It’s going to be one of the biggest "single buy" Air Force acquisitions since World War II: 179 aircraft at a cost of $200 billion over a 20-year period. The plane — a "flying gas station" — will replace the half-century-old U.S. fleet of KC-135 and KC-10 refueling tankers. Designated the KC-X by the Air Force, it’s been on the drawing board for years. Not one of the new tankers has been built, but it’s already in serious trouble. The problem: Some Americans seem intent on ensuring that a foreign aircraft manufacturer is awarded the contract to build these planes because it will bring a handful of jobs to their state. If they succeed, it will be a major disaster for American taxpayers and American jobs.
For more than a decade Air Force wonks have been tinkering with the design and specifications for a new aerial tanker. The planes are an absolute necessity for the kinds of worldwide deployments being conducted in the global war on terror — or "The Long War" — in Washington’s new vernacular. In fairness, there are numerous factors beyond size, speed, range, payload and price that must be considered by the decision makers, including arcane procurement rules and regulations dictated by the Office of Management and Budget, Congress and even the World Trade Organization (WTO). Not the least of these is the Berry Amendment, which mandates that our armed forces must "Buy American" unless no U.S. product or equipment is available.
When Air Force planners first started to work on a replacement for the KC-135 and KC-10, there were three U.S. aircraft manufacturers capable of bidding on and building such a plane: Lockheed, McDonnell Douglas and Boeing. But that was then and this is now. Today, only Boeing remains — unless the European Aeronautic Defense and Space Co. (EADS), owner of Airbus, is allowed to bid. They are, and there’s the rub.
In order to compete for the lucrative tanker contract, EADS "teamed" with U.S.-based Northrop Grumman to offer the Air Force a tanker based on the Airbus A330 as an alternative to a Boeing 767 variant. Both companies have successfully converted these civil airframes into military tankers. Australia and the UK have chosen the Airbus’ KC-30 for their aerial tanker fleets. Japan and Italy have decided on Boeing’s KC-767A. All of this would seem to indicate that the USAF need only ask both competitors for bids, and select the plane that gives us the most bang for our buck. But if it were that simple, a contract for new KC-X tankers would already be awarded.
Though the Air Force describes the KC-X as their "top procurement priority," it has yet to issue a formal request for proposals. In "DoD-speak" an RFP is the mechanism by which a project is described and bids are solicited. Two drafts of the aerial tanker RFP have been circulated since September. But last week, the Northrop Grumman/Airbus team threatened to drop out of the bidding — complaining that the process to evaluate the different aircraft overlooks aspects of their Airbus model that make it more competitive with Boeing.
The Pentagon’s response, according to industry newsletter Aerospace Daily, has been to offer Northrop/Airbus "one more pass" at revising the request for proposals. Though Air Force officials noted that they have "held more than 20 senior-level meetings ‘to ensure the RFP is comprehensive, understandable and adequately reflects the war fighter’s requirements,’" there is much more to this than a matter of wording in a contract negotiation.
Industry insiders say that behind all the maneuvering is a decades-long dispute between the United States and the European Union over commercial aircraft subsidies — and allegations of corruption and rampant bribery within the EADS/Airbus empire.
In 2003, on the eve of the annual Paris Air Show, The Economist published an extensive investigative report detailing "irregularities" in aircraft manufacturing and sales. Boeing, and others in the industry were cited for questionable practices. But EADS/Airbus was singled out for fraud and bribery on a massive scale designed to boost sales to airlines in Switzerland, Belgium, Saudi Arabia, Kuwait, India, Canada and Syria.
Though new EADS/Airbus managers Thomas Enders and Louis Gallois vow that they have improved the ethical culture in the European aerospace giant, others disagree. According to The Atlantic Times, an English language paper published in Germany, EADS/Airbus is still being wracked by "delays and turbulence." One industry insider told me, "If anything, the use of Schmiergelder (‘grease monies’) to facilitate sales became more rampant as Airbus sales tanked in 2006 and the vaunted Airbus 380 white elephant collapsed amidst design flaws and faulty wiring."
Fair market competition on a level playing field is great — as long as everyone plays by the same rules. Apparently, that isn’t the way EADS/Airbus has played in the past. If Airbus is awarded the contract to build the KC-X, American taxpayers will, for the next two decades, be subsidizing a company whose practices and products are questionable at best; Boeing, an essential U.S. exporter will be damaged and thousands of high-tech American aerospace jobs will disappear forever in Toulouse, France and Hamburg, Germany. We ought to increase exports of American products, not American jobs. When it comes to the KC-X, wouldn’t it be better to simply "Buy American?"