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Boeing Pushes USAF Tanker Lease in Ads (May 5)

(EDITOR’S NOTE: Below is the text of full-page ads placed by Boeing in a dozen U.S. publications, including The Washington Post and the Wall Street Journal, on Tuesday, May 4.
"This is a sign of desperation," Keith Ashdown at Taxpayers for Common Sense told the Reuters news agency on Tuesday. "The Boeing contract is on its last legs and they're doing what they can to keep it alive.")



The Boeing 767 Tanker: Let’s Get the Facts Straight

Airborne refueling operations are a linchpin of military action. From conducting combat operations over Afghanistan and Iraq to patrolling the skies above our own homeland, our military needs the most advanced refueling capabilities to effectively project U.S. military power and to protect U.S. interests around the world.

Yet the oldest U.S. Air Force tankers were first bought in the 1950s. They are expensive to maintain and are increasingly unavailable for operations. The central issues for the Air Force have been how to best replace the oldest tankers in the inventory; and how to quickly deliver improved capability to the warfighter while providing value to the taxpayer. Many believe that taking advantage of market-based financing at a time of record low interest rates is the most cost-effective way to jump-start this critical long-term modernization effort.

Therefore, in 2001 Congress directed that the Air Force negotiate to acquire these planes using a streamlined process and tools commonly employed in the commercial aircraft market. The Air Force and Boeing worked together for more than two years — a normal process of rigorous give-and-take discussions — to develop a financial proposal that would deliver the tankers expeditiously to the warfighter and provide the best possible value for U.S. taxpayers.

Last fall, after much debate on the plan that had been submitted to Congress, the Secretary of Defense directed a pause in tanker program discussions in order to undertake a series of additional reviews. Boeing fully supports these reviews so that the Department of Defense, the Congress and the American public can have full confidence in the 767 tanker program.

Unfortunately, recent news reports — based on draft reports, out-of-context e-mails and misleading allegations — have misrepresented important issues and merit our factual response:


Accusation: Boeing violated defense contracting conflict-of-interest laws by rewriting the operational requirements for the new tanker.

Fact: The Air Force independently developed requirements, and these requirements remain unchanged. The U.S. Air Force developed a set of 26 requirements for a new tanker in November 2001. These requirements have not changed. Boeing did not write them. We did not change them. In fact, our original 767 tanker design did not meet all 26 requirements. To meet them, we added such features as increased-thrust engines, increased-power generators, an all-digital cockpit, a beefed-up landing gear and heavy-duty flaps structure. In short, Boeing changed its aircraft to meet U.S. Air Force requirements, not vice versa. Our enhanced 767 meets all Air Force requirements and will be available to all other Boeing customers, both military and commercial.


Accusation: Needs of Navy and allied refueling requirements will not be met by the Boeing 767 tanker.

Fact: 767 tanker has simultaneous refueling capability. From Day One, the 767 tanker will have the capability to refuel all Air Force, Navy, Marine Corps and allied aircraft on the same mission. The requirement for simultaneous refueling of two aircraft was not requested in the first set of U.S. Air Force tanker modernization plans. Whenever the Air Force wants simultaneous refueling capability, it is available. In fact, the first 767 tanker now in production for Italy will be capable of simultaneously refueling two aircraft.


Accusation: The Air Force used an inappropriate acquisition strategy to negotiate the lease of 100 new 767 tankers.

Fact: Commercial acquisition process is fully consistent with Congressional direction. Almost two decades ago, the Packard Commission’s landmark report on Department of Defense reform recommended increased use of commercial products, services and processes to reduce the time and the cost it took to field weapons systems. Consistent with that goal, in 2001 Congress directed the Air Force to negotiate a commercial lease for the streamlined acquisition of up to 100 new 767 tankers to begin replacing the 43-year-old KC-135 tankers. The Air Force has publicly stated that it “fully complied with all applicable statutes and regulations” during a negotiation process that was reviewed in detail by the Department of Defense’s Leasing Review Panel, the Office of Management and Budget and the Congress. Leasing 767 tankers is consistent with the Packard Commission’s vision of acquisition reform; leasing is a common business practice in the commercial aviation world where 20-25% of Boeing and 25-30% of Airbus aircraft are leased at any given time.


Accusation: The terms and conditions of the 767 tanker lease do not adequately protect the U.S. government or the taxpayers.

Fact: Agreement provides unprecedented protection for taxpayers. The 767 tanker lease agreement will provide new refueling aircraft to the Air Force at a fixed price, and it contains unprecedented protections for the U.S. government and taxpayers. Under the proposed contract, Boeing — not the Air Force — assumes the risks. Boeing pays upfront for the tanker’s development. The Air Force is not required to make any payments until new 767 tanker aircraft are delivered. Boeing has agreed to limit its potential profit, and has agreed to a Most Favored Customer clause: The U.S. government will get a rebate if the company sells the basic 767 airframe to another customer for less than the price paid by the Air Force.


We — the 157,000 people of Boeing — are proud of the world-class products we provide to our customers. We stand prepared to reopen discussions with the Air Force as soon as the Department of Defense is ready.

(signed)

Harry Stonecipher
President and Chief Executive Officer
The Boeing Company

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The Boeing 767 Tanker: Let’s Get the Facts Straight