Ethics Newsline®

Protestors say company has done everything it can to clean up its image and deserved to win the bid; others express outrage over military contract going to overseas firm

SEATTLE and CHICAGO
An ethics scandal may have come back to haunt the Boeing Company as a huge contract was awarded to a competitor last week.

The Seattle Post-Intelligencer reports that Air Force officials indicated that their decision to bypass Boeing and award a mega-contract to Northrop Grumman and its partner, European firm EADS, would “signal that the service has moved beyond the tanker scandal that inflicted grievous wounds on the reputations of the Air Force and Boeing.”

Boeing’s troubles began in 2001 when the Air Force leased 20 tankers and later bought 80 more in a $20 billion deal. The arrangement unraveled when it was revealed that an Air Force procurement executive had set up the purchase in return for an offer of a job after she left government. Eventually, the incident led to the departure of Boeing’s chief executive.

The Air Force’s decision to bypass Boeing stunned the aerospace industry, according to BusinessWeek. Boeing has been supplying refueling tankers to the Air Force for the past 50 years, reports the Chicago Sun-Times.

Based in Chicago and with major manufacturing operations in the Seattle area, Boeing ultimately could lose much more than this initial contract, which is part of a 30-year program to replace nearly 600 refueling tankers at a cost of roughly $100 billion, according to the Sun-Times.

The Seattle Times notes that many are blaming Boeing’s huge loss on the taint of the tanker scandal, with one union leader protesting that company leadership had done everything possible to clean up its operations in the wake of the incident.

Boeing may appeal the action following a debriefing session with Air Force officials.

BusinessWeek also notes that many are protesting the award of a military contract to an overseas firm. “We are shocked that the Air Force tapped a European company and its foreign workers to provide a tanker to our American military,” Sen. Patty Murray (D-Wash.) said in a statement. “At a time when our economy is hurting, this decision to outsource our tankers is a blow to the American aerospace industry, American workers and America’s military.”

Murray’s complaint was countered by observations that as part of the deal, EADS said it will relocate a major manufacturing facility from Europe to Mobile, Alabama, creating jobs for about 1,500 U.S. workers, according to the Seattle Times.

Sources: Deutsche Welle, Mar. 3 — BusinessWeek, Mar. 1 — Seattle Times, Mar. 1 — Seattle Times, Mar. 1 — Chicago Sun-Times, Mar. 1 — Seattle Post-Intelligencer, Mar. 1.

For more information, see: Related Newsline story, Aug. 7, 2007 — Related Newsline story, July 31, 2006 — Related Newsline story, Oct. 3, 2005 — Related Newsline story, June 13, 2005 — Related Newsline Commentary, Mar. 14, 2005.