Boeing Shows Its True Colors – Again

The former criminal enterprise currently known as Boeing has again confirmed its history of bad behavior.

In competing for the Air Force refueling tanker manufacturing contract, Boeing used just about every trick known to man, some of them illegal, to win the contest.

Boeing promised the people of Kansas that if they won the contract, the tankers would be built in Wichita.  This so fired up the politicians of Kansas that operating at full RPM in wild-eyed zealotry they accused anyone who supported Boeing’s opponent in the contest of being “un-American.”

It didn’t matter that the other manufacturer in the contest would have assembled the tankers in Mobile, Alabama, a city that most cartographers would locate within the United States of America.

Now surprise, surprise!  Boeing just announced that they are taking the tanker manufacturing out of Kansas along with over 2,000 jobs.  Never mind the promises.  “Adios Wichita.”

If this comes as any shock to the people of Wichita, perhaps a review of Boeing’s behavior in the tanker contest would be of benefit to our friends in Kansas.

It’s a sordid history including corruption, suicide and bungling.  It dates back to 2001 when the Air Force announced its intention to lease 100 new tankers from Boeing for $20 billion.

In May 2003, the Pentagon chief arms buyer approved the lease four days before he retired.  Sen. John McCain promptly criticized the arrangement and called it a “sweet deal” for Boeing that would cost taxpayers more than the alternatives.

In November 2003, Boeing fired Chief Financial Officer Mike Sears and Vice President Darleen Druyun.  Boeing said Sears had improperly offered Druyun a job while she was an Air Force acquisitions officer in charge of the tanker project.  One week later, Boeing CEO Phil Condit “resigned.”  Sears and Druyun were criminally prosecuted for their role in the tanker deal, convicted and sentenced to prison.

Early in 2004, Secretary of Defense Donald Rumsfield canceled the Boeing tanker leasing deal.

In September 2005, American-based Northrop Grumman teamed up with EADS (European Air Defense Systems) to participate in the competition to replace the Eisenhower-era tankers.

In January 2007, the Air Force issued a “final” request for tanker bids.  A few months later, Boeing and Northrop submitted bids.  In October, The Air Force’s number two acquisition official, Charles Riechers, was found dead in his home of an apparent suicide.  Riechers was working on the tanker program and was under scrutiny while awaiting Senate confirmation for another job.

In January 2008, Northrop confirmed that the tankers would be built in Mobile, Alabama should the Los Angeles-based company win the bidding.  The next month, the Air Force awarded the $35 billion contract for 179 tankers to Northrop/EADS.

Boeing promptly filed a loser’s whining protest.  The aerospace giant brought its considerable political clout to bear, attempting to convince the government that whining constitutes substance.  Three months later on March 10, 2008, the General Accounting Office upheld the Boeing protest, citing “significant errors” in the process.

Later in 2008, Secretary of Defense Robert Gates canceled the Northrop award and said the Pentagon would rebid the contract.  But he removed control over the process from the Air Force, saying his office would make the decision.  The Pentagon then released a draft request for another round of bidding.

Within days, Boeing filed a bullying complaint saying that it might bail out of the bidding unless it got additional time from the Pentagon to consider its offer.  The Defense Department yielded to Boeing and delayed the competition, effectively punting the decision to the Obama Administration which took office four months later.  President Obama asked Robert Gates to stay on as Defense Secretary and Gates agreed.  Gates returned control over the tanker process to the Air Force.

Long story short, Boeing won the contest with a low-ball bid and with the help of its superior lobbying efforts in Kansas and Washington.  And it didn’t hurt that Boeing’s corporate headquarters was in President Obama’s hometown.

Within months of winning the contest with their lower bid, Boeing announced that there would be significant cost overruns as allowed under the contract.

Now on top of that, Boeing is moving the manufacturing from Wichita.  They have said, in effect, “Screw you, Wichita.”

Note to wherever this outfit locates next: You are hereby forewarned that your new corporate citizen bears close scrutiny.

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About William Bruce

President, American Business Brokers Association / Business Broker and Accredited Business Intermediary assisting business buyers and sellers with the transfer of ownership since 1986 / Author: How to Buy a Business.
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6 Responses to Boeing Shows Its True Colors – Again

  1. Elene Parker says:

    Speaking of which, I read this (link, if you’re interested: during my coffee break today. Judging by your post, I think you’d find it worth a glance. Cheers, Elene

  2. Elene, thanks for the link. Very interestng. Boeing cannot relied upon.

  3. Will,
    You have provided fresh new evidence to a new truism I am detecting in business these days: the true meaning of Crony Capitalism. Such as shame. It’s tough enough trying to keep the government honest which, by definition, cannot be done. But to have large American corporations pulling this stunts like this, it is hard to a business cheerleader.

    And to think for a while I was actually sympathetic to their South Carolina DOL case…any more I don’t really care since their integrity is like this. As a legacy manufacturer, what young bot hasn’t dreamed of flying the B-17 over Germany in WWII. That brand represents all the America has struggled to become.

    As for me, I will now forgo the idea of an eventual IPO in my company, as I see what happens time after time when a company goes public, and then the soul of a company disappear in deference to the darkness of cold stockholders. Think I’ll remain privately-owned, and support only privately-owned small business.

    BTW, Northrop is probably the only corporation left in the nation that actually still has it’s soul still intact. All of their products are excellent, sound, built and maintained with integrity. It’s been that way since Jack Northrop began building his own airplanes after leaving an egotistical Lockheed assignment.

    Maybe there are simply more union employees with Boeing than Northrop whose votes are desperately needed in the upcoming election?

    Back to work. Thanks for a great story, Will.

    Rick Matthews

  4. Rick, thanks for your kind words and comments. Boeing has indeed lost its soul.

  5. Dale says:

    Very interesting Will, now I know the “rest of the story”…will definitely keep an eye out for them when they arrive in San Antonio.



  6. Bill Clinton says:

    This is the way Boeing does business; screw the government, screw the employees, screw the stockholders, only the managers profit.

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