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T-Minus One Week On Tanker, Boeing And Northrop Grumman

Sometime between now and the end of next week, we'll find out who will make the next refueling tanker for the U.S. Air Force. Ok, that's probably not true. One week until the next shoe drops in one wild business saga. The only thing missing from the tanker story is sexual intrigue, but that'll probably show up in a movie version starring Clive Owen as the head of Airbus.

Boeing Headquarters
Boeing Headquarters

It's been a year since I started reporting on "the biggest defense contract of 2007," except now it'll be "the biggest defense contract of 2008." Or maybe 2009. The $35 tanker deal has taken more odd turns than a lost UAV, including:

--The unique way Boeing pitched the deal in the early part of the decade as a lease, not a buy.

--The scandal involving the Air Force procurement official landing the deal for Boeing while secretly trying to get a job there.

Northrop Grumman
AP
Northrop Grumman

--Northrop Grumman taking the unusual step of fronting a bid involving Airbus, which was itching to make planes for the U.S. military.

--Northrop threatening to pull out when it complained the deck was stacked against it, a move that could have derailed the entire bidding process, further delaying new tankers.

--Northrop Grumman/EADS winning the contract in an upset--surprising even some inside the partnered companies.

--Boeing filing a challenge, lauching one of the most aggressive, political campaigns in defense procurement history.

--The Secretary of Defense firing the top two officials at the Air Force, creating questions about the service's integrity.

Which leads us to this point. Now the defense secretary has recommended new leaders for the Air Force: Mike Donley as Secretary of the Air Force--he comes from DOD's admin and finance, and Gen. Norton Schwarz as the branch's Chief of Staff. Gen. Schwartz has been in charge of the Air Force's tranportation division. Plus, his name also sounds like Norman Schwarzkopf, which can only help.

We asked both Boeing and Northrop Grumman if these changes could impact the tanker decision. No comment from Boeing, but a Northrop spokesman said it shouldn't make a difference (no shock there). He added, "The Air Force identified the need to replace its Eisenhower-era tanker aircraft fleet almost a decade ago. Leadership changes within the Service should have little impact on that need."

Here's what I think is going to happen. Um. Well. Ok, I don't have a clue. Predicting this is harder than guessing Da'Tara was going to win the Belmont.

If the GAO sides with Boeing, how can Congress not make an issue out of this? If the GAO sides with Northrop Grumman, what's the point of fighting it anymore? Boeing risks looking like Hillary Clinton and not knowing when to quit.

Which leads to the Presidential election. If this challenge drags on, will John McCain maintain his past criticism of Boeing? Will Barack Obama--from Boeing's home state of Illinois--threaten to veto any defense budget that doesn't reopen the bidding?

Meantime, those poor pilots are out there flying buckets of bolts filled with fuel which are a half century old. God bless the maintenance guys.

Questions? Comments? Funny Stories? Email funnybusiness@cnbc.com

  • Based in Los Angeles, Jane Wells is a CNBC business news reporter and also writes the Funny Business blog for CNBC.com.

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