Boeing Miscalculated
Published in Financial Times
(Germany) on June 13th, 2008
by Gerhard Hegmann (link to original)
(Germany) on June 13th, 2008
by Gerhard Hegmann (link to original)
Translated from
by Ron Argentati.
Edited by .
The contract of the century for the new U.S. Air Force tanker awarded to EADS (Trans. note: The European Aeronautic Defense and Space Company) is being re-examined. For Boeing, who lost the contract, this is their last hope to turn the tables.
The Air Force contract is becoming a battleground for media strategists, lawyers and politicians. Now, supposedly, the Air Force’s decision in favor of the Airbus model was made on faulty data. That news comes barely a week after the GAO decision to award the contract to EADS. The GAO must now go through the entire selection process once again. The Boeing company, previously highly favored to win, now has one last hope to get the 35 billion-dollar contract.
Boeing began a full-page newspaper advertising campaign in Washington that has more to do with national pride than factual data. Politicians and the most important government officials are to be “re-tuned.” Cost alone is to be only one of five main criteria that tipped the balance in favor of the more modern Airbus craft.
The trans-Atlantic consortium of Northrop Grumman and Airbus parent EADS won on four of the five criteria. Every expert knows that when it comes to defense weaponry, costs can’t be accurately calculated. Reportedly, the bids by each side differ by only tenths of a percent on costs. Additionally, nearly all large American defense contracts end up costing billions more than originally bid. Boeing, as the Pentagon’s second largest supplier also profits from this.
The US company doesn’t want to admit that the Europeans are capable of supplying a technologically superior air tanker. The Europeans have exactly the airplane the US military wants. Boeing was too smug and miscalculated. If the decision is actually overturned, then politics will determine which armaments the military gets. That’s the way it is everywhere.
The Air Force contract is becoming a battleground for media strategists, lawyers and politicians. Now, supposedly, the Air Force’s decision in favor of the Airbus model was made on faulty data. That news comes barely a week after the GAO decision to award the contract to EADS. The GAO must now go through the entire selection process once again. The Boeing company, previously highly favored to win, now has one last hope to get the 35 billion-dollar contract.
Boeing began a full-page newspaper advertising campaign in Washington that has more to do with national pride than factual data. Politicians and the most important government officials are to be “re-tuned.” Cost alone is to be only one of five main criteria that tipped the balance in favor of the more modern Airbus craft.
The trans-Atlantic consortium of Northrop Grumman and Airbus parent EADS won on four of the five criteria. Every expert knows that when it comes to defense weaponry, costs can’t be accurately calculated. Reportedly, the bids by each side differ by only tenths of a percent on costs. Additionally, nearly all large American defense contracts end up costing billions more than originally bid. Boeing, as the Pentagon’s second largest supplier also profits from this.
The US company doesn’t want to admit that the Europeans are capable of supplying a technologically superior air tanker. The Europeans have exactly the airplane the US military wants. Boeing was too smug and miscalculated. If the decision is actually overturned, then politics will determine which armaments the military gets. That’s the way it is everywhere.
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