Boeing Contract a Victory for Lobbyists

Although Airbus offered the Pentagon the better tanker airplane, it never stood a chance against rival Boeing.

The outrage was predictable. German Economics Minister Rainer Brüderle did not rule out “possible further steps and consequences.” Peter Hintze, Germany’s air freight coordinator, said it all left “a bitter aftertaste” and wondered whether the process had actually been entirely fair.

Politicians and the public in the United States would probably have reacted just as skeptically, and even more emotionally, had the Pentagon awarded the biggest contract in the history of aviation to Boeing’s European competitor, Airbus.

The skepticism is understandable. The $35 billion contract for a new fleet of tanker aircraft has a long history tainted by corruption. Several of the players have been jailed, and one Boeing executive lost his job as a result of the scandal.

Now, on the third try, the Air Force has selected Boeing, which used its home-field advantage as a preferred domestic supplier. Surely, it should come as no surprise if the Air Force has all its future needs supplied by a U.S. manufacturer, as it has always done in the past. It made no difference that Airbus promised 50,000 new jobs in the United States and emphasized America in its advertising. Boeing did the same thing.

The awarding of the contract is proof that in the defense industry it is not about who can provide the best product, but about who has the stronger lobbyists in the country making the award.

One of the more popular arguments is that it would be unpatriotic to deny a domestic producer the contract, whether that bidder has a competitive product or not.

Of course, they have now missed a chance to strengthen the transatlantic partnership between Europe and the U.S. by opening the American weapons industry a little to outsiders. In declaring Airbus the winner, the Pentagon could have demonstrated that it had introduced a paradigm shift in the awarding of military contracts. But that would have resulted in European applause and a public outcry at home.

A fair and impartial process of awarding contracts looks much different, because had the award been made on the basis of the better product, they would have selected the KC-45 Airbus. That aircraft is already successfully being flown by the air forces of several different nations, it is tried and tested, and it offers superior performance parameters.

Boeing, on the other hand, is entering the starting gate with an airplane that has yet to fly for the first time. It sounds ambitious when Boeing CEO Jim Albaugh claims he will fulfill the contract on time and at the price offered in Boeing’s bid.

Then again, defense contracts worth billions upon billions of dollars are governed by laws other than logic and free-market principles.