Saturday, February 26, 2011

Week in review (2/20 to 2/26)

The announcement during the week that the Air Force chose Boeing, rather than EADS, to build aerial tankers took everybody by surprise, according to press accounts. I suppose that's because everyone was listening to the experts, who for weeks were calling EADS the favorite.

When I first read those predictions, I couldn't help but think back to 2008, when all the experts were calling Boeing the favorite. Predictably, when the Air Force chose EADS three years ago, everyone was shocked.

One thing I learned in more than 30 years as a reporter and editor is to be very wary of the predictions of industry experts and insiders. That was particularly true of the tanker contest, where so many factors were at play.

So now the big question is, will EADS protest the decision? The company will be debriefed Monday, and will then make a decision on whether to appeal to the Government Accountability Office. It will have 10 days to do so after that briefing. You can already find the experts, undaunted by their track record, making predictions. I could make arguments for why EADS should appeal, as well as arguments for why it shouldn't.

On the one hand, it's a huge contract, $35 billion, and establishing a foothold for the production of wide-body jets in the United States would go a long way towards EADS reaching its goal of being a bigger player in the lucrative U.S. defense market. It's already building helicopters in Columbus, Miss.

But on the other hand, Boeing supporters would point fingers at EADS if it does anything that further delays delivering tankers to the warfighters. The warfighters have waited long enough, it's true. Of course, you won't find any Boeing supporters pointing out that the 2008 protest caused a delay.

The decision was based on price, something that drove Northrop Grumman out of the contest. Boeing's bid was more than 1 percent below EADS' price, so non-mandatory capabilities were not taken into consideration. These non-mandatory capabilities were taken into account the last go-around and tilted the contest in EADS' favor.

There was a fundamental shift between 2008 and 2010 in what the Air Force was looking for. In 2008, it appeared to be capability. This time, it was cost. For EADS, the key question will be, is there anything they can do to shift the focus back to capability?

One of the maneuvers that clearly had a huge impact on the final outcome was changing the cost calculation to 40 years from the previous 25 years. Rep. Norm Dicks of Washington State took credit for that. It would be hard not to give a nod to the politics that was behind all of this.

Brookley improvements
Also during the week, Alabama's Mobile Airport Authority said it was considering borrowing $8 million to improve streets, drainage, signs and landscaping at the Brookley Aeroplex, the location where EADS planned to build a $600 million plant to assemble tankers.

Of course, EADS won't be building the plant, but it's still possible the authority will pursue the improvements. Bill Sisson, executive director of the authority, had said that even if EADS didn't win the contract, the work needs to be done to relieve traffic congestion and meet increased demand for industrial space.

Mentor program
A ceremony was held at the end of the week in Fort Walton Beach, Fla., marking the mentor-protégé agreement between Lockheed Martin and Fort Walton Machining. Under the Defense Department program, mentor companies help prepare small businesses with capabilities and know-how to perform as prime or subcontractors to the federal government. Fort Walton Machining is a supplier for Lockheed Martin's F-35, F-16, F-22 and C-130J programs.

Tidbits from other fields
Shipbuilding: The latest destroyer built by Northrop Grumman in Pascagoula, Miss., has been delivered to the Navy. The William P. Lawrence will leave Pascagoula May 19. … Austal USA in Mobile, Ala., decided to spend more on its latest expansion and will get a bigger tax break than the one previously approved by the city industrial development board.

Marine science: The number of infant dolphins washing ashore in Mississippi and Alabama keeps going up. It's unclear at this stage whether it has anything to do with last year's BP oil spill.