Boeing/EADS another Update 4-15-08

In an effort to get answers from the Military, Congressman Todd Tiahrt has sent a letter to Secretary Winne. He asks some serious questions. However, no answers are yet forthcoming. It is a sad state of affairs when things like this continue. Seems the military doesn’t want to admit it made a mistake and so they intend to ignore the matter completely. This will not do! We want answers and the military needs to come up with them. I checked the blog a few days ago and there wasn’t any new news. So…

From my inbox, here is the email I received today with all the links and things included:

The Honorable Michael W. Wynne
Secretary of the Air Force
1670 Air Force Pentagon
Washington, DC 20330-1670
Dear Mr. Secretary,

It has come to my attention that the primary supplier of the Air Force’s $35 billion KC-X Tanker competition, European Aeronautic Defence and Space Company (EADS), has engaged in many serious, illegal activities. These proven illegal activities and other serious allegations bring into question whether EADS is an appropriate supplier to the United States Air Force.

A recent New York Times article reports that Autorité des Marchés Financiers, the French Financial Market Regulator, filed a formal complaint and requested a criminal investigation of EADS and more than a dozen current and former executives. This action is based on insider trader violations.

The April 2007 Center for Security Policy Report “EADS is Welcome to Compete for US Defense Contracts-But First it Must Clean Up Its Act” highlights several serious questions for defense policymakers regarding EADS suitability for contract award. I have attached this report and the New York Times article for your review.

In addition to these open source documents, the Department of Defense has been briefed by other elements of the United States Government on other EADS violations. Unfortunately, the Air Force has turned a blind eye to very obvious and serious illegal activities of this major contractor.

Although the evidence of EADS’ corruption is overwhelming, the Department of Defense and the Air Force waives the Foreign Corrupt Practices Act and Cost Accounting Standards for foreign competitors. The American public may never know the true extent of illegal activities that the chosen KC-X Tanker manufacturer has committed. This represents a serious concern to our national security.

Mr. Secretary, please detail:

1) Why are foreign corporations, such as EADS, exempt from Foreign Corrupt Practices Act and Cost Accounting Standards when bidding for United States Air Force contracts, while domestic suppliers are not exempt?

2) Why is every defense supplier, both foreign and domestic, not held to the same standards?

3) Why were EADS’ illegal activities not considered as part of the KC-X tanker competition?

I look forward to your prompt reply.

Todd Tiahrt
Member of Congress

EADS pose security problem to US , says US think tank

New Paper Highlights Problems With European Defense Company EADS; Says U.S. Should Be Careful Before Engaging in Partnership EADS Union’s anti-American propaganda. (PRNewsFoto/Center for Security Policy)


WASHINGTON, April 26 — In a globalizing economy, the U.S. is increasingly reliant on foreign suppliers of military hardware. This relationship can be beneficial both to America and its foreign company partners, but only if the latter can be trusted to be honest vendors and fair competitors worthy of a stake in U.S. national security.

A new paper, published by the Center for Security Policy, argues that the recent large scale introduction of one these foreign firms — European defense conglomerate EADS — poses exactly this sort of serious security issue.

The paper is entitled “EADS is Welcome to Compete for U.S. Defense Contracts — But First It Must clean Up Its Act,” and it lays out several issues that ought to make Americans skeptical about whether EADS can function as an honest, scrupulous U.S. defense partner.

First, the European governments that own/sponsor the company have a history of spying on this country and stealing trade secrets from U.S. companies. This illicit behavior is even worse when coupled with EADS’ long history of bribery and corruption.

Second, the Russian government, which has displayed a growing hostility toward the U.S., is a part owner in EADS and is working to increase it share of the company’s stock to 20% or more. This would give Putin’s government the ability to manipulate the company, and perhaps even control it.

Third, EADS is one of Europe’s largest employers of militantly anti-U.S. labor unions .Many of these unions actively work against U.S. security and foreign policy while EADS continues to profess its desire to partner with the Pentagon.

Fourth, EADS actively seeks to circumvent counterproliferation regimes by selling military hardware, over Washington’s objections, to current and potential U.S. adversaries.

EADS has even been implicated as being unwittingly involved in an Iranian purchase of nuclear weapons technology. The bottom line, according to the paper, is that while EADS has the potential to be a valuable partner in U.S. defense and security, it will need to change its ways before American policy makers can trust it, and American tax papers can be assured they are getting the best product for their money. The espionage, bribery, corruption, proliferation, and Anti-Americanism will have to stop.

The full report is located at: Click

And then we have this article from Reuters:

EXCLUSIVE-US Air Force cost tweak hit Northrop tanker lightly
04.09.08, 4:25 PM ET

United States – By Andrea Shalal-Esa

WASHINGTON9 (Reuters) – The U.S. Air Force added $5.2 billion in costs to Boeing (nyse: BA – news – people ) Co’s unsuccessful aerial tanker proposal, far more than it added to the winner, Northrop Grumman Corp (nyse: NOC – news – people ), according to Boeing and documents viewed by Reuters.

The Air Force’s evaluation and adjustments to the two bids for the $35 billion program are at the heart of Boeing’s contract protest filed March 11 with the nonpartisan Government Accountability Office. The GAO is due to rule by June 19.

The full article can be found here:

Reuters will not allow me to post the full article here without purchasing it and since I am disabled, that isn’t possible. Please read the article on their site. I will paraphrase it here, but the full article is better.

Reuters goes on to say that the Air Force added $776. million to EADS bid for the tanker contract but the final bid was also dropped by $1.4 billion for EADS. Clearly this was unfair on the part of the Air Force and these are ongoing issues that Boeing is trying to get cleared up. With bias like this EADS was clearly favored. The bid by Boeing was increased by $5.2 billion dollars by the Air Force.

The Government Accountability Office is due to rule by June 19. If there is any appearance of favoritism on the part of the Air Force the GAO will likely question the Air Force concerning these issues.

The cost increase they assigned to Boeing of $1.4 billion was for more development work and projected production cost savings that Boeing promised. I don’t pretend to understand why the costs were raised if Boeing promised cost savings…

Boeing accuses the Air Force of prejudice in its decision making and points out several instances:

For example: The Boeing 767 had better “survivability equipment” but the Air Force discounted this in favor of EADS larger fuel capacity and longer flying time. An irony here is that Northrup Grumman, (a subsidiary of EADS), makes defensive equipment for Boeing.

The Air Force decided it could upgrade the survivor equipment of the A330 by adding money onto the project. They figured the costs for the first five years would be $115 million, and $199 million over the life of the project total.

A defense analyst, Loren Thompson at Lexington Institute said Boeings accusations show that the Air Force process is anything but transparent.

Favoritism by the Air Force towards EADS was fairly obvious.

Jim McAleese, a defense consultant said that the GAO will look at both proposals and see if they were treated fairly by the Air Force. Their decision, (GAO’s) will determine who gets the contract and what, if any, actions will be taken afterwards.

A memo by Sue Payton explaining her decision on the tankers said she would have still picked EADS A330 over Boeing’s 747 because of its superior reliability and other capabilities. It remains to be seen just what will happen though as the investigation continues.

It is looking more and more like the Air Force manipulated things in order to do business with EADS instead of Boeing. I’m wondering whose pockets got lined on this deal? If so, will any heads roll because of this investigation? Surely with Congress looking in on it there will be an investigation and things will get straightened out. At least I hope so. No more favoritism when it comes to the military. They are making some really stupid decisions lately.


~ by justmytruth on April 15, 2008.

2 Responses to “Boeing/EADS another Update 4-15-08”

  1. I do check my sources and have included them, with links, in the articles I write. And yes, I do know that Boeing hasn’t had a stellar track record. I mentioned that in my articles too. Thank you for stopping by and leaving a comment.

  2. You seriously need to look at both sides of this, and get your information straight. An AMERICAN COMPANY – Northrop Grumman – won this contract. And Northrop Grumman is NOT a subsidiary of EADS, however EADS is a SUBCONTRACTOR to Northrop Grumman on this contract- this is why the Foreign Corrupt Policies Act didn’t apply. As for the rest of the letter from Congressman Tiahrt the Secretary of the Air Force doesn’t set defense acquisition policy, the DoD does – maybe he should have addressed his letter to the right person. Also, if you want to talk corruption, that’s how Boeing lost this deal in the first place a few years ago.

    I’m not saying who’s right or wrong, but you need to check all the facts before you slant one way or another.

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