedure’s “significant errors” as the foundation for his examination of the nominee:

“To me, when you make a statement that it is not fatally flawed against a background of a lot of problems, I find a lot of disconnect.”

Donley replied by reasserting that he did not see gross misconduct. Still, disagreements over the severity of the problems aside, Donley fully admitted that drastic changes needed to be made:

“While I do not believe the Air Force acquisition is fatally flawed, GAO’s findings are troubling. They indicate the need for changes that will ensure we are better prepared in the future to more fully document the details of source selections such that Air Force decisions will successfully withstand protests and thereby restore confidence in the acquisition process.”

As a remedy, Donley suggested specific fixes intended to improve the system:

“I have directed the Assistant Secretary of the Air Force (Acquisition) to identify the lessons learned from the recent GAO decision on KC-X, and previous decisions in which protests were sustained, and outline a near-term plan for improvement that will strengthen the major program and source selection decisions pending for later this year. I also plan two 90-day reviews of the Air Force acquisition process, one internal and one external, to recommend opportunities for longer-term improvement.”

Given the current state of Air Force procurement, and the reports that the Air Force has a closed mind going into the new tanker competition, Tanker War Blog believes only more house cleaning of personnel will ensure “longer-term improvement”.

There are just too many people in Air Force procurement who don't get how badly they failed or truly understand the dire consequences of having EADS think they somehow now deserve the tanker contract. More EU lobbying anyone?

Senator Hilary Clinton (D-NY) provided a poignant critique of the Air Force’s procurement system by questioning how Title 10, Subtitle A, PART IV, CHAPTER 144, § 2440 of the U.S. Civil Code, which requires the consideration of the US industrial base when granting contracts, was ignored during the tanker competition.

Donley lamely stated that it would be impossible to do so because “we live in a global economy,” adding that “attempting to go with U.S. sources only in particular situations where it seems to advantage one company over another is really a temporary perspective.”

His argument for not considering Title 10, especially in light of our country’s current economic situation, was quickly countered by Clinton.

She said her fear is that the decision to not consider Title 10 “will come back to haunt us” economically. She stated she was, "also extremely conscious of the impact of decisions made by our government with taxpayer dollars that undermines our competitiveness for the long run."

Not satisfied with Donley's answers, and running out of time to leave for a vote on the Senate floor, Clinton stated that she would submit further questioning for the record.

Another highlighted procurement controversy at the hearing was the Air Force's Senior Leader In-Transit Comfort Capsules. Senator McCaskill seized upon this as another example of a mindset that prizes appearance over mission, much like the Thundervision scandal.

There may be a KC-30 tanker connection to the this mindset as two of Australian A330 tankers will be converted to VIP planes. How much did ability to use the KC-30 in VIP mode influence the Air Force's decision? We will have to leave that to further investigation and another post.

In conclusion, while all the nominees preformed well, it was another bad day for Air Force procurement. It was also certainly no walk in the park for those being questioned, but unless some major issues arose in the closed session we see all of the nominations being eventually confirmed. Though, we do not rule out one of the nominations being put on hold until certain procument process assurances are given.

Here are some source documents and resources from the hearing:
Donley Prepared Testimony

Gen. Schwartz Prepared Testimony

Gen. McNabb Prepared Testimony

Below is a short Pentagon Channel news report on the hearing.

Air Force Nominations Hearing Today

At 9:30 today the Senate Armed Services Commitee will hold a hearing to consider the nominations of:

Mr. Michael B. Donley
to be Secretary of the Air Force

General Norton A. Schwartz, USAF
for reappointment to the grade of general and to be Chief of Staff, United States Air Force

General Duncan J. McNabb, USAF
for reappointment to the grade of general and to be Commander, United States Transportation Command

We expect a number of tanker related questions to be asked.

C-Span will be covering the hearing but may not air the proceedings live.

The hearing is now over but the Pentagon Channel did air the hearing live.

New Boeing Tanker Ad Campaign

To counter the KC-30 team's Built. Tested. Flown. misinformation campaign we are told that today Boeing will launch ads to show that they most certainly have more than a paper design.

While the tanker delivered to Japan is a slightly different configuration of the 767 than that proposed to the Air Force, unlike the KC-30 tanker, it was been tested and certified by the FAA.

In fact, the Japanese 767 tanker is far more mature than the EADS Australian tanker program. The KC-30 team has yet to pass fuel in flight on any A330 tanker.

Also, the EADS D-1 tanker that was scheduled to be delivered to the US Air Force has none of the modifications or additions to the green A330 (cargo door, freighter floor, refueling systems, defensive systems, military com gear, etc.)have been made to their "completed" Air Force tanker.

If the KC-30 team was truthful it would put out an ad that said their tanker is Partially Built, Somewhat Tested, Flown in a Configuration far less than Complete.

It may not be catchy, but at least it would have been honest.

Tanker News 18 July

The following tanker related items caught our eye:

The Guardian: EU leaders lobbied White House on tanker contract
Key Passage:

European newspapers have reported for months that Brown, Sarkozy and Merkel have lobbied Bush, writing letters and raising the issue in direct talks.

Initially the leaders lobbied for the contract and more recently, according to the latest reports, they have expressed concern that the Pentagon decision to reopen the tanker competition could jeopardise Airbus jobs in Europe.

"He will support the Airbus bid in any way he can," an unidentified spokesman for Brown told The Times of London last week, adding that 11,000 jobs were at stake in Britain, where the wings for the A330 are built.

According to a report in the International Herald Tribune, Tom Enders, a top EADS executive, accompanied Merkel to one meeting with Bush at the White House.

TWB has witnessed how the KS and WA Congressional delegations have been panned for merely standing up for the home team. How is it that the European politicians get no criticism for their near constant lobbying for EADS? (Thanks to George H. for sending us this article.)

CNBC: Protectionism Not Good in Tanker Deal
Key Passage:

Northrop Grumman CEO warned of a "political overlay" in the US defense procurement procedure, where, he said, a small number of members of Congress were merely looking out for their constituencies, particularly to keep jobs in their districts.

Both executives stressed that the aerospace industry is becoming increasingly global and that EADS should be not be viewed through protectionist lenses.

EADS should be "considered as an American citizen," Gallois said.

If Gallois really wants EADS to be considered an American citizen he should demand the quick passage of Rep. Tiahrt's Tanker Recompete Act. That way his company will finally be treated like a US company. It will also be held accountable for US laws/regulations including cost accounting standards, Buy America provisions, specialty metal provisions, the Foreign Corrupt Practices Acts, and compliance with the International Traffic in Arms Regulation.

Our guess is that he wants all the benefits of citizenship without the responsibilities. At Tanker War Blog we believe, based on its well documented shady past alone, EADS should not even be issued a tourist visa to get into the country, much less be able to apply for citizenship. (Thanks to Bobby L. for sending us this article.)

Reuters: Airbus writes off 9-year-old Saddam plane order
Key passage:

Nine years after France's top plane executive shook hands in Baghdad on a $500 million deal to sell airliners to the government of Saddam Hussein, Airbus finally conceded on Thursday the deal was off.

Airbus sales chief John Leahy ordered the deal removed from its backlog in response to an inquiry from Reuters about the long-forgotten deal at this week's Farnborough Air Show.

The deal to supply five A310 passenger jets had been on the Airbus order book since its then director Jean Pierson clinched the deal in 1989, as Iraq's skies reopened following travel curbs imposed during its eight-year war with Iran.

We admit that this article is not tanker news, but it was too interesting to pass up. The deal looks more like it was 19 years ago rather than 9, but maybe they kept moving it forward on their books. In the article Airbus complains that they did not get to bid on the last Iraqi plane contract. No kidding; perhaps the Iraqis remembered France opposed their liberation and was heavily involved in propping Saddam up with the oil-for-food scandal.

NG/EADS to receive Cease and Desist Order

Air Force Magazine online is reporting that NG/EADS will no longer be able to refer to its KC-30 tanker as the KC-45A in advertisements and press releases. An Air Force spokesperson told the Daily report that:

USAF created the nomenclature KC-45A to refer to its next tanker aircraft, but now that the KC-X competition is back up for grabs, neither Boeing nor Northrop Grumman can claim the KC-45A designation—not yet, at least. The Air Force has not yet notified Northrop Grumman to quit calling its airplane the KC-45A, “but the Air Force will do so and we expect that they will [comply],” the spokeswoman said.

The KC-30 team though remained defiant; if not delusional. Randy Belote, Northrop’s VP for communications, was quoted as saying yesterday, "As winner of the KC-X program and while under contract for the KC-45, we have no plans to change the name or nomenclature of our tanker.”

Also, Air Force Magazine online reports that the naming of the KC-45 has been delayed and put on hold due to the the recent shake-up of Air Force leadership:

The rumored top name for the new tanker is “Expeditor II,” which honors the Beech C-45 Expeditor of the World War II era. The nickname would seem to echo the KC-45A designation chosen for the new aircraft (see item above), but the original Expeditor was a relatively small transport specializing in light loads and small airfields, while the two KC-X contenders—Boeing’s KC-767 and Northrop Grumman’s KC-30—are based on widebody airliners.

It seems strange that the Air Force would choose a name associated with a small transport aircraft, but their whole fixation on more pallets and cargo for a tanker has always been beyond comprehension.

We will not be too hasy in our judgment though. Maybe the Airmen on the flightline know what they are doing. When the KC-767 is eventually chosen as the new tanker, naming it the "Expeditor II" might make sense as it can use a lot more of those "small airfields" than the KC-30.

FYI: in case you missed last month's name the KC-30 contest, proceedings and results can be viewed on TAnchorman's blog.

How EADS is Killing the Aerospace Free Market

EADS subsidies do no exist in a vacuum. These subsidies cause a ripple effect throughout the industry.

As a direct result, US aerospace companies lose market share and American aerospace workers lose current and future jobs. Additionally, to compete against these subsidies American companies are forced to cut costs; many times through the use of overseas suppliers, causing further US job loss.

America is not the only country affected. Canada which has the world's fourth largest aerospace industry - generating more than $22.7-billion in 2007 - has also suffered. Unlike the US though, Canada has decided to join EADS in the subsidies game.

The Canadian Government recently announced a $350 million dollar loan to support local owned Bombardier's new C-Series airliner. According to Canadian Business:

This is a plane that will reportedly use 20% less fuel than comparable aircraft on the market at a time when airlines around the world are struggling with record high fuel prices. According to Bombardier, it will give the third-largest civil aircraft manufacturer a huge advantage. So why are Canadian taxpayers involved?

Government officials, who hope the loan will earn a “positive” return, say they want Canada to maintain its strong position as an aeronautics supplier. They point to a $250-million auto fund, as if that shows the Harper government has always supported the logic behind corporate handouts (rather than offering another good example of Harper’s growing capacity for pandering).

Simply put, Montreal was competing with Missouri for assembly rights on the C-Series jet. And with buying votes in mind, the Harper government decided to sell its soul to woo Quebec. To do so, it was even willing to risk an international trade war, since the subsidized C-Series will compete with U.S.-based Boeing and Airbus-maker European Aeronautic Defence and Space Company (EADS).

Since EADS is the king of subsidies, we don't think they will complain too much. But, the US government and workers in Missouri should be outraged.

Brazil - home to Embraer, another competitor to the future C series - will probably also have some issues with the "loans". But, as Wikipedia points out neither company is a stranger to the subsidies game:

Both Embraer and its main competitor, Bombardier, were engaged in a subsidy dispute in the late 90s and early 2000s. It was found by the World Trade Organization (WTO), in a 2000 ruling, that Embraer has received illegal subsidies from the Government of Brazil. In its ruling, the WTO ordered Brazil to eliminate its Proex export subsidies program, which was found to aid Embraer. In October 19, 2001, the WTO ruled against Canada, just as it had ruled against Embraer, over low interest loans from the Canadian government designed to aid Bombardier in gaining market share.

Just when you think a free market is starting to be establish someone calls for a new round of subsidies and it all falls apart again.

TWB Recruiting Drive: Do Your Part

Several of Tanker War Blog's original members will be departing now that DoD has announced that it will recompete the tanker contract. Also, at the end of the week our unofficial spokesperson Mike Reilly will be stepping down.

To fill these positions, and hopefully create a wider network, we are recruiting new bloggers. We are specifically looking for people with good writing skills, in-depth knowledge of the tanker issue, and that have time to dedicated to the blog.

If interested, please send your resume to us at tankerblog@gmail.com.

Pay is nonexistent, but the chance of being cursed at by KC-30 fans is high.

Fired Air Force Sec. Makes Wild Accusations

In today's print edition of Defense News (subscription required), fired Air Force Secretary Michael Wynne makes several accusations that show just how in denial Air Force officials are on the GAO's findings. When questioned about the GAO decision, and the fact that it appears that there were "Acquisition 101" type errors, Wynne had this to say:

"The Air Force overcomplicated it, probably based on the CSAR-X outcome. The CSAR-X outcome was a conditioning exercise. As a result, they really wanted both competitors to be almost equal."

Whether Wynne knows it or not, this statement is pretty damning. The competitor's products were not equal. The KC-30 team proposed an aircraft that was bigger than required, and only through the tweaking of grading criteria and weighting was the Air Force able to make them equal. As we have mentioned, time and time again, we believe that Air Force acquisition's goal became having a competition and not getting the best tanker for the mission.

The second part of Wynn's answer, which as previously reported, veers from damning to bizarre and bitter:

"Here's one of those cases where Boeing had probably assessed their prospects were dimming. I would say they systematically began to build a case, and I'm not sure they shared everything they could have shared with the Air Force along the way. They were essentially building a Pearl Harbor file" that they could use later."

We would like to inform the former secretary that we have never found anyone in Boeing who thought "their prospects were dimming". In fact, every Boeing supporter or person from Boeing we have come in contact with was truly shocked when it was announced that the Air Force had selected the KC-30. We would add that they had every right to be shocked because, as we now know, the competition was so riddled with errors that DoD has been forced to take the program away for the Air Force.

In the same interview and article, Wynne asserts that Boeing was unwilling to submit commercial rates on their support organizations and that he was surprised that the GAO sided with Boeing on this point:

"I was surprised the GAO did not see that for what it was," he said, "which is: bid high for the stuff that you're going to contract for and bid low on the stuff that you're not going to contract for." Pressed to say whether Boeing's alleged move was dishonest, Wynne said, "Anything that is used to acquire, that is legitimate in the eyes of the customer or the evaluator is legitimate. ... I would say that it depends on how you characterize it. It was a good business idea that seems to have sustained the protest. No different than calling a steal in baseball when the pitcher doesn't realize it."

Many of us in Washington initially gave Wynne a pass on his failures on the tanker and other procurement programs. But, given his lack of understanding of the GAO decision and his wild accusations it is impossible to do so anymore.

One of the main reasons Wynne was promoted to Air Force Secretary was to clean up the procurement mess of the tanker lease deal. In this he failed just as miserably as he did in ensuring his service accounted for nuclear weapons.

The record will show that Wynne's tenure was a complete loss. (pun intended)

HASC Tanker Hearing Analysis

The July 10, Air and Land Forces Subcommittee hearing on the source selection and path forward regarding the Air Force's KC-(X) program went on much longer than expected but yielded some new information and insight.

We have posted the GAO's testimony as well as the full hearing transcript on our documents site.

Also, you can listen to the hearing which is divided into two parts:
Part 1 Chairman's opening statement and the GAO testimony (23 min)
Part 2 GAO questions/Young testimony & questions (1 hr 48 min)

Observations on GAO testimony and questions:
1) GAO members found it unusual that none of the parties asked for a hearing. GAO instead called for one, but neither Sue Payton (the SSA) or LTG John Hudson (the chairman of the SSAC) testified at the protest hearing. Chairman Neil Abercrombie also found this very curious and said his subcommittee would follow up as to why these two important people were not selected by the Air Force to answer any questions.

2)Rep. Jeff Miller had the best grassy knoll theory of the day as he tried repeatedly tried to get the GAO reps to say union analysts had hand in the GAO decision. Mr. Miller attempted to call the impartiality of the GAO's decision into question by saying the GAO analysts were biased because their union, the International Federation of Professional and Technical Engineers was a vocal critic of the KC-30 contract.

Rep. Miller was assured the GAO's protest department is not unionized, and it is separate from the congressional reports department where the analysts work. Also, the GAO reps stated that only once was an analyst's advice even sought out during the protest decision. This single instance was only to clarify if a particular term in the report was used correctly.

Rep. Miller then followed up by accusing the GOA of creating an inflammatory decision report and argued that the KC-30 team's failure to address the Air Forces questions on depot-level maintenance should not have been labeled as a "refusal". The GAO reps said that the KC-30's own lawyers stated that the decision not to provide the information on the depot-level maintenance was "intentional".

3) The GAO reps stated, that while Air Force personnel did technically break procurement law, it was their opinion that this was not a case of intentional or malicious wrongdoing.

Nor did they see any indications of procurement personnel changing their minds on evaluations that might indicate outside influence.

4) The were several discussions on the Air Forces talking points, parroted by the KC-30 team, that only 8 out of over one hundred allegations were sustained. The GAO reps. did not know where the "over a hundred" allegations number came from and thought such a ratio was contrived or missed the point that the mistakes they did find were significant.

[Sec. Young later shed some light on this issue by saying the Air Force just counted up all the allegations in Boeing's eight protests. Mr. Young though did not offer much of an endorsement on the Air Force's math but did say that many of the allegations were overlapping.]

Observations on Young's Testimony and Questions:
1) Under Secretary of Defense of Acquisitions, Technology and Logistics, John Young was taken to task repeatedly for assuring Congress that the KC-(X) procurement selection was done correctly. HASC Chairman Ike Skelton (MO) said that despite these assurances, the train went off the track seven times and Mr. Young's oversight team failed to detect any of the issue the GAO sustained. Mr. Young said he had talked to his team, widely suspected to have been led by Shay Assad, about these shortcomings.

2) Rep. Nancy Boyda was asked that why only 25 year life cycle costs were used for evaluation when history shows that the tankers will probably be flown mush longer. Mr. Young replied that in fact since the requirements document stated that the life of the aircraft must be 40 years that the new RFP may call for determining 40 year life cycle costs.

3) Sec. Young stated that the current RFP would be amended as little as possible and that those amendments would primarily be to address the issues the GAO found. One of those changes could be to state that extra credit would be given to exceeding the KPP objective relating to aerial refueling.

Rep. Norm Dicks informed Sec. Young that Sec. of Defense Gates had already told Senator Levin that this extra credit provision would be in the new RFP. Sec. Young said he has not been told this Sec. Gates. (From this discussion, in is apparent that DoD has already made up its mind on this extra credit.)

4) Sec. Young said that the Sense of Congress was that cost needed to be made more important and that DoD would dutifully look into elevating this consideration. he also mentioned again that known cost such as those associated with SDD should be weighted more heavily than estimated life cycle costs.

5) Sec. Young laid out the new decision timeline as follows:

Late July	New RFP released
Mid August	Final RFP released
Early October	Proposal submission deadline
Late December	Contract Decision

Sec. Young stated that the process will be event driven and that his own team has told him that the new RFP may not be able to be completed until early August. Chairman Abercrombie told Sec. Young that he should fire anyone who is not dedicated to meeting timeline.

6) Sec. Young said that in addition to being the SSA he may also still be the Milestone B decision authority. The KC-X program currently has Milestone B approval, but this may be revoked due to the GAO findings and the expedited recompete.

HASC Tanker Hearing Today

Today’s public hearing is now finished.

First two GAO reps will speak:
Mr. Daniel Gordon Deputy General Counsel GAO
Mr. Michael Golden Managing Associate General Counsel Procurement Law Division GAO

Then one DoD rep will speak:
Mr. John Young, Under Secretary of Defense for Acquisition, Technology and Logistics

At our documents site we have posted the hearing read-ahead memo.

DoD Tanker Recompete Brief Analysis

Now that the DoD KC-X tanker contract recompete press conference is over, it is time to review and analyze yesterday's events. (Note: The briefing transcript is on our documents site so you can do your own analysis. Or, you can view the brief on the right. )

What has changed in the Tanker War:
1) By deciding to recompete the contract, DoD has voided the KC-30 team's contract that was awarded after the first flawed competition. As John Young said," There is no contract award right now. And there won't be a contract award."

2) Sue Payton has been relieved as the Source Selection Authority (SSA) for the tanker contract and that task now falls to John Young. Sec. Gates was asked directly why is Ms. Payton staying on her job in Air Force acquisitions and if he had confidence in her. He answered that , "Yes I have confidence in the acquisitions team." Not a ringing endorsement but it probably means she will not be asked to resign.

3) In addition to a new SSA, a new Source Selection Advisory Committee (SSAC) will be appointed.

4) A new contract decision timeline has been established. Sec Gates believes that DoD can, "award a contract by December." But, Mr Young was more cautious stating that the timeline could slip and, "That is the best case to make the source selection decision by the end of the year."

What stays the same in the Tanker War:
1) The competition is not being completely reopend. The current RFP will be used as the starting point and amended as needed. Young stated, "We have a valid requirements document that has not been called into question."

2) There will be no new provisions for the WTO dispute or for industrial base implications.

Statements that give us cause for concern:
1) Acting Sec. of the Air Force Mike Donley's statement that "...the Air Force successfully defended itself against over a hundred protest allegation, some of which were overlapping. And based on this overall performance and my understanding of the transparent and collaborative way in which this process was conducted, I would not conclude that the underlying Air Force acquisition system is somehow fatally flawed."

Mr. Donley is taking false comfort in a GAO report that was scathing in its criticism of Air Force procurement. Also, how was it "transparent and collaborative" if the GAO said the Air Force "conducted misleading and unequal discussions with Boeing…."

2) Acting Sec. Donley's statement that, "GAO's conclusions show that even in a large, complex procurement with considerable staff resources and oversight, work accomplished by our contracting personnel, our warfighters and our engineers is not always adequately prepared to withstand the detailed audits and the legal challenges that we can now expect."

Gee, we though the GAO conclusions showed that, “[The Air Force’s] selection of Northrop Grumman’s proposal as reflecting the best value to the government was undermined by a number of prejudicial errors..." And, that the GAO found, "a number of significant errors in the Air Force’s evaluation under the key system requirements and product support subfactors of the mission capability evaluation factor and in its cost evaluation..."

But now, thanks to Mr. Donley we see that SSAC and SSA were not screwed up at all; they were only not adequately prepared to withstand such a mean legal challenge. We have a feeling a couple of Senators may have to talk some sense into him during his confirmation hearing.

3) Mr. Young's statement that "... we have some confidence in what the bidders propose for the cost to develop and build the aircraft. Many of our systems, from fighter aircraft to ships to weapons, are over their 15-, 20-, 25-year life used in ways we didn't anticipate. We still have to consider life cycle costs in developing a weapons system, because that is roughly a third of the Defense budget. But we don't want to overweigh -- you know, we want to balance the known cost to develop and build the tanker with the estimated life cycle cost, and we will do our very best in that to estimate that life cycle cost and include the realistic price of fuel, although it's very difficult to understand, you know, how fuel may vary from here going forward."

This only confirms our suspicions that, even though prohibited by the RFP to base selection decisions on costs other than most probable life cycle costs (MPLCC), DoD and the Air Force are heavily biased toward a tanker with low SDD costs. This favors the subsidised A330 based tanker with its lower SDD costs. Mr. Young's statement also seems like a cop out. He almost appears to be saying that determining MPLCC is just too hard; its not like its only been around in one form or another since the late 18th Century.

Tanker War Blog's Final Analysis:
As Rep. Norm Dicks has stated, the expedited rebid is, "...better than a split buy or other options, but the devil will be in the details." Right now not enough details are known on how the grading criteria or the RFP will be changed. Also, it seems as though no one in DoD other than Sec. Gates really understands the ramifications of the GAO findings other than it made Congress angry.

Will this expedited recompete be an honest attempt to get the right tanker for the mission, or simply a method to revalidate a decision and process DoD has not truly accepted as significantly flawed? It is too early to tell.

DoD to Recompete Tanker Contract

Congressional notifications of DoD's way ahead on the Air Force tanker contract are ongoing.

First indications are that DoD has decided to have an "Expedited Recompete"; no details as of yet. Sounds like Option A that we mentioned last week.

More to come.......

DoD to Announce Tanker Contract Future

DoD has officially announced the tanker decision press conference.

Secretary of Defense Robert M. Gates will conduct a press briefing at 1 p.m. EDT in the DoD Briefing Room, Pentagon 2E579.

This gives him enough time to host an honor cordon to welcome Minister of Government and Justice of Panama Daniel Delgado to the Pentagon today at 2:00 PM.

Congressional notifications are ongoing. First indications are that DoD has decided to have an "Expedited Recompete"; no details as of yet. Sounds like Option A that we mentioned last week.

The Pentagon Channel will cover the DoD press conference proceedings live.

Also, CNN broadcast the initial tanker contract announcement in February through its Live Video site, so there is a good chance they will do so again.

We will continue to keep you informed as we get more details.

Past 4-Star Transport/Tanker Boss Comments

Human Events yesterday published an extremely important article by Retired General John Handy, former Commander of both TRANSCOM and Air Mobility Command (AMC). In it Gen. Handy provides compelling rationale on why the KC-135 replacement program should be based on small to medium size aircraft.

Like most of us General Handy was "a bit surprised" by the decision to buy the KC-30 and even more shocked by the "unusually harsh language used by the Government Accountability Office" in its recommendation that the contract be rebid. He says that the harsh GAO language:

...compels me to do something I've never done before: to speak out publicly. I am not employed by either Boeing or Northrop-Grumman. But the service I've devoted most of my life to appears to need a bit of help.

Somewhere in the acquisition process, it is obvious to me that someone lost sight of the requirement. Based on what the GAO decided, it's up to people such as myself to remind everyone of the warfighter requirement for a modern air refueling tanker aircraft.

General Handy lays out what he believes are the three major requirements for the KC-X tanker:

1) The ability to deploy and bed down in sufficient numbers in order to accomplish all assigned tasks.
2) The tanker must be survivable and provide the crew with superior situational awareness.
3) The ability to integrate in the current defense transportation system. That means 463L compatible pallets; floor loaded on a freighter capable floor all compatible with the current modern airlift fleet.

General Handy concludes that:

Now, if you look at these rather simple requirements and look at the previous offerings from industry, you might agree with me that the KC-767 more closely meets these needs than the competition. If that's what the warfighters need, that's what they should get.

We could not agree more with General Handy's assessment that Air Force procurement lost sight of the requirement. In our view, the pressure to have a competition was so great that the Air Force was forced to make changes to the RFP to accommodate an larger aircraft that they did not want. These changes, both pre and post final RFP, tilted the metrics of the competition toward a larger tanker.

It almost seems as though the goal of the SSA became having a competition, and not getting the best tanker for the mission. (As we have previously pointed out, the pressure that led to this was constant and irresistible.)

Competition is a good thing. But, when it becomes the ends, and not the means, thereby causing one to lose sight of the requirement; well, the whole procurement process is worthless.

Tanker Decision: Predictably Irrational

Air Force procurement actions have a lot of us asking, "Why?"

As in, why did the Air Force select the KC-30 in a process that the Government Accountability Office ruled was conducted in a most biased and seemingly irrational way.

In our continuing search for answers, we believe we may have found something in the book Predictably Irrational by Dr. Dan Ariely.

When people make decisions they think they're in control, making rational choices, but as Dr. Ariely shows, often they are not. In an entertaining and surprising way, he unmasks the subtle but powerful tricks that our minds play on us.

We think that Dr. Ariely's research on the Power of FREE relates strongly to the tanker contract selection. FREE is a magical price, one that people don't evaluate in the same way as other prices. It is guaranteed to make us do strange things and go crazy with desire. FREE tricks our minds into thinking there is no downside, even though there may be hidden costs or the product is not what we really need. Here is a link to a video on the Power of FREE. Also, here is an article that explores the allure of something for nothing.

A variation on the Power of FREE is where people will agree to a bad deal because it appears to offer something extra for free. If you remember back to that fateful February 29th, during the KC-X contract announcement press conference when General Lichte had this to say about the reason the Air Force chose the bigger Northrop/EADS tanker over Boeing's tanker:

Well, I -- from a warfighter's perspective, and I know the team looked at a whole number of things, but from my perspective, I can sum it up in one word: more.

More passengers, more cargo, more fuel to offload, more patients that we can carry...

Many of the statements out of the Air Force since have echoed this more is better mantra. It almost seems as though the Air Force fell for the old marketing trick of advertising a product as getting 20% more free? In this case it would be closer to 18% more fuel hauling capacity free. (Remember this was before the Air Force figured out that the KC-30 was more expensive.)

We have begun to wonder if we should similarly advertise to increase our blog readership. So, we had TAnchorman, who has just returned from vacation, make us a new marketing slogan and label (on right) to put on Tanker War Blog. We are not sold on the idea, but we bet at least a couple of people in DoD will be.

They should not be too hard on themselves though. We wrote Dr. Ariely to ask about his thoughts on our More for Free Tanker Theory. He said that the situation was, "very sad but we all fall for this trap....".

Rumors on what DoD will do next

As Congress is out of session, and DoD takes its sweet time deciding what to do next on the tanker issue, we offer our readers the following rumors as to the options now on Under Secretary of Defense for Acquisition, Technology and Logistics, John Young's desk:

A. Request Boeing and NG/EADS submit immediate new best and final offers under the original or only slightly revised RFP.

B. Have the Air Force make significant revisions to the RFP and rebid the contract. (Since this will take at least 1 year lead time to re-open the Joint Joint Capabilities Integration Development System process, this option seems unlikely.)

C. Execute both the Boeing and NG/EADS contract proposals as submitted under a potential "co-production" or "Leader/Follower" production strategy. (The details and the split in this split-buy were not clear.)

D. Fund "competitive prototyping" with each contractor under parallel System Development and Demonstration (SDD) over 18-month period with a winner take all fly-off for production much like the JSF. (This might be problematic if both competitors are funded at the same level since Boeing's proposal probably has higher SDD costs.)

Our sources in the Pentagon have been drastically attrited during the tanker war, but we have reason to believe in those we still have. So, we would ascribe that the above options are at least 80% accurate.

We have taken note that trying to force the current contract through against the GAO recommendation is not rumored to be on the table.