Bipartisan Senate Letter Urges KC-X Investigation

UPDATED: EADS NA Statement Welcomes Investigation

Seven senators from both parties called on the Pentagon’s Inspector General today, urging him initiate and investigation into what harm might have been done when Air Force officials mistakenly handed Boeing and EADS NA each other’s data about the KC-X tanker competition.

Sens. Maria Cantwell (D-Wash.), Patty Murray (D-Wash.), Jerry Moran (R-Kansas), Charles Schumer (D-NY), Lindsey Graham (R-SC), Richard Durbin (D-Ill.), and Pat Roberts (R-Kansas) signed the letter.

“At a minimum, we know that the IFARA [Integrated Fleet Aerial Refueling Assessment] score was compromised. That is why it is critical that your investigation determine whether the data breach compromises the IFARA adjustment to price, and more broadly, whether the data breach creates an unfair competitive advantage for the bidder that looked at the other bidder’s proprietary,” they wrote to Inspector General Gordon Heddell. “We are requesting an investigation because we want to make sure the Procurement Integrity Act, Federal Acquisition Regulations (FAR), and ethics rules have not been violated.”

“Today’s hearing did not get at the core of the problem,” Cantwell said. “The tanker competition is a price competition, and EADS saw Boeing’s proprietary data. What happened here is that EADS looked at Boeing’s IFARA score, which is used by the Air Force to adjust a bidder’s initially proposed price. EADS now has an unfair competitive advantage to adjust its bid to undercut Boeing.

The day after the hearing, EADS NA issued this statement, welcoming an investigation: “We would welcome an investigation by the DoD Inspector General—if such an investigation does not delay the decision on acquisition of new tankers. Scandal and protest have kept this badly needed system out of the hands of our service men and women long enough. We are interested in illuminating unambiguous facts, not in a tactic for delaying the decision process.” That was issued under the rubric of Ralph Crosby, the company’s chairman of the board.

The senators did not mention in their letter that the Air Force ensured both sides knew what data the other side had received, nor that each company could alter their bids should they wish to do so after having seen that data. Instead, they said that it took the Air Force three weeks to implement the “remedy” for the data swap goof.

Cantwell and the others — most of whom have important Boeing plants in their states — acted after this morning’s Senate Armed Services Committee hearing during which very little new light was shed on the consequences of the data swap. Of course, some close observers of the competition argued that little came out of today’s hearing because the incident has had few consequences beyond scaring EADS that it might have given Boeing another reason to protest and worrying Boeing that its bid might well be weaker than it had thought.

But Cantwell and her colleagues put it this way in her press statement: “The two witnesses present could not even tell the Committee how the leaked IFARA score may impact the overall Air Force competition.”

Most of the hearing constituted restatements of familiar themes. Sen. Clair McCaskill of Missouri, who criticized the tanker program as “a case study in incompetence,” repeated familiar arguments that any company that receives foreign subsidies should have that fact taken into account when it competes for a contract. The World Trade Organization, of course, has found that EADS has received illegal subsidies. It has also found in a preliminary ruling that Boeing illegally received subsidies. McCaskill did not mention the fact that Boeing has received American subsidies.

One of the fun moments during the hearing came when Sen. John McCain told SASC Chairman Sen. Carl Levin today that the KC-X hearing should not have occurred, especially so close to the contract award.

McCain was joined in his criticism by several other Republican senators.

Finally, another bill was introduced to influence the tanker competition, this one by the Cantwell and Sen. Jerry Moran, Republican of Kansas. This bill, the Defense Level Playing Field Act (S.189), would require the Pentagon take into consideration “illegal foreign subsidies in the tanker competition that unfairly place American workers at a competitive disadvantage.” No mention of taking into consideration illegal American subsidies, because, of course, they would not hurt American workers — or Boeing.