Letter to Last Woman Standing

With members of the Air Force leadership being forced out the door yesterday, Congressman Norm Dicks and Congressman Todd Tiahrt wrote a letter to one of the purge's survivors, the Assistant Secretary of the Air Force for Acquisition, Sue Payton.

The letter specifically questions how the Air Force determined that the relative risks of the two proposals are comparable in terms of cost, schedule and technical performance.

The letter states:

On the one hand, you have the EADS team that proposed to build the first several planes in a number of different combinations of production facilities (most of which are either overseas or do not exist today). This approach entails building new facilities, hiring and training a new workforce, transferring design and production information among multiple nations, languages and cultures, and establishing and certifying production processes multiple times.

In contrast, the Boeing bid proposes to make a one-time investment of time and effort on the front end of the program to adapt an existing production line and develop production processes that maximize the in-line militarization modifications on an ITAR-compliant line that will be proven and certified only once. This is consistent with the underlying approach used by the Rand Corporation in the KC-X Tanker Analysis of Alternatives; an approach that they used because it "eliminates the rework of sequential green aircraft production and tanker modification at two locations."

The letter went on to mention Boeing's approach to the KC-X proposal is fundamentally the same as the one that they are successfully using today for the Navy’s P-8A Poseidon aircraft:

This program, awarded to Boeing in 2004, is performing on its original program plan to begin delivering aircraft next year....Just a couple of weeks ago, VADM David Venlet (Commander of Naval Aviation Systems Command) stated "Normally with non-commercial-built airplanes, it takes us longer to build them and we have more time, but with this one, we're almost running behind Boeing to catch up and to keep up with that airframe, and we're very pleased with that concept."

Who's Leaking Air Force Procurement Information?

After the stock market closed last Thursday, the Air Force announced that Boeing had lost another contact; this time it was for the Global Positioning System III satellites.

The loss itself was not surprising, but the timing certainly was. Why wait for the stock market to close if, as it is our understanding, an Air Force official may have already leaked the results of the competition two and a half weeks prior.

If you remember back to the brief Boeing and the Air Force at War: The Damage Spreads and the post we did on it. The following paragraph contains the issue at hand:

“The deterioration of Boeing's relationship with its biggest government customer hit a new low last week...But the tone of Boeing's tanker campaign has led at least some service officials to believe the worst about the company, a feeling that is spreading far beyond tankers. For instance, the service has probably delayed announcing award of the GPS III satellite contract in part because it fears another Boeing protest.”

We may tackle the other ridiculous rumors in the full, unabridged paragraph in another post, but today we'll address the last part of the passage about the GPS III satellite contract.

Remember the information for this brief is coming directly from top Air Force leakers or “service officials” as they are referred to in the penultimate sentence. These officials supposedly “believe the worst about” Boeing and the example given of these suspicions is that the GPS III satellite contract announcement was being delayed because Boeing would protest the loss.

The author tries to muddy the source by using the word “probably” as a qualifier, but one can reasonably ascertain that this information is a direct "instance" of suspicion provided by the “service officials” referred to previously.

This was not the first time we have seen an official leak information to spin the information on the tanker contract. As our inaugural post pointed out, contrary to Assistant Secretary of the Air Force for Acquisition Sue Payton’s public statements during the tanker award announcement that “We owe it to Boeing to give them the first debrief,” Air Force personnel briefed at least one outside defense expert and sought to brief members of congress while trying to delay debriefing Boeing for two weeks.

These actions were taken to seed the story that Boeing had lost decisively and to make public and congressional opinion go against a possible Boeing protest. This shameful tactic did work in the media and continues to generate numerous stories that Boeing lost decisively as see here, here, and here.

Who are these “service officials” that have willfully chosen to spin and spread rumors? Well since the other side is paying the “probably” game we will right play along.

A number of people on the Hill tell us that they very strongly believe a main source for these leaks, and the person who undermined Ms. Payton’s credibility, is “probably” Kenneth E. Miller.

That’s right; the Special Assistant for Acquisition Governance and Transparency to the Secretary of the Air Force is who our sources say is “probably” leaking information to spin the tanker controversy against Boeing in a very un-transparent way.

Is it illegal to leak, spin, or provide misleading information; maybe, maybe not depending on the leaked information. (Just ask poor Scooter Libby) But, if someone did selectively leak the result of a billion dollar contract award early, the risk of malfeasance, such as insider trading, certainly does exist.

DoD is very aware of the effect a big contract can have on the markets, which is why they announced the GPS III contract after the markets closed. Too bad in this case, Mr. Miller may have already let the cat out of the bag.

If our numerous sources are all wrong or Mr. Miller feels he has been unfairly accused on leaking information on the tanker contract, we would ask that he e-mail us a written rebuttal using his Pentagon account, and that he request an appearance at a special congressional hearing where he can deny these suspicions under oath. We would like specific denials of being a source, if not the sole source, of these leaks mentioned in these: Tanker Competition: Northrop Won By A Wide Margin, Boeing, Northrop CEOs Met With Air Force, and Boeing and the Air Force: The Damage Spreads. (We are most interested in these three instances, but if there are some we missed please feel free to make note of them in your statement so that they can be covered in cross-examination.)

Note: Tanker War Blog is releasing this information while the market is open, as it is our hope by doing so we can raise tanker integrity and transparency futures.

Integrity "Above All"

For our first post we want to address a leak in this announced contract that in our view requires clarification and tarnishes the Air Force's good name.

At a press conference on 29 February Sue Payton, Assistant Secretary of the Air Force for Acquisition, announced that the Northrop Grumman/EADS team had won the contract to produce the next generation aerial refueler over rival Boeing.

When asked about specifics about the proposals Ms. Payton replied, “Actually, until we debrief Boeing, I will not -- I will not go into details there. We owe it to Boeing to give them the first debrief on this, so I will defer that question and the answer to that question until we've debriefed the offer.”

When questioned later to provide other proposal details Ms. Payton replied again, “No, I don't think I should do that. I think I owe it to Boeing to discuss the elements of our decision with them first.”

Too bad this moral high ground and honesty “above all” approach to the procurement process lasted for only 24 hours.

Contrary to Ms. Payton’s public statements Air Force personnel briefed at least one outside defense expert and sought to brief members of congress while telling Boeing that the earliest they could be briefed was the 12th of March. (Pentagon acquisition chief John Young eventually stepped in an ordered the Air Force to brief Boeing earlier on 7 March.)

These actions were taken to seed the story that Boeing had lost decisively and to make public and congressional opinion go against a possible Boeing protest. This shameful tactic did work in the media and generated numerous stories that Boeing lost decisively see here, here, and here. But if anything it only hardened congressional opinion and may have actually forced Boeing into protesting the decision. (How else were they going to get the straight story from an organization that seeming sold its integrity for preemptive media spin.)