No-Bid Contracts and Contract Fraud

June 29, 2008

Refueling Tanker Contract Controversy Continues

There is no peace to be found in the area of government contracting.  The latest flap over the refueling tanker contract just won’t end.  After rival Northrop-Grumman was awarded the contract in what Boeing earlier said was a fair competition, (when they thought they had it in the bag), suddenly blew up amid cries of foul play by Boeing, once it was announced Northrop-Grumman had been awarded the contract.  Boeing has pulled in many political favors and quid pro quo favors it appears on this one, if one can judge anything by the fury exploding in rallies and protests attended conspicuously by our elected officials in Congress, (Senator Patty Murray-WA, for instance) many of whom are notorious for their use of large and numerous defense contractor campaign donations. 

Boeing has managed, despite the existence of currently open criminal investigations into matters concerning contracts won by Boeing in the past, to rally this kind of support to maintain their claim of  automatic right to own the tanker contract.  It makes one wonder about our elected government officials when criminal cases being investigated against defense contractors are left open, not allowed to be completed and prosecuted, apparently with Congress’s blessing, and yet new contracts are blindly awarded to the offending defense contractors.

What follows are links to a couple of articles regarding Congress’s attempts to pass new bills which these articles contend would steer the tanker contracts to The Boeing Company.  The first article, “New bills steer tanker to Boeing” (Sean Reilly, Friday, June 27, 2008) describes an attempt by Kansas politicians to push through a bill which would pressure the Pentagon to take the tanker contract away from Northrop-Grumman and give it to Boeing or else the Pentagon would have to rebid the contract with an added load of new conditions and red tape.    -GFS

Mobile Press-Register

http://www.al.com/news/press-register/index.ssf?/base/news/121455815441380.xml&coll=3

The second article “Pro-Boeing bill blocked by Sessions” (Sean Reilly, Saturday, June 28, 2008) describes the efforts by Senator Jeff Sessions (AL) to block this bill.  Sessions said he put a “hold” on the bill in order to give the Air Force more time to “develop a way forward that serves the military’s best interest.”

Mobile Press-Register

http://www.al.com/news/press-register/index.ssf?/base/news/1214644527311860.xml&coll=3

Keep an eye on this issue.  -GFS

June 25, 2008

Boeing & Influence: Please Question the Ethics of Everyone Involved

A reader who has expressed concerns about the uproar surrounding the award of the Air Force Tanker Contract sent this to me today. This reader is well-informed regarding problems in the Boeing Company’s business dealings and corruption within the industry-government agency system. -GFS

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Blogs should attack each and every Rep who supports this and keep the light shining on this criminal activity all the while pointing out who is in Boeing's sphere of influence. When the competition closed Boeing said it was fair. When they didn't win, they claimed it was unfair and had two high-ranking Air Force personnel fired because of some B.S. accusations. -anonymous

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"Boeing Co.'s legion of congressional supporters vowed Wednesday to force the Air Force's hand should the service fail to heed the Government Accountability Office's advice that they reopen competition for the lucrative contract to build a fleet of aerial refueling tankers.

The aircraft giant's backers on Capitol Hill worked for months to help publicize Boeing's objections to the Air Force's Feb. 29 decision to give the $35 billion project to a team led by Northrop Grumman Corp. and EADS, the parent company of Boeing's European rival Airbus.

But they were buoyed by GAO's decision Wednesday to uphold Boeing's formal protest of the contract award after a 100-day review of the Air Force's contractor selection process.

In a summary of its 69-page unreleased report, GAO said the Air Force made a "number of significant errors that could have affected the outcome of what was a close competition between Boeing and Northrop Grumman."

GAO provides only nonbinding evaluations of federal contract protests. The Air Force has 60 days to inform GAO of its plans.

Still, armed with GAO's findings and recommendations, Boeing and its supporters demand the Air Force to open another competition for the tanker procurement contract and pick a new winner.

"We expect them [the Air Force] to make the right decision for this country," said Democratic Sen. Patty Murray, whose home state of Washington would build the Boeing tankers. "And if they don't, I would expect Congress to act."

Murray, a member of the Senate Defense Appropriations Subcommittee, added that all legislative options are on the table in the event the Air Force does not take action on the tanker contract.

"We obviously just found out this decision," she said. "We will be looking at all our options."

House lawmakers who have sided with Boeing echoed Murray's statements as news of the GAO's findings reverberated across Capitol Hill.

"In light of the GAO's analysis, the Air Force should reconsider their decision and recompete the contract," Rep. Todd Akin, R-Mo., said. "If the Air Force does not do so willingly, I will work in my role on the House Armed Services Committee to take legislative action to require the Air Force to reconsider this decision."

Boeing's defense business is headquartered in St. Louis, just outside Akin's district.

Northrop Grumman's supporters emphasized that GAO's findings were merely a reflection of problems with the Air Force's procurement process -- not with the contractor's proposal.

"While this is a most disappointing decision, the competition is not over," said Sen. Jeff Sessions, R-Ala., a senior member of the Senate Armed Services Committee. "I am confident the merits of the Northrop Grumman/EADS tanker will be acknowledged."

Northrop Grumman and EADS planned to turn out their tanker, based on the Airbus A330 commercial aircraft, from a $600 million facility the European partner planned to build in Mobile, Ala.

A groundbreaking was set for June 28, but EADS said the event was scheduled "pending the outcome of the Government Accountability Office review of the tanker contract award."

Meanwhile, key lawmakers who waited for GAO's review and carefully avoided taking sides in the contract dispute issued blunt statements ordering the Air Force to get back to work to acquire new refueling tankers.

"The GAO did its work, and the Air Force is going to have to go back and do its work more thoroughly," House Armed Services Chairman Ike Skelton, D-Mo., said in a statement.

His counterpart in the Senate, Armed Services Chairman Carl Levin, D-Mich., suggested that there may be a more intensive review of the Air Force's acquisition processes that led to the Feb. 29 award.

"We now need not only a new full, fair and open competition in compliance with the GAO recommendations, but also a thorough review of -- and accountability for -- the process that produced such a flawed result," Levin said.

In a statement Wednesday night, Susan Payton, assistant Air Force secretary for acquisition, said service officials are reviewing the GAO decision."

"As soon as possible, we will provide the Air Force's way ahead," Payton said. "We appreciate the GAO's professionalism and thoroughness in its assessment of the protest of the KC-45A source selection."

May 04, 2008

KBR Sloppy Work Endangers U.S. Soldiers

Despite Alert, Flawed Wiring Still Kills GI's
    By James Risen
    The New York Times

    Sunday 04 May 2008

    Washington - In October 2004, the United States Army issued an urgent bulletin to commanders across Iraq, warning them of a deadly new threat to American soldiers. Because of flawed electrical work by contractors, the bulletin stated, soldiers at American bases in Iraq had received severe electrical shocks, and some had even been electrocuted.

    The bulletin, with the headline "The Unexpected Killer," was issued after the horrific deaths of two soldiers who were caught in water - one in a shower, the other in a swimming pool - that was suddenly electrified after poorly grounded wiring short-circuited.

    "We've had several shocks in showers and near misses here in Baghdad, as well as in other parts of the country," Frank Trent, an expert with the Army Corps of Engineers, wrote in the bulletin. "As we install temporary and permanent power on our projects, we must ensure that we require contractors to properly ground electrical systems."

    Since that warning, at least two more American soldiers have been electrocuted in similar circumstances. In all, at least a dozen American military personnel have been electrocuted in Iraq, according to the Pentagon and Congressional investigators.

    While several deaths have been attributed to inadvertent contact with power lines under battlefield conditions, the Army bulletin said that five deaths over the preceding year had apparently been caused by faulty grounding, and the circumstances of others have not been fully explained by the Army. Many more soldiers have been injured by shocks, Pentagon officials and soldiers say.

    The accidental deaths and close calls, which are being investigated by Congress and the Defense Department's inspector general, raise new questions about the oversight of contractors in the war zone, where unjustified killings by security guards, shoddy reconstruction projects and fraud involving military supplies have spurred previous inquiries.

    American electricians who worked for KBR, the Houston-based defense contractor that is responsible for maintaining American bases in Iraq and Afghanistan, said they repeatedly warned company managers and military officials about unsafe electrical work, which was often performed by poorly trained Iraqis and Afghans paid just a few dollars a day.

    One electrician warned his KBR bosses in his 2005 letter of resignation that unsafe electrical work was "a disaster waiting to happen." Another said he witnessed an American soldier in Afghanistan receiving a potentially lethal shock. A third provided e-mail messages and other documents showing that he had complained to KBR and the government that logs were created to make it appear that nonexistent electrical safety systems were properly functioning.

    KBR itself told the Pentagon in early 2007 about unsafe electrical wiring at a base near the Baghdad airport, but no repairs were made. Less than a year later, a soldier was electrocuted in a shower there.

    "I don't feel like they did their job," Carmen Nolasco Duran of La Puente, Calif., said of Pentagon officials. Her brother, Specialist Marcos O. Nolasco, was electrocuted at a base in Baiji in May 2004 while showering. "They hired these contractors and yet they didn't go and double-check that the work was fine."

    The Defense Contract Management Agency, which is responsible for supervising maintenance work by contractors at American bases in Iraq, defended its performance. In a written statement, the agency said it had no information that staff members "were aware" of the Army alert or "failed to take appropriate action in response to unsafe conditions brought to our attention."

    Keith Ernst, who stepped down Wednesday as the agency's director, said, though, that the agency was "stretched too thin" in Iraq and that the small number of contract officers did not have expertise in dealing with so-called life support contracts, like that awarded to KBR to provide food, shelter and building maintenance. "We don't have the technical capability for overseeing life support systems," he said.

    For its part, KBR, which until last year was known as Kellogg, Brown and Root and was a subsidiary of Halliburton, denied that any lapses by the company had led to the electrocutions of American soldiers. "KBR's commitment to employee safety and the safety of those the company serves is unwavering," said a spokeswoman, Heather Browne. "KBR has found no evidence of a link between the work it has been tasked to perform and the reported electrocutions."

    Ms. Browne declined to respond to the specific accounts of former KBR electricians.

    Those electricians have a ready response to anyone who suggests that poor electrical work might be considered an unavoidable cost of war. "The excuse KBR always used was, 'This is a war zone - what do you expect?' " recalled Jeffrey Bliss, an Ohio electrician who worked for the company in Afghanistan in 2005 and 2006. "But if you are going to do the work, you have got to do it safe."

    Since the United States invaded Iraq in 2003, tens of thousands of American troops have been housed in pre-existing Iraqi government buildings, some of them dangerously dilapidated. As part of its $30 billion contract with the Pentagon in Iraq, KBR was required to repair and upgrade many of the buildings, including their electrical systems. The company handles maintenance for 4,000 structures and 35,000 containerized housing units in the war zone, the Pentagon said.

    Lawmakers and government investigators say it is now clear that the Bush administration outsourced so much work to KBR and other contractors in Iraq that the agencies charged with oversight have been overwhelmed. The Defense Contracting Management Agency has more than 9,000 employees, but it has only 60 contract officers in Iraq and 30 in Afghanistan to supervise nearly 18,000 KBR employees in Iraq and 4,400 in Afghanistan handling base maintenance.

    "All the contract officers can do is check the paperwork," said one agency official, who asked not to be identified. While about 600 military officers supplement the contract officers, Mr. Ernst said, the soldiers are not adequately trained for the task.

    The Army has provided little detailed information about the electrocutions, other than to say late Friday that 10 soldiers had been electrocuted in Iraq. A House panel has also reported that two marines died similarly.

    In the civilian work force, about 250 workers died from electrocution in the United States in 2006, according to the Bureau of Labor Statistics.

    According to the Army warning bulletin, two deaths occurred 10 days apart in May 2004 at different bases in northern Iraq.

    Staff Sgt. Christopher L. Everett, 23, of the Texas National Guard was electrocuted in September 2005 while power-washing a Humvee at Camp Taqaddum, in central Iraq near Falluja. His mother, Larraine McGee said Army officials had told her that the equipment he was using was connected to a generator that was not properly grounded, and that soldiers had previously complained of shocks.

    "We were told that as a result of his death all the generators were being repaired and that it wouldn't happen again," Ms. McGee said. "But if it is still going on, something's not right."

    The most recent fatality occurred on Jan. 2 in Baghdad, when Staff Sgt. Ryan D. Maseth, a Green Beret, died in a shower after an improperly grounded water pump short-circuited.

    Nearly a year earlier, KBR issued a technical report to the contracting agency citing safety concerns related to the grounding and wiring in the building in the Radwaniyah Palace Complex, where Sergeant Maseth's unit, the Army Fifth Special Forces Group, was housed.

    Another soldier said in an interview that he was repeatedly shocked in the shower in December 2007 and submitted requests for repairs. But nothing was done until the day after Sergeant Maseth's death, when the defense agency ordered KBR to correct the problem, according to Pentagon documents.

    Cheryl Harris, Sergeant Maseth's mother, said in an interview that the Army initially told her that her son had taken an electrical appliance into the shower with him. Later, she said, officials told her that investigators had found electrical wires hanging down around the shower. She said she had been skeptical of both accounts and learned the truth only after repeatedly questioning Army officials.

    Her family has filed a wrongful death lawsuit against KBR, the only such claim brought in any of the electrical deaths.

    "I knew Ryan would not get into a shower with an electrical appliance, and having wires hanging overhead didn't make sense," said Ms. Harris, of Cranberry Township, Pa. "My biggest question is really, why would KBR do a safety inspection, know about the electrical problems and not alert the troops?"

    Long before Sergeant Maseth's death, KBR electricians were complaining about the dangers of unsafe electrical work at bases.

    In 2006, John McLain was working as a KBR electrician at the United States regional embassy compound in Hilla, south of Baghdad, when he made a disturbing discovery. A KBR quality control inspector had recently cited employees there for failing to file quarterly ground resistance testing logs - reports on whether the wiring in the upgraded embassy building was properly grounded and safe.

    Mr. McLain soon realized that the testing was not being conducted, because the building had never been grounded, though KBR and at least one Iraqi subcontractor were supposed to install proper safeguards during a renovation the previous year. Mr. McLain said he had sent a series of increasingly blunt memos and e-mail warnings about the safety hazards to KBR officials.

    Mr. McLain said other KBR electricians later created logs that incorrectly made it appear that the grounding system existed. KBR fired him in 2007 after he told a visiting defense contracting agency official about his concerns. His candor proved useless, however. Mr. McLain said that the contracting agency official showed no interest. "He said, 'I'm not an electrician; I don't know what you are talking about,' "Mr. McLain recalled.

    Noris Rogers, who worked for KBR in Afghanistan in 2005, said he repeatedly complained to his supervisors that electrical work at Camp Eggers, the American military's command base in Kabul, Afghanistan, did not meet the requirements of the company's Pentagon contract.

    Mr. Bliss, who saw a soldier in Qalat, Afghanistan, get a severe shock from an electrical box that was not supposed to be charged, said his KBR bosses mocked him for raising safety issues. They were "not giving the Army what it needed," he said, "and not giving the soldiers what they deserved."

April 28, 2008

Bush Plan to Outsource Fed. Jobs to Contractors

Bush Plan To Contract Federal Jobs Falls Short
Scope and Savings Have Not Met Goals

By Christopher Lee
Washington Post Staff Writer
Friday, April 25, 2008; A01

Joseph Wassmann thought he had a secure position producing videos for the U.S. Military Academy, but not long ago he found his job on the line because of a Bush administration plan to inject more efficiency into the federal bureaucracy.

Wassmann, 40, was among a group of information management employees at West Point who had to prove that they could do their jobs better and more cheaply than a private contractor. If they could not, they were told, the work would be outsourced. It was all part of President Bush's government-wide plan to reduce costs by inviting contractors to bid on about 425,000 federal jobs that could be considered "commercial" in nature.

The West Point competition dragged on for more than two years. In the end, Wassmann and most of his co-workers won, but only by agreeing to downsize from 119 employees to 88. And the mood has never been worse, he said.

"Tensions are at an all-time high," he said. "We have to cut ourselves to the bone to win these bids. . . . And morale is just destroyed afterward."

The public-private face-off at West Point illustrates just what Bush envisioned when he proposed the "competitive sourcing" initiative in 2001 as part of his management agenda. It turned on a simple idea: Force federal employees to compete for their jobs against private contractors and costs will decrease, even if the work ultimately stays in-house.

But as Bush's presidency winds down, the program's critics say it has had disappointing results and shaken morale among the federal government's 1.8 million civil servants.

Private contractors have grown increasingly reluctant to participate in the competitions, which federal employees have won 83 percent of the time.

The program fell short of the president's goals in scope and in cost savings. Between 2003 and 2006, agencies completed competitions for fewer than 50,000 jobs, a fraction of what Bush envisioned.

Moreover, the Government Accountability Office found that the administration has overstated the savings from some competitions by undercounting the costs of running them. Collectively, they cost $225 million, or about $4,800 per job, according to White House figures.

"The competitive sourcing initiative did little to improve management, produced a ton of worthless paper, demoralized thousands of workers and cost a bundle, all to prove that federal employees are pretty good after all," said Paul C. Light, a professor of government at New York University's Wagner Graduate School of Public Service.

"From a legacy perspective for the president, I think this will be seen as a costly failure on his part," said Colleen M. Kelley, president of the National Treasury Employees Union (NTEU), which represents 150,000 employees in 31 agencies. "They have not made any progress on what their stated goal was, and that's a good thing. It has been just an endless fight to slow them down and to derail them."

Bush officials acknowledge that they had hoped to put many more jobs up for competition -- as varied as janitorial services and computer management. Even so, they say, the competitions completed thus far have generated realized and projected savings of more than $7 billion.

"We've delivered real savings -- over $1 billion a year," said Clay Johnson III, deputy director for management at the Office of Management and Budget. "I thought we would have generated by now even larger savings than that. But anything that generates savings of that magnitude has to be deemed a big success."

Competitive sourcing dates to Dwight D. Eisenhower's administration, when the White House began encouraging federal agencies to turn to the private sector for certain goods and services. For decades, almost all such competitions took place in the Defense Department, the government's largest.

Bush entered office with a deep skepticism of government. He saw competitive sourcing as a way to improve agencies' performance.

Private companies loved the idea of vast new contracting opportunities. But federal unions feared the concept was simply a way to steer lucrative business to the administration's political backers.

From the outset, the program's rocky path illustrated the collective political power of federal workers. The initiative drew early criticism from politicians whose districts included many federal employees, including Sen. Barbara A. Mikulski (D-Md.) and Rep. James P. Moran Jr. (D-Va.). They argued that the White House was pursuing "arbitrary" numerical job targets.

In the end, the unions and their allies in Congress largely stymied the administration's efforts. They banned the use of numerical quotas. They inserted special provisions in annual appropriations bills that denied funding for some competitions. And they walled off certain federal jobs after declaring them "inherently governmental."

The unions, including the American Federation of Government Employees and the NTEU, also won legislative restrictions that removed health care and retirement benefits from the cost comparisons, wiping out an advantage for many private-sector bidders.

Many contractors threw up their hands and stopped participating, said Stan Soloway, president of the Professional Services Council, an Arlington-based contractor group.

A competition involving 258 administrative positions at the Labor Department, including 50 in the Mine Safety and Health Administration, illustrates why contractors lost interest, Soloway said.

In May 2007, the department awarded the work to GAP Solutions, a small, minority-owned firm in Virginia whose bid promised $62 million in savings over five years. But at the behest of unions, Sen. Robert C. Byrd (D-W.Va.) had the jobs declared inherently governmental, prohibiting the contractor from taking over the work.

The company had already hired some employees, but when Labor officials terminated the $71 million contract, they refused to reimburse the firm for its upfront costs, Soloway said. (GAP Solutions officials declined to comment.)

"It's unfortunate that it has effectively gone from being a management tool to really more of a political issue," he said.

The unions are not happy, either. They cite another troubled competition, this one at the Internal Revenue Service. In 2005, about 1,100 agency employees initially won in their bid to keep jobs to manage paper tax returns at seven IRS service centers. After a company protest, though, the agency reversed itself and hired IAP Worldwide Services.

Shortly before IAP was to take over in late 2006, it notified the IRS that it was not prepared to do the work at all locations. By then, federal employees were already moving to other jobs. The contractor did not get fully on board until late last year. Yet in a report issued last spring, the OMB claimed about $35 million in savings, said Kelley, the NTEU president.

"This, for me, is just an example that OMB's projections of savings from federal contracting are wildly speculative and they are completely unsupported by any evidence," she said.

The OMB's Johnson said agencies are doing more to validate savings claims.

"The bottom line," he said, "is the federal government can be more focused on its cost and its performance. We should always look at what it costs us to do everything -- IT, human resources, building maintenance, everything. And if we ever stop doing that, then we are being poor stewards of the taxpayers' money."

At West Point, the workers won, but they are not celebrating. Some displaced employees found other academy jobs. Some took early retirement.

Soft landings are getting harder to come by, and more competitions are on the way, said Don Hale, president of the AFGE Local 2367, which represents 1,600 workers at the academy.

"When we first started the competitive sourcing initiative, we had some fat here," he said. "Now it's at a point where we're going to start losing people because we can't gain any efficiencies."

April 06, 2008

Navy Restarting Contest for Halted Shipbuilding Program

By David Sharp
Associated Press
Thursday, April 3, 2008; D04

PORTLAND, Maine, April 2 -- The Navy is moving forward with construction of a new type of small, speedy warship after upending the program by canceling contracts last year, officials said Wednesday.

The Navy's formal request for proposals, issued to General Dynamics of Falls Church and Lockheed Martin of Bethesda on Tuesday, calls for construction of three Littoral Combat Ships over the next several years.

The Navy envisions a competition in which the winning bidder is awarded contracts for two of the ships while the other builds a third, Lt. Cmdr. John Schofield said Wednesday.

The Navy, which hopes to eventually build 55 Littoral Combat Ships, wants the smaller warships capable of operating in shallow coastal waters to defend against pirates and terrorists. The ships are a key element of the Navy's goal of increasing its fleet to 313 ships.

But the program has been plagued by cost overruns, and the Navy's handling of the fast-tracked effort has come under criticism.

The Navy put the brakes on the program last year, canceling two ships, after costs of the original ships grew from early estimates of about $220 million to more than $300 million apiece.

The Navy is operating under a congressional cost cap of $460 million per ship, a reflection that the original cost estimates were too low.

Lockheed Martin's LCS-1 is being built by Marinette Marine in Wisconsin, while General Dynamics' LCS-2 is being built at the Austal USA shipyard in Mobile, Ala.

Lockheed Martin's version resembles a traditional frigate or destroyer but features a sleek, semi-planing hull, while General Dynamics' version is an all-aluminum three-hulled vessel.

April 03, 2008

More From Boeing and Northrop

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New salvos fired in tanker dispute

Another day, and more exchanges between Boeing and Northrop on the tanker controversy.

Boeing on Thursday said the Air Force had found, in its evaluation, fewer weakness with the 767 than with the KC-30 tanker offered by Northrop and EADS. The Air Force review identified 98 strengths and only one weakness with the 767, according to Boeing. That same Air Force review found only 30 strengths but five weakness for the KC-30, according to Boeing.

After Boeing issued a press release, and its tanker boss, Mark McGraw held a teleconference with media, Northrop quickly responded.

Northrop said "we continue to be surprised by the language being used by Boeing that suggests" the Air Force did not run a fair competition.

Northrop also recently launched what it calls America's New Tanker website that it says is to "inform the general public about the facts" surrounding the Air Force decision to buy 179 tankers from Northrop and EADS and not from Boeing.

This was the latest from Boeing:

ST. LOUIS, April 3, 2008 -- While the U.S. Air Force awarded a contract to build the next aerial refueling airplane to the team of Northrop Grumman and the European Aeronautic Defence and Space Company (EADS), Air Force evaluators found the Boeing (NYSE:BA) KC-767 Advanced Tanker offers more mission capability and has a better chance of surviving combat than the larger Northrop-EADS KC-30 tanker.

"The fact that the Air Force gave Boeing the highest possible rating in mission capability and cited the KC-767 Advanced Tanker as having three times more strengths than the Northrop-EADS tanker in this most important category further highlights the inconsistencies in the selection process," said Mark McGraw, vice president and program manager for Boeing Tanker Programs. "As for protecting flight crews on the most dangerous missions, the Air Force evaluated Boeing's tanker as much more survivable than the Northrop-EADS tanker."

On Feb. 29, the Air Force selected Northrop/EADS' Airbus A330 derivative over Boeing's KC-767. Boeing subsequently asked the Government Accountability Office (GAO) to review the decision, citing numerous irregularities and a flawed process that included making unstated changes to the bid requirements during the competition that provided Northrop/EADS with an unfair competitive advantage.

"Despite the changes made in favor of the KC-30 in the area of mission capability, the evaluation was clear in its assessment," McGraw said. "The Air Force identified 98 strengths and only one weakness with the KC-767, while they pinpointed 30 strengths and five weaknesses for the KC-30, including four weaknesses in aerial refueling."

The Air Force gave Boeing high marks in aerial refueling. Evaluators cited the ability of the KC-767 to refuel the V-22 Osprey, which the KC-30 was evaluated as not being able to do. They cited the KC-767's better maneuverability while flying heavily loaded into a refueling zone, and they said its refueling flight deck displays and communications systems were better than the KC-30's. Evaluators also found three weaknesses in Northrop/EADS' boom design and an additional weakness in their ability to be a receiver due to the lighting of their receptacle.

In contrast, the Air Force said the KC-767 met or exceeded all key performance parameters in the mission capability requirements evaluation. Among some of the other key strengths: aeromedical evacuation, enhanced navigation system, better use of airport ramp space, better cockpit displays and communications systems, and more likely to integrate into operational use faster with new equipment and future growth.

"Also of significant concern for us is the fact that the Air Force settled for a plane that is ultimately less survivable for flight crews performing their vital missions in war zones," McGraw said. "In providing technology and features that can keep the airplane more survivable for the men and women flying them, the Air Force determined that the KC-30 is less survivable than the KC-767." The Air Force found that in the critical area of combat survivability, the Boeing tanker had nearly five times as many strengths as Northrop's. The Air Force said Boeing's strengths totaled 24 and gave just five for Northrop-EADS.

"The superiority of the KC-767 in the critical area of survivability compared with the corresponding 'weakness' of the Northrop/EADS plane should give warfighters and American taxpayers alike cause for concern as the GAO continues their review," McGraw added.

And this was the response from Northrop.

Northrop Grumman Corporation today issued the following statement at the conclusion of Boeing's conference call on its protest of the KC-45 selection decision:

April 3, 2008

"We continue to be surprised by the language being used by Boeing that suggests that, first, the United States Air Force did not run a fair, open or transparent tanker program selection process, and second, that the Air Force leadership improperly steered the award decision.

Northrop Grumman was rated superior in four out of five evaluation criteria so for Boeing to suggest that the award outcome should have been different is illogical.

Among the many points Boeing continues to refuse to address is its low marks in the area of program management and risk. Boeing chooses to ignore what concerned the Air Force, including Boeing's failure to deliver on its commitments to Italy and Japan to provide a plane that is not the same as what has been proposed to the Air Force; the fact that the plane Boeing is proposing for the Air Force has never been built; and, the fact that Boeing has not yet built the boom it proposed to provide.

By contrast, Northrop Grumman and its partners have built, tested and flown the KC-45 and we have built and successfully passed fuel through the boom that will be used.

No amount of insistence on the part of Boeing officials that its scores should be higher will make it so. To raise your score, you must provide a superior product, which is precisely what Northrop Grumman did."

And here is the latest from the IAM about Sen. Barack Obama's comments on Wednesday about the tanker controversy. I mentioned what he had to say about a Congressional investigation in my blog entry yesterday.

"Senator Barack Obama just walked away from another fight for American jobs," declared R. Thomas Buffenbarger, president of the International Association of Machinists and Aerospace Workers (IAM). "This is becoming his trademark. But never before has he done so on this scale, with 44,000 American jobs at stake."

At a town meeting in Wilkes Barre, PA, this week, Senator Obama suggested the Air Force's decision on the tanker deal was justified if it turns out the Airbus bid was 10-15 percent better than Boeing's.

"He just doesn't get it," said Buffenbarger. "Airbus has been subsidized by the French government, the British government, even the German and Spanish governments.

"For Senator Obama to equivocate on this issue is a complete embarrassment. But for him to equate our efforts to protect 44,000 jobs and national security with drawing 'a moat around America' just shows he's no friend of blue collar workers.

"Maybe Senator Obama doesn't 'mind the Pentagon procuring from other countries' but I sure as hell do. What is at stake is America's manufacturing sector. What's at stake is over $40 billion in American taxpayer dollars."

And finally, here is Northrop's press release about its "America's New Tanker" Web site.

Northrop Grumman's "America's New Tanker" Website Generates National Support
for the KC-45 Tanker

LOS ANGELES – April 3, 2008 – Northrop Grumman Corporation (NYSE: NOC)
recently launched the website "America's New Tanker"
(www.americasnewtanker.com) to inform the general public about the facts
surrounding the U.S. Air Force's selection of Northrop Grumman to deliver the
KC-45 aerial refueling tanker aircraft.

"This website serves as a central point of accurate information and
current news for Americans who want to learn the facts about the KC-45 Tanker
– from the 48,000 U.S. jobs this program will support to how citizens can take
action and contact their elected officials," said Randy Belote, Northrop
Grumman vice president of corporate and international communications.

Citizens across the nation have generated tens of thousands of letters to
their respective congressman, senators and governors in support of the Air
Force's selection of Northrop Grumman to provide the KC-45 Tanker. The
website also offers a capability that enables visitors to receive e-mail news
updates about the program.

"Following the Feb. 29 Air Force announcement that it had selected
Northrop Grumman to build and deliver the new fleet of KC-45 aerial refueling
tankers, supporters of the losing bidder spread misinformation about the basis
for the Air Force's decision," Belote added. "We believe that citizens who
visit the site will learn the facts surrounding the program – like the fact
that the program is led by an American company, that the aircraft will be
built in the United States in four new factories, and that the KC-45 is the
superior tanker for our Airmen at best value for American taxpayers."

The KC-45 Tanker aircraft will create 48,000 new American jobs at 230
companies in 49 states. The aircraft will be assembled and modified at new,
state-of-the-art manufacturing facilities in Mobile, Ala., while the KC-45's
refueling systems will be built at new facilities in Bridgeport, W.Va., and
delivered to the KC-45 Production Center for aircraft integration.

The KC-45 will be built by a world-class industrial team led by Northrop
Grumman, and includes EADS North America, GE Aviation, Sargent Fletcher,
Honeywell, Parker, Goodrich, AAR Cargo Systems, Telephonics, Knight Aerospace,
Astronics and Aircraft Safety.

Posted by James Wallace at April 3, 2008 5:16 p.m.

GAO Considers Boeing Tanker Appeal

GAO won't throw out Boeing tanker appeal

By ERIC ROSENBERG AND JAMES WALLACE P-I AEROSPACE REPORTER
P-I WASHINGTON BUREAU

WASHINGTON -- The Government Accountability Office on Wednesday denied requests by Northrop Grumman and the Air Force seeking dismissal of an appeal by The Boeing Co. over the award of a lucrative tanker jet project to Northrop and Airbus parent EADS.

But even this latest developed touched off a war of words between Northrop and Boeing.

Northrop, in a statement, said the denials came after a supplemental filing by Boeing that "streamlined its original protest and eliminated many of the elements that were central to the Air Force and Northrop Grumman motions."

"Boeing's decision to abandon the public relations rhetoric contained in its original protest filings is in keeping with our motion," said Randy Belote, Northrop Grumman vice president of corporate and international communications.

"We are encouraged that the company has streamlined its approach. We remain convinced that the Air Force process that led to Northrop Grumman's selection was fair, open and transparent, and we look forward to assisting the Air Force defend its selection decision before the GAO."

Boeing issued a statement shortly after Northrop's, saying it has not streamlined its original protest.

"We have no idea of the basis of the Northrop Grumman statement," Boeing said. "We continue to press every ground in our original appeal. We have neither abandoned nor narrowed any ground. In fact, our supplemental filings have added additional grounds to our original filing based on the information we have received from the Air Force since filing our protest on March 11. Any assertion to the contrary is a blatant attempt to misrepresent the facts."

On March 1, Boeing asked the GAO to overturn the contract award to the EADS-Northrop team. In motions filed with the GAO last week, Northrop Grumman and the Air Force asked the agency to dismiss elements of Boeing's request.

The agency has until mid-June to rule on Boeing's complaint.

Michael Golden, a GAO spokesman, declined to comment.

The Air Force in February rejected a Boeing bid to build the new midair refueling tankers and instead chose a team of European Aeronautic Defense and Space Co. and Los Angeles-based Northrop Grumman. The initial program is valued at around $35 billion but could grow to $100 billion.

In its appeal to the GAO, Boeing accused the Air Force of switching airplane size requirements in the middle of the bidding contest. Initially, the service had sought bids for a medium-sized tanker but ended up picking a much larger aircraft, Boeing maintains.

Boeing also alleged that the Air Force "repeatedly made fundamental but often unstated changes to the bid requirements and evaluation process" in an effort to keep the Airbus tanker in the competition.

The EADS team, maintaining that it won the contract because its aircraft was superior, has denied Boeing's charge that the Air Force stacked the deck in its favor.

Northrop Grumman said that Boeing's complaints are "untimely" and that the Chicago-based aerospace giant should have complained sooner in the process, not after the Air Force made the contract award.

The issues Boeing has raised "should have been questioned, or perhaps protested, before Boeing submitted its final bid," Northrop Grumman said.

P-I aerospace reporter James Wallace can be reached at 206-448-8040 or jameswallace@seattlepi.com. Read his Aerospace blog at blog.seattlepi.com/aerospace.

March 21, 2008

Congress Wants Contract Fraud Documents

Democrats Want Contract Fraud Documents
    By Lara Jakes Jordan
    The Associated Press

    Thursday 20 March 2008

    Washington - House Democrats demanded documents Thursday about a multibillion-dollar overseas contracting loophole to track down how - and why - the Bush administration slipped it into plans to protect taxpayer money.

    Leaders of the House Oversight and Government Reform Committee gave the administration until April 4 to turn over the documents or, aides have said, face a possible subpoena.

    The controversial loophole has irked Democrats and Republicans alike. But it has the support of a trade association that lobbies on behalf of giant global government contractors, including Blackwater USA, KBR Inc., Boeing Co., CACI International Inc. and Lockheed Martin.

    The United States has spent more than $102 billion over the last five years to help rebuild Iraq and Afghanistan. In that time, the Justice Department has uncovered at least $14 million in contract bribes in those two nations alone.

    "Preventing fraud by contractors overseas should be a high priority," Democrats wrote in letters sent to the White House Office of Management and Budget and four other executive agencies. "Instead, the exemption for contracts to be performed overseas appears to have been inserted in the rule late in the process and against the wishes of the Department of Justice, which raises serious questions as to why and how such a policy was developed."

    The letters were signed by House Oversight Chairman Henry Waxman of California and committee members Reps. Edolphus Towns of New York and Peter Welch of Vermont. Welch, who first called for the investigation, vowed "to get to the bottom of this."

    "Who snuck this in at the eleventh hour and why?" Welch said in a statement. "No contractor should be given a free ride to defraud taxpayers, at home or abroad."

    OMB spokeswoman Jane Lee said Waxman's request was being reviewed and that the rule in total would help curb fraud, but she declined to discuss the loophole.

    Letters also were sent to the Justice and Defense departments, NASA and the General Services Administration.

    Thursday's demand marked the first step in a congressional inquiry of the loophole that was quietly slipped into plans otherwise aiming to crack down on waste, fraud and abuse of taxpayer dollars spent on government contracts. The loophole was first reported last month by The Associated Press.

    The government spends an estimated $350 billion a year on contracts.

    Last May, facing growing cases of fraud and increasing spending overseas, the Justice Department introduced plans to force companies to notify the government about evidence of contract abuse worth $5 million or more. Currently, contractors report evidence of abuse on a voluntary basis, and the number of company-reported fraud cases has declined steadily over the past 15 years.

    By November, after it left the Justice Department and was published in the Federal Register, the proposed rule specifically exempted "contracts to be performed outside the United States."

    The Justice Department and the Office of the Special Inspector General for Iraq Reconstruction have asked the exemption be eliminated before the rule becomes law. Additionally, Sen. Charles Grassley, R-Iowa, has threatened to block the loophole in the federal budget if the administration does not do away with it.

    OMB's Office of Federal Procurement Policy has repeatedly declined to comment on the loophole or how it was added to the overall fraud crackdown.

    The House inquiry is looking at whether the exemption was added at the request of private firms, or their lobbyists, to escape having to report abuse in U.S. contracts performed abroad.

    Alan Chvotkin, executive vice president of the Professional Services Council, says the loophole merely follows long-standing Defense Department policy that only covers domestic contracts. Without the exemption, Chvotkin said, U.S. firms that subcontract out work to foreign businesses could be unfairly held liable for abuse that they have little or no way of preventing.

    The Arlington, Va.-based Professional Services Council represents more than 300 government contractors and other businesses. Chvotkin said the lobbying firm did not ask for the loophole but agrees with it. The Professional Services Council is among firms and other business groups, including the U.S. Chamber of Commerce, that oppose the overall rule.

    "We're not trying to exempt companies or suggest that fraudulent behavior in overseas contracts should go unpunished," Chvotkin said in an interview this week. "If somebody's guilty, hold them accountable. We've just stopped short of mandatory disclosure as part of a government-wide rule that goes everywhere for everything."

    The rule - with or without the loophole - could become law at any time.

    "It's hard to imagine that the Justice Department won't fight to eliminate this exception before the rule becomes final," said former prosecutor David Laufman, now a defense attorney in Washington.

  -------

Murray considers pushing procurement law changes

Murray considers pushing procurement law changes

3-18-08

By KATHY MULADY
P-I REPORTER

Awarding a $35 billion Air Force refueling tanker contract to the parent of Airbus carries risks that will ripple far beyond the economic effect of sending tax dollars and jobs overseas; it also compromises national security, and gives away U.S. technology and capability, a gathering of aerospace suppliers told Sen. Patty Murray on Tuesday.

Murray, D-Wash., said she would consider pursuing legislation aimed at changing procurement laws to keep production of military equipment within the U.S., and she asked for help in making her case to Congress. Her colleagues, she said, see the issue mainly in economic terms.

"If the laws need changing, how do we do that, and how do we sell it in a global market?" she asked.

The Air Force stunned the aerospace industry last month by announcing that a team of the European Aeronautic Defense and Space Co. and Northrop Grumman would get the contract to build the refueling tankers. The Boeing Co. has filed a protest of the decision.

On Wednesday, Murray is meeting with labor leaders and workers at a rally near Boeing's Everett plant, where the tankers would have been built, to protest the contract.

"We need to have a serious conversation as a nation about what we lose," Murray said Tuesday. "Not many are thinking deeply about the military security we are giving away."

Suppliers questioned plans to finish the planes in Alabama, "in a facility that doesn't exist, by workers who don't exist, with engineers who aren't there."

They also questioned the effect of the heavier planes on runways and whether they would fit in hangars, how the planes will be maintained, where parts for repairs will come from, and how long it will take to get them.

"Are they going to be waiting for parts from France?" asked Steve Smolinske, president of Rainier Rubber.

And they wondered if foreign manufacturers would be required to operate under the same rules as the American suppliers.

"Is the military going to do background checks on the workers?" asked Rosemary Brester, president of Hobart Machined Products.

Another supplier said that at his company, national security rules are strict.

"Some people in our organization can't talk to other people, or be in certain parts of the building," said Tom Welsh, with Valley Machine Shop in Renton.

Suppliers questioned how the EADS-Northrop contract fits in with the Buy American Act that requires the government and its contractors to purchase American-made goods when available.

Murray said a possible answer might be in legislation for the aerospace industry that is similar to the Jones Act for the maritime industry.

The Jones Act of 1920, named after Washington Sen. Wesley Jones, limits the amount of repair and construction on U.S.-flagged ships that can be done overseas and regulates maritime commerce.

P-I reporter Kathy Mulady can be reached at 206-448-8029 or kathymulady@seattlepi.com.

Why Northrop Beat Boeing

Last updated March 20, 2008 11:54 p.m. PT

Why Northrop beat Boeing for tanker

Air Force says fewer planes would be needed for missions

By TONY CAPACCIO
BLOOMBERG NEWS

Northrop Grumman Corp.'s aerial tanker beat rival Boeing's plane for a $35 billion military contract in part because fewer of the aircraft would be required to meet wartime missions and it might be ready sooner, according to Air Force documents.

The Air Force would require 22 fewer Northrop tankers to meet classified homeland defense and combat scenarios covering the Pacific and Southwest Asia required in the competition, according to a document that outlined the service's selection criteria.

Boeing lost the 179-plane contract Feb. 29 to Northrop and its partner, the European Aeronautic Defense and Space Co., and protested the decision March 11. The Air Force briefing document made available to Bloomberg News indicates that although the contest was close, the Air Force decided the Northrop entry was better in some key areas such as turnaround time on refueling missions.

The Air Force also determined Los Angeles-based Northrop's plane was likely to need less development time to meet the goal of an April 2013 introduction, the document said.

Both companies offered "fair and reasonable prices" and "a reasonable business arrangement," the briefing document said. Northrop was deemed "more advantageous in mission capability" and "in key system requirements" and "program management," the document said.

The loss of the contest and appeals would end the hold Chicago-based Boeing has had on the Air Force tanker business since 1956. Boeing's entry in the latest contest was based on its 767 commercial plane, whereas Northrop's was based on the larger A330 made by EADS unit Airbus, based in Toulouse, France.

Boeing spokesman Bill Barksdale said the company was given the document with selected Northrop material redacted. Northrop spokesman Dan McClain confirmed his company also received the document with Boeing data deleted and declined further comment. Lt. Col. Jennifer Cassidy, an Air Force spokeswoman, also declined to comment on the documents.

The documents said Boeing's candidate had better communications capability and bested Northrop in some aerial refueling capabilities. The Boeing aircraft also was judged to have better survivability characteristics.

Even so, "Northrop Grumman provides better aerial refueling efficiency," said the slides prepared by the Air Force Aeronautical Systems Center at Wright-Patterson Air Force Base near Dayton, Ohio.

The Air Force concluded there was more risk that Boeing's development phase would take longer and be more expensive than Northrop's, the slides said. That included the likelihood of a "relatively lengthy software development phase."

"Little difference exists between" Northrop's "cost and price and the government's probable cost and price" for the development phase, the Air Force said. In contrast, the difference between Boeing and the government's probable costs "are not reasonably explained" for some categories.

The Air Force slides, in assessing the competitor's past performance, said there was "little confidence" in Boeing's program management, whereas Northrop was rated "satisfactory."

Barksdale, in his e-mailed statement, said that problems Boeing had with some international tanker programs and a Navy multimission aircraft were "overly emphasized" and that the Air Force didn't properly consider "lessons learned" by the company in resolving those issues.

Among the "major discriminators" that swayed the Air Force was the Northrop model's larger size. Boeing, in its protest to the Government Accountability Office, said that if the company had been told "the Air Force wanted a large-scale tanker, it could have offered" the bigger 777 aircraft as a base. The GAO has 100 days from the March 11 filing to decide whether the contest was fair.