Tanker mess exposes problems in Pentagon

WASHINGTON — Just four months ago, U.S. Air Force leaders were proudly touting their "fair and open" handling of the refueling-tanker contract that led to the selection of a team led by Northrop Grumman and European Aeronautic Defence & Space.

Now that Boeing has successfully challenged that decision, those officials face a humbling question: "How in the world could they have screwed it up?"

For Mobile, Ala., where the tanker would be assembled and outfitted, the stakes are high as the Air Force ponders its next move. But other analysts see the turmoil as evidence of a broader breakdown, with military bureaucrats and contractors increasingly failing to deliver new weapons on time at the agreed-upon price.

Navy has problems

"The Navy shipbuilding program is every bit as big a disaster ... and the Army has the same kinds of problems," said Winslow Wheeler, a former congressional staffer who works at the Center for Defense Information, a nonpartisan think tank.

New arms spending is at a two-decade high, according to a recent review by the Government Accountability Office. On average, major new systems are 21 months behind schedule, with cost overruns of 40 percent, GAO official Michael Sullivan told a congressional committee in April.

Budget busters

Budget-busting has become routine. The Navy, for example, will need about $27 billion in taxpayer money annually — more than double the average funding in recent years — to meet long-range shipbuilding goals, the nonpartisan Congressional Budget Office reported.

The combined price for just two vessels — the first in the next-generation DDG-1000 destroyer line — will hit $10 billion, the budget office predicts.

As a result, some lawmakers want a "pause" before allowing the Navy to order a third destroyer.

In congressional testimony, Navy officials have blamed the cost overruns in part on the DDG-1000's newness.

But outside experts see a flawed system throughout the defense establishment. Military managers offer artificially rosy cost estimates to get a green light for favored priorities, often with relatively little backup data, Sullivan said.

Lax oversight

Wheeler has a blunter take: "Too much money, no adult supervision and careerist" employees who often go to work for defense contractors after they leave the government.

Attempts to get comment from the Defense Department were unsuccessful. At the April hearing, a Pentagon representative said the department has made "measurable progress" in improving its buying practices, although "much work remains to be done."

By some measures, the Air Force has had a particularly hard time doing the job right.

Replacing its fleet of flying gas stations — as the refueling tankers are often labeled — is the service's top purchasing priority. But its first attempt to do so by leasing 100 planes from Boeing fell apart earlier this decade after questions arose first about the cost, and then about Boeing's illegal hiring of a top Air Force procurement official.

Two Boeing executives, one of them the former Air Force official, went to prison.

Pledge to do better

Seemingly chastened, the Air Force pledged extra care in running the competition between Boeing and Northrop.

"We've got it nailed," Sue Payton, the Air Force's top weapons buyer, said at the Feb. 29 news conference announcing the Northrop-EADS team had won.

But the project is on hold after Boeing's protest prevailed. The GAO review found what appeared to be elementary mistakes.

At one point, for example, the Air Force's evaluation team told Boeing it had satisfied one key threshold, only to decide later that it had not — without, however, letting the company know.

Northrop told

Northrop, by contrast, was informed upfront that it had only partially passed muster, giving its side the chance to meet the requirements, according to the GAO.

"But for these errors, we believe Boeing would have had a substantial chance of being selected for award," the agency concluded in recommending a reopened competition.

The Air Force's tanker program is the latest in a string of contracting controversies.

The service's attempt to award a $15 billion contract for search-and-rescue helicopters to Boeing has twice been faulted by the GAO.

The service also faces a newly filed lawsuit by Alabama Aircraft Industries over a separate $1.1 billion award to Boeing for maintenance of much of the existing tanker fleet.

Four-star favor

And the Air Force in April announced disciplinary action against five officers over a scheme to steer a $50 million deal to a Pennsylvania firm that included a recently retired four-star general.

"They suffer more from these GAO protests than any of the other services, which is an indication that their system is more flawed than the other services,' " said Nick Schwellenbach, national security investigator for the Project on Government Oversight, a watchdog group.

An Air Force spokeswoman declined to comment.