ContractsProf Blog

Editor: Myanna Dellinger
University of South Dakota School of Law

Monday, September 15, 2008

$40 Billion Contract with &%*$! Europeans Canceled

AirbusI used to think "Why would anybody want to fly on an air bus?" But then I learned then when you pronounce it the proper, French-inflected way, it's really not so bad. That must have been what the Pentagon was thinking when, as reported previously on this blog, it awarded a $40 billion contract for aerial refueling tankers to Northrop Gruman and EADS, the parent corporation of Airbus. But with a little prodding from Boeing, as reported in the Wall Street Journal and on National Public Radio, the Pentagon has gone back to thinking of Airbus planes as little more than Greyhound buses with wings.

Seven years ago, the Air Force determined that it needed to replace its aging fleet of tankers, but Boeing persuaded the Department of Defense that it had been too hasty in awarding the contract to do so to those nasty, nasty foreigners, who were going to build the new planes in faraway Mobile, Alabama. Defense Secretary Robert Gates prescribed a "cooling off" period to redress mistakes made in the bidding process by the Department of Defense. He did not elaborate on the nature of these mistakes, but I suspect that the problem was that the DoD permitted an American value (protect Boeing) to be trumped by other, less significant American values, such as freedom of contract, competition, and national security.

[Jeremy Telman]

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