Key Current Issue in Transatlantic Procurement: The Tanker Deal

1. Key Current Issue in Transatlantic Procurement:The Tanker Deal Christopher Yukins Associate Professor of Government Contract Law The George Washington University Law School _________________________________________ Brussels September 2008

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

3. 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

4. Boeing KC-767 Northrop Grumman/EADS KC-45A The Bids

5. 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 selection—its about MORE: • “More passengers, more cargo, more fuel to offload, more patients that we can carry, more availability, more flexibility and more dependability.”

6. Boeing Theme: It doesn’t add up Full-page ads in major newspapers Focuses on Boeing’s 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 Media/Public Relations Response: Boeing

9. 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 Boeing’s “misinformation” campaign with its own fact sheets and press releases Media/Public Relations Response: Northrop

13. 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

14. 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 Battle on Capitol Hill: Key Actors

15. Secretary Gates’ Sept. 10, 2008 Announcement “. . . [W]e 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.”

16. Conclusion