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June 30, 2008

Congress finds a third option in the tanker battle

For the duration of the battle over the Air Force's replacement of their aging refueling tanker fleet between Boeing and Northrop Grumman/EADS, Congress has had two options:

  1. Let the process run its course while complaining or complimenting loudly about the outcome; or
  2. Intervene in the process to alter the outcome and risk the label of meddling.

An accusation of meddling is a serious one.  Though Congress routinely earmarks unnecessary military equipment, it's usually "small" procurements.

Given the size of the tanker contract, and the precedent it would set, Congress would open itself up to a great deal of criticism if procurement decisions this large were blatantly done this politically. The potential of this has created one of the best soundbites of the conflict so far, with Northrop Grumman calling Congressional action to give the contract to Boeing "a $35 billion earmark".

Northrop Grumman has been able to keep Congress in check with this messaging.  However the newly released GAO report cites enough errors with the procurement process that Congress now has a third option: they can demand a rebid without strings.  Legislation introduced in Congress has demanded a tanker rebid with a series of constraints on the selection process that would all but give the contract to Boeing.

This is over-reaching on the part of Congress, and subject to the earmark accusation.  Now that the GAO has done the hard work of finding fault with the Air Force, all Congress really has to do is simply demand a "do over", with no strings attached, and Boeing is in a better position to win.  A "rebid" even by the same process will give Boeing the second shot they so desperately want, without Congress having to sully itself with the machinations of politically tinkering with the actual procurement process criteria.

Since the Air Force can't or won't just give the contract to Boeing, and they can't seem to proceed politically with the contract as it stands, a rebid with the recommendations of the GAO in mind is the most likely outcome. Congress may push it along with a threat of the "Tanker Recompete Act", but simply the threat of such legislation and the appearance of unfairness should be sufficient to force a rebid.

As I mentioned last week, a rebid seems a very likely next step for Northrop Grumman/EADS to prepare for, and they should have been preparing messaging for that for the last few weeks showing that the outcome to be the same result. They have been saying for months now that the Air Force needs these planes immediately, but that messaging hasn't seem to get much traction. 

With Congress distracted by the holiday and the November elections, not much will happen in the next few weeks, but this is the kind of issue that you can see someone wanting to bring to a higher profile because protectionist rhetoric looks good during an election. 

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