ContractsProf Blog

Editor: D. A. Jeremy Telman
Valparaiso Univ. Law School

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Tuesday, March 11, 2008

Contracts, Politics, and National Security

Usaf_f15_f16_kc135_750pix  On February 29th, the U.S. Air Force announced that it was awarding a $35-40 billion contract to build aerial refueling planes to a team formally led by Northrop Grumman.  I challenge anyone to click on the image at left and resist the temptation to stand up and shout U.S.A!!  U.S.A.!!  Aerial refueling is cool!!

Anyhow, the contract award to Northrop Grumman and its partner, the European Aeronautic Defense and Space Co. (EADS),was widely reported as a "stunning setback" for Boeing, since EADS is the parent corporation of Boeing's rival, Airbus.  What was the Air Force thinking?  This is about refueling, not about supplying pilots with beaujolais nouveau.  In any case, like an earlier proposal to place a Dubai-controlled company in charge of managing six U.S. port terminals, this government contract raises issues of patriotism, national security and economic outsourcing.

Today, the Associated Press reports that Boeing will file a challenge to the Air Force's decision with the Government Accountability Office.  According to the AP, pressure to review the decision is coming from politicians representing states that would have benefitted had the contract been awarded to Boeing. Meanwhile, Alabma Senator, Richard Shelby, defended the Air Force's decision.  Northrup Grumman reports that the contract will lead to the creation of 2000 new jobs in Mobile.

UPDATE: For those interested in learning more about the Government Accountability Office bid-protest mechanism, there is a new article out:  Robert S. Metzger & Daniel A. Lyons, A Critical Reassessment of the GAO Bid-Protest Mechanism, 2007 Wisc. L. Rev. 1225.

[Jeremy Telman]

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