EADS/Airbus Government Ownership, Protection, Intervention & Subsidies: The Effect on American Free Enterprise and National Security

United States: The Cancelled 2008 KC-X

Tanker Competition

The U.S. selection of the EADS tanker was cancelled after the Air Force admitted to five calculation errors—which when corrected showed Boeing, not EADS, provided the low-cost solution—and a number of prejudicial errors were uncovered by the GAO that called in to question whether the EADS tanker met the Air Force’s requirements.

EADS and its supporters have used the flawed and now cancelled 2008 KC-X tanker award to perpetuate an inaccurate narrative that EADS overwhelming won the competition, but a “politically connected Boeing” had Congress cancel the contract.

The facts do not support EADS’ oversimplified and self-serving public relations efforts. A factual accounting instead shows that the previous KC-X contract was terminated by the Department of Defense in the wake of recommendations and findings by the Government Accountability Office (GAO) that “the Air Force had made a number of significant errors that could have affected the outcome of what was a close competition.”⁹⁹

While defending its selection of the EADS tanker to the GAO, the Air Force admitted it “discovered five errors in its assessment … which, when corrected, would result in Boeing displacing [EADS] as the offeror with the lowest evaluated [most probable life cycle cost] MPLCC.”¹⁰⁰ Not only was the evaluation flawed, but the GAO determined that the EADS tanker was not even eligible to compete as EADS did not fulfill several requirements for submission. The GAO ruled that the “Air Force improperly accepted [EADS’] proposal, where that proposal clearly took exception to a material solicitation requirement” to plan for and support establishment of an Air Force depot maintenance capability within two years after delivery of the first full-rate production aircraft.¹⁰¹ The Air Force repeatedly told the EADS team it did not meet these “minimum program tasks,” yet the EADS team refused to address this discrepancy.¹⁰² The GAO also ruled that EADS’ proposed tanker “could not be accepted” because it failed to establish that it can refuel all currently compatible planes using current Air Force procedures, which was a mandatory minimum requirement.¹⁰³

The GAO’s scathing report made clear that the 2008 KC-X competition decision was not based on the merits of the EADS tanker, but instead was the result of an unsound evaluation process rife with irregularities and questionable judgments. Similarly, the cancellation of EADS’ contract was not due to political pressure, but instead was the result of DoD finally realizing the contract decision was significantly and fatally flawed. ■

NOTES

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2. Friedberg, Aaron L. In the Shadow of the Garrison State. United States: Princeton University Press, 2000. 291. Print.

3. “Business Enterprises.” Report to Congress by the Commission on Organization of the Executive Branch of the Government, U.S. GPO. 1955. p. xii.

4. Friedberg, p. 259.

5. “National Security Strategy.” U.S. Government Printing Office. May 2010. p. 2.

6. Gates, Dominic and Kyung M. Song. “WTO rules strongly against subsidies to Boeing rival Airbus.” Seattle Times 30 Jun 2010.

7. Ibid. p. 9.

8. Kerpen, Phil. “AFP News Room.” Tanker Earmark Won’t Fly. Americans for Prosperity , 06 May 2008. Web. 5 Aug 2010. <https://www.americansforprosperity.org/tanker-earmarkwont-fly>.

9. EADS Registration Document 2009. pp. 114 -115.

10. Ibid. p. 122.

11. “Abu Dubai firm becomes one of the biggest shareholders of EADS.” The New York Times.  05 Jul 2007.

12. Clark, Nicola and Andrew Kramer. “Russian state bank buys share of EADS.” International Herald Tribune. 12 Sept 2006.

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23. Petechuk.

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121-124.

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27. Jane’s All the World’s Aircraft 2000-2001.  Jane’s Information Group. Surrey, UK. 2000. pp.

229-231.

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2010. Web. <https://en.wikipedia.org/wiki/NHIndustries_NH90>. Retrieved March 20, 2010.

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30. “Dassault nEUROn.” Wikipedia . San Francisco, CA: Wikimedia Foundation, Inc., 2010.

Web. <https://en.wikipedia.org/wiki/Dassault_nEUROn>. Retrieved March 20, 2010.

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32. Page, Lewis. “Cost-Effective Defence.” Economic Research Council. October 30, 2006.

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34. “France threatens action against Taiwan, U.S. if Airbus loses CAL deal.” AFX News Limited (London). August 1, 2002

35. “Chen aide backs Boeing against Airbus.” Asia Times (Tawain). August 2, 2002.

36. “Removal of commerce secretary resented.” Dawn (Pakistan). February 1, 2003.

37. “Pakistan: EU withholds 4,000 tons of flexible textile quotas.” Asian Textile Business.  February 1, 2003.

38. “PIA takes delivery of its first ATR 42-500 aircraft.” Avions de Transport Regional (ATR) Press Release. May 31, 2006.

39. Kundi, Imran Ali. “EU scraps anti-dumping duty on Pak bedlinen exports.” Nation (Pakistan) 06 Mar 2009, Print.

40. “Long-term ‘Business Plan of PIA’ being finalized.” Daily Times (Pakistan) 29 Apr 2009, Print.

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43. Pearlstein, Steven. “Europeans Relent, Back Merger.” Washington Post 24 June 1997, Print.

44. The U.S. Jet Transport Industry Report 2005, U.S. Department of Commerce. p. 67

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