Key Current Issue in Transatlantic Procurement: The Tanker Deal

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Key Current Issue in Transatlantic
ProcurementThe Tanker Deal

• Christopher Yukins
• Associate Professor of Government Contract Law
• The George Washington University Law School
• _________________________________________
• Brussels
• September 2008

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October 2004 Shocker

• Ex-Air Force Official Gets Prison Time
• Boeing Received Special Treatment in Procurement
• Washington Post, October 2, 2004

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Timeline

• Jan. 30, 2007 Air Force announces RFP for KC-X
• Feb. 29, 2008 Air Force chooses NG/EADS KC-45A
• Mar. 7, 2008 Air Force debriefs Boeing on losing
  bid
• Mar. 11, 2008 Boeing files protest with GAO
• Apr. 2, 2008 GAO denies AF NG motions to
  dismiss
• June 18, 2008 GAO rules on protest
• Sept. 10, 2008 DoD defers competition,
  post-election

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The Bids

• Boeing KC-767

• Northrop Grumman/EADS KC-45A

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Air Force Announces a Winner for KC-X

• Air Force Selects Northrop Grumman-EADS KC-45A
• Contract worth 35 billion over 25 years
• Up to 179 aerial refueling tanker aircraft
• Initial 4 SDD aircraft for 1.5 billion
• Lots 1-5 valued at 10.6 billion
• Remaining contract value to come from options on
  lots 6-13
• General Arthur Lichte on the selectionits about
  MORE
• More passengers, more cargo, more fuel to
  offload, more patients that we can carry, more
  availability, more flexibility and more
  dependability.

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Media/Public Relations Response Boeing

• Boeing Theme It doesnt add up
• Full-page ads in major newspapers
• Focuses on Boeings strengths vis-à-vis 5 RFP
  evaluation factors
• Less flash and more substance
• Website/Blog
• http//boeingblogs.com/tanker
• Public Relations
• Multiple press releases with fact sheets each
  week

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Media/Public Relations Response Northrop

• Northrop Theme Why We Won
• Ads focus on the merits
• Highlights strengths of KC-45A
• Position papers on each issue
• Heavy emphasis on jobs
• Website/Blog
• Homepage devoted to issue
• www.americasnewtanker.com
• Public Relations
• NG began countering Boeings misinformation
  campaign with its own fact sheets and press
  releases

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GAO Protest

• Boeing protest to GAO under Competition in
  Contracting Act
• Summary of Boeing Argument
• Impermissibly applied selection criteria
• Disregarded the RFP
• Violated Federal Acquisition Regulation
• GAO decision June 18, 2008
• Accepted key Boeing arguments
• Success rate for GAO protests
• Between 16-29 yearly rate from 2002-2007
• 27 in 2007

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Battle on Capitol Hill Key Actors

• House of Representatives
• Two-Pronged Approach
• Legislation to Kill Deal
• Change Pentagon Rules for Future
• Vocal Critics
• Duncan Hunter (R-Cal.) Buy American Advocate
• Todd Tiahrt (R-Kan) and Norm Dicks (D-Wash)
  Boeing States
• Legislative Action
• Issue could have been revisited in
  appropriations/authorization process

• Senate
• More subdued response
• SASC no response in markup
• Senators Levin (D-Mich) and Warner (R-Va) opposed
  legislative measures to overturn contract,
  especially prior to GAO ruling
• Senators from Boeing States
• Joint letters from Washington and Kansas Senators
  to President and Joint Chiefs criticizing deal

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Secretary Gates Sept. 10, 2008 Announcement
. . . We have been engaged in discussions with
the competing companies on changes to the draft
RFP request for proposals that would address
the findings and recommendations of the GAO's
review of the Boeing protest. . . . It is my
judgment that in the time remaining to us, we can
no longer complete a competition that would be
viewed as fair and objective in this highly
charged environment. The resulting cooling off
period will allow the next Administration to
review objectively the military requirements and
craft a new acquisition strategy for the KC-X.
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Conclusion