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11:57 am CST - April 28, 2008

Posted under The Scoop

Big-Ticket Tanker Brawl


By Bara Vaida
Published: 04-28-08

Boeing & Northrop Grumman have opened their checkbooks in their lobbying fight over an Air Force contract.

Are defense contractors Boeing and Northrop Grumman prepping for one of the costliest lobbying brawls ever in Washington?

With a mammoth Pentagon contract at stake, neither Boeing, which is protesting the $35 billion deal that was awarded to its rival, nor Northrop and its partner, European Aeronautic Defense and Space, which won the bid to build refueling tankers for the Air Force, will disclose lobbying budgets or say much about strategy.

Still, K Street is rife with talk that Boeing is ready to spend as much as $250 million on an advocacy and legal campaign to overturn the February 29 award to Northrop and EADS, which owns airline manufacturer Airbus.

“We’ve heard [the number] through an Air Force source and a couple of other Hill sources,” said Sam Adcock, senior vice president of government relations at EADS North America. Northrop spokesman Randy Belote said he, too, has “heard that number thrown around.” A spokesman for the Air Force said that it “is not aware of the specifics” on how much Boeing is spending on its protest.

Is the quarter-billion-dollar figure realistic, or is it being talked up as part of a strategy to counter Boeing?

Doug Kennett, a Boeing spokesman, said the $250 million number is “so ridiculous that you almost don’t want to respond to it.” He declined when asked to provide a figure that he would call accurate. “This is a serious, ongoing formal protest,” he said. “Plain and simple.”

Whatever the truth, there is no doubt that Boeing and Northrop are opening their checkbooks.
In the first three months of 2008, Northrop paid out $3.31 million in lobbying fees, while Boeing spent $2.8 million, according to lobbying disclosure documents, although not all of that spending was directly related to the tanker battle.

In 2007, Northrop spent $10.9 million and Boeing shelled out $10.6 million, according to the Center for Responsive Politics.

Both sides have boosted their lobbying teams over the past two months. Boeing hired former House Democratic Leader Dick Gephardt of Missouri, and Northrop signed up the lobbying shop of former Sens. Trent Lott, R-Miss., and John Breaux, D-La. It also hired Democratic strategist Steve Elmendorf. EADS hired former Transportation Secretary Norman Mineta, who works at Hill & Knowlton.

Twenty firms are currently registered to lobby for Boeing; 16 are registered for Northrop and seven for EADS, according to congressional records.

Responding to Boeing’s protest, the Government Accountability Office has agreed to rule on whether the award process was flawed. Its decision is expected in June; meanwhile, the contract is on hold.

While they wait, the companies are waging an expensive public-relations war.

Boeing has run ads in newspapers and magazines (including National Journal) questioning the Air Force’s criteria and the fairness of the procurement process. The company has also tapped such grassroots specialists as the DCI Group and the Dewey Square Group.

In news briefings, Boeing officials have questioned the national security and economic implications of having a European company as part of the team building U.S. military planes. Boeing supporters, including union workers, have staged rallies and sent letters to Congress, while a staffer at the Center for Security Policy, a conservative think tank, has created TankerWarBlog.com to support Boeing’s position.

Northrop’s aggressive response has included a barrage of print ads arguing that it won the contract on the merits. One ad featured an “open letter” to Defense Secretary Robert Gates from 22 retired Air Force generals who called questions about the award process “a vitriolic attack on the Air Force.” (National Journal has reported that all of the generals are either employees of, or consultants to, Northrop Grumman and its subcontractors.)

Northrop has created its own website, AmericasNewTanker.com, and its PR team, which includes Public Strategies, has been promoting Northrop’s viewpoint in daily e-mails.
Between March 1 and April 21, Boeing and Northrop spent a combined $3.3 million on print advertising related to the tanker contract, according to the Campaign Media Analysis Group, a division of TNS Media Intelligence.

“Both sides are playing very aggressive; both have their gloves off,” said Richard Aboulafia, a vice president at the Teal Group, a defense analysis firm that hasn’t received money from either Boeing or Northrop on the tanker issue.

Meanwhile, Boeing allies on Capitol Hill have vowed to block spending on the tanker contract if Boeing’s appeal to the GAO fails. Aboulafia said he could see Boeing spending hundreds of millions of dollars on advertising “to show support for its political allies” as they try to reverse the Air Force decision.

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