USAF Buys American (Finally)

William R. Hawkins
On Thursday, the Department of Defense awarded a $35 billion contract to build 179 new aerial refueling tankers to Boeing. Aerial refueling is the key to America's global power projection capability, but the U. S. Air Force is dependent on tankers that were first deployed when President Dwight Eisenhower was in office. This contract is the first installment on a plan to replace the entire fleet of 500 KC-135 tankers, based on the venerable but obsolete 707 airliner. The USAF expects to eventually buy 400 new tankers, at an estimated cost of up to $100 billion.

The competition between Boeing and European Aeronautic Defence and Space (parent firm of Airbus) ran for nearly a decade and delayed a program that has been long overdue. The first of the new tankers will not be delivered until 2017.

Many analysts had predicted EADS would win the contract given the behavior of the USAF during the bidding process whose leaders seemed enthralled by the idea of integrating a "global" defense industry. The USAF tried to award the contract to EADS in 2008, but this decision was overturned by the Government Accountability Office (GAO) after Boeing protested that it had not been treated fairly. When EADS' American partner, Northrop Grumman, pulled out of the deal, the European firm was given a deadline extension to revamp its offer so it could stay in the competition.

The USAF then ignored a ruling by the World Trade Organization that Airbus had engaged in predatory business practices and had received $5.7 billion in illegal subsidies from European governments for the A 330 airliner that would be the basis for its tanker. EADS would also have been granted waivers on import duties on parts shipped from Europe for use in their plane which would have been assembled (but not really built) in Alabama.

Yet, even with all these advantages, Boeing came in with the better aircraft at a better price. The Boeing KC-46A tanker, based on the proven 767 airliner/freighter, is smaller than the Airbus A330. This is a strategic advantage in that it will be able to operate out of far more airfields around the world.  Also, the heavier A330 would have burned more of its own fuel on missions to refuel fighters and bombers, driving up operating costs.

"Boeing was a clear winner," announced Deputy Defense Secretary William J. Lynn III. Considerations in the award, Lynn said, were "warfighting requirements, price and life-cycle costs." A fourth factor should have been given attention as well, maintenance of the U.S. defense industrial base. Though EADS promised to build a plant in the U.S. to assemble its tankers, the key factor in selecting the site was that it be near a deep water port so the parts could be shipped in from European factories where the real production work and best jobs would be located. Thus a site was chosen near Mobile.

While the 50,000 American jobs that will be supported by the Boeing victory are important, the larger defense industrial base issue is about keeping production capabilities in the United States over the long haul. The KC-46A is expected to remain in service for 30-40 years. Can any foreign corporation be depended upon to maintain the U.S. refueling fleet for such an extended period? The European defense industry is in steep decline as continental governments lapse into isolationism. Can anyone predict the changes in politics than could affect cooperation over the coming decades? 

Keeping the capability to build, maintain and operate major military systems within the United States and subject to American control should be a vital strategic consideration. The term "arsenal of democracy" must remain a fundamental concept in national security planning.

 

 

 

 

On Thursday, the Department of Defense awarded a $35 billion contract to build 179 new aerial refueling tankers to Boeing. Aerial refueling is the key to America's global power projection capability, but the U. S. Air Force is dependent on tankers that were first deployed when President Dwight Eisenhower was in office. This contract is the first installment on a plan to replace the entire fleet of 500 KC-135 tankers, based on the venerable but obsolete 707 airliner. The USAF expects to eventually buy 400 new tankers, at an estimated cost of up to $100 billion.

The competition between Boeing and European Aeronautic Defence and Space (parent firm of Airbus) ran for nearly a decade and delayed a program that has been long overdue. The first of the new tankers will not be delivered until 2017.

Many analysts had predicted EADS would win the contract given the behavior of the USAF during the bidding process whose leaders seemed enthralled by the idea of integrating a "global" defense industry. The USAF tried to award the contract to EADS in 2008, but this decision was overturned by the Government Accountability Office (GAO) after Boeing protested that it had not been treated fairly. When EADS' American partner, Northrop Grumman, pulled out of the deal, the European firm was given a deadline extension to revamp its offer so it could stay in the competition.

The USAF then ignored a ruling by the World Trade Organization that Airbus had engaged in predatory business practices and had received $5.7 billion in illegal subsidies from European governments for the A 330 airliner that would be the basis for its tanker. EADS would also have been granted waivers on import duties on parts shipped from Europe for use in their plane which would have been assembled (but not really built) in Alabama.

Yet, even with all these advantages, Boeing came in with the better aircraft at a better price. The Boeing KC-46A tanker, based on the proven 767 airliner/freighter, is smaller than the Airbus A330. This is a strategic advantage in that it will be able to operate out of far more airfields around the world.  Also, the heavier A330 would have burned more of its own fuel on missions to refuel fighters and bombers, driving up operating costs.

"Boeing was a clear winner," announced Deputy Defense Secretary William J. Lynn III. Considerations in the award, Lynn said, were "warfighting requirements, price and life-cycle costs." A fourth factor should have been given attention as well, maintenance of the U.S. defense industrial base. Though EADS promised to build a plant in the U.S. to assemble its tankers, the key factor in selecting the site was that it be near a deep water port so the parts could be shipped in from European factories where the real production work and best jobs would be located. Thus a site was chosen near Mobile.

While the 50,000 American jobs that will be supported by the Boeing victory are important, the larger defense industrial base issue is about keeping production capabilities in the United States over the long haul. The KC-46A is expected to remain in service for 30-40 years. Can any foreign corporation be depended upon to maintain the U.S. refueling fleet for such an extended period? The European defense industry is in steep decline as continental governments lapse into isolationism. Can anyone predict the changes in politics than could affect cooperation over the coming decades? 

Keeping the capability to build, maintain and operate major military systems within the United States and subject to American control should be a vital strategic consideration. The term "arsenal of democracy" must remain a fundamental concept in national security planning.