Boeing: protection rents redux
http://seattletimes.nwsource.com/html/home/ Sky-high request? 7E7 bidders asked to provide freighters By Katie Pfleger and Dominic Gates Seattle Times staff reporters In an unusual twist on the corporate-incentive game, Boeing has asked states competing for the 7E7 assembly line to provide a small fleet of oversized cargo planes that would be used to deliver parts for the next-generation jet. The planes, 747 jumbo jets with a bulging modified fuselage, could dramatically speed the delivery of components from far-off suppliers in places like Japan and Italy. Boeing announced yesterday it has adopted air freight as the primary method of parts delivery for the 7E7. That could decrease Puget Sound's chances of landing the project by undercutting any advantage of direct sea transportation from Japan, where more than one-third of the 7E7 is expected to be built. Instead, the announcement is offering new hope to East Coast sites such as Charleston, S.C., and locations far from the sea, such as Tulsa, Okla. "If they are really serious (about air freight), a Japan-facing deep seaport should matter a lot less," said Richard Aboulafia, an industry analyst with the Teal Group. However, he questioned whether Boeing really wants the additional cost of air-freighting large, heavy parts around the globe. Instead, Aboulafia wondered if Boeing's announcement might be a negotiating tactic: "Are they trying to eliminate the widespread perception that Washington has an inside track?" In closed-door discussions, Boeing has asked competing sites for help in acquiring the cargo planes, according to people close to the site-selection process. Boeing representatives have expressed the need to keep the debt for the jumbo freighters off the company's books, sources say. That means the planes could be owned by an air-freight company or by one of the states themselves. Business developers across the country have grown increasingly accustomed to offering free or cheap land, training programs, tax breaks and other similar incentives to lure companies to a location. Boeing has been offered a half-billion-dollar loan by the Kansas legislature, $350 million in cash and loans financed by taxpayers in Tulsa, a reported $30 million from the Texas governor and $3.2 billion worth of industry tax breaks in Washington state. Three modified 747 freighters, which Boeing says it needs, could cost about an additional $300 million, analysts say. However, the company said it could save money air-freighting, in part because million-dollar parts would spend less time in transit. Some parts would get to the plant in a single day, down from 30 days. Boeing has steadfastly declined to comment on the site-selection process, saying only that it will have a location chosen by the end of the year, at the same time the Boeing board decides whether to offer the 7E7 for sale. If the process follows the same pattern as a recent Boeing site selection for its Delta rocket business, the company is now negotiating with state and local officials to maximize the incentive packages. Most states involved in the process have also stopped commenting publicly on what they are offering Boeing, saying that to talk would be to risk dropping out of consideration. Ray Gilley, president and chief executive of the Metro Orlando Economic Development Commission in Florida, said with a wide-open competition such as this one, a company's requests and the sites' responses can get creative. "The company, I think, is asking for what they believe and feel is critical for their success," said Gilley, whose city is not competing for the 7E7. "To the extent that various communities might be able to supply what they need or come close to it is a question for the communities." He said he has had a variety of special requests during his 20 years in business development, such as assistance in getting an executive's child into a school for special needs, or getting a spouse in the arts sector a job as a curator. As for a request for 747 freighters: "Oh, it would make my jaw drop," Gilley said. The creation of such a fleet of specialized transport aircraft would be an entirely new and costly step for Boeing if it were to finance the fleet itself. Analysts estimate that Airbus spent about $1 billion to build its fleet of five Beluga transport planes, which it uses to ferry major components from its European partners to its headquarters in Toulouse, France. Boeing's shipping distances would be much greater, because major components for the 7E7 are expected to come from Japan and Italy to the United States. Ned Laird, managing director of the Air Cargo Management Group, estimates that Boeing could pick up a used 747-400 passenger jet for around $50 million and do the cargo conversion for another $30 million. Boeing could even use some of the 747-400s currently sitting on the books of Boeing Aircraft Trading, a unit of Boeing Commercial Airplanes that deals in used planes trade
Re: protection rents redux
Are there any articles or data on the distribution of contracts for reconstruction in Afghanistan that Penners would commend? Cheers, Ken Hanly - Original Message - From: "Ian Murray" <[EMAIL PROTECTED]> To: "pen-l" <[EMAIL PROTECTED]> Sent: Friday, March 21, 2003 4:30 PM Subject: [PEN-L:35881] protection rents redux > U.S. Set to Award 7 Contracts for Rebuilding of Iraq > Initial Work Will Go to American Firms > > By Paul Blustein and Renae Merle > Washington Post Staff Writers > Friday, March 21, 2003; Page A30 > > > The U.S. Agency for International Development said yesterday that it will > shortly award seven contracts to American companies for the initial stages > of reconstruction in postwar Iraq -- two of them as early as today. > > Justifying the decision to restrict the contracts to U.S. firms, Andrew S. > Natsios, the USAID administrator, said one reason is the need for the > firms' personnel to have security clearances, because "there are > classified documents they have to see." > > Natsios and other officials emphasized, however, that they expect the > long-term reconstruction effort to go well beyond the USAID contracts and > include international organizations and aid agencies from other countries, > which would presumably award contracts to non-U.S. firms. > > "We expect U.N. agencies will be involved in a major way," Natsios said, > adding that he has also been talking "below the radar screen . . . for > three or four months now" to his counterparts at the aid agencies of other > wealthy countries in the expectation that they, too, would play > significant roles in rebuilding Iraq after U.S.-led forces unseat > President Saddam Hussein. > > Other U.S. officials said they envision important contributions from the > International Monetary Fund and World Bank as well. The IMF has > established a task force to study the Iraqi economy, although any > financial support from either it or the World Bank probably would take > considerable time because the two institutions last worked in Iraq in the > 1970s and early 1980s. > > The U.S. officials' comments may go at least part way toward defusing a > controversy that has arisen over USAID plans to limit its contracts to > U.S. firms. The agency almost always awards American companies a large > portion of its contracts, but international criticism erupted after recent > news reports that the USAID had limited the selection process for the > biggest contracts to a handful of huge U.S. multinational firms, some of > which are well connected to the Bush administration. Those firms include a > subsidiary of Halliburton Co., the company once headed by Vice President > Cheney. > > The agency's handling of the matter, and the implication that > international organizations and other aid agencies would be left out, was > denounced as "exceptionally maladroit" by Chris Patten, the European > commissioner for external relations. The amount of aid that is needed for > reconstruction, although still far from determined, is certain to dwarf > the sum that the USAID is planning to spend on the contracts in question, > and that is one major reason that U.S. officials say they would welcome > involvement by international agencies and other countries. Many experts > have cited estimates ranging from $25 billion to $100 billion for the full > reconstruction, while the largest contract the USAID is planning to award > at this stage is for about $600 million. > > That contract, to repair the country's infrastructure, including roads and > bridges, is to be awarded early next week. The field of competitors was > narrowed from seven to two or three, and the companies have been asked to > submit their "best and final offers," agency officials said. Two contracts > to administer Iraq's seaport and airports may be awarded as soon as today. > > The total cost of the USAID's plan is still unknown, Natsios said, and > will be allocated in a supplementary appropriation bill that President > Bush plans to submit to Congress soon. According to people who have seen > contract documents that have been distributed to some of the firms, the > USAID effort is intended "to provide tangible evidence to the people of > Iraq that the U.S. will support efforts to bring the country political > security and economic prosperity." > > Even if Washington does not intend to have U.S. firms dominate Iraq's > reconstruction, officials of many nongovernmental organizations (NGOs) > that have been actively involved in aid are upset about the USAID plan > because it apparently envisions a minor role for them. NGO officials > contend
protection rents redux
U.S. Set to Award 7 Contracts for Rebuilding of Iraq Initial Work Will Go to American Firms By Paul Blustein and Renae Merle Washington Post Staff Writers Friday, March 21, 2003; Page A30 The U.S. Agency for International Development said yesterday that it will shortly award seven contracts to American companies for the initial stages of reconstruction in postwar Iraq -- two of them as early as today. Justifying the decision to restrict the contracts to U.S. firms, Andrew S. Natsios, the USAID administrator, said one reason is the need for the firms' personnel to have security clearances, because "there are classified documents they have to see." Natsios and other officials emphasized, however, that they expect the long-term reconstruction effort to go well beyond the USAID contracts and include international organizations and aid agencies from other countries, which would presumably award contracts to non-U.S. firms. "We expect U.N. agencies will be involved in a major way," Natsios said, adding that he has also been talking "below the radar screen . . . for three or four months now" to his counterparts at the aid agencies of other wealthy countries in the expectation that they, too, would play significant roles in rebuilding Iraq after U.S.-led forces unseat President Saddam Hussein. Other U.S. officials said they envision important contributions from the International Monetary Fund and World Bank as well. The IMF has established a task force to study the Iraqi economy, although any financial support from either it or the World Bank probably would take considerable time because the two institutions last worked in Iraq in the 1970s and early 1980s. The U.S. officials' comments may go at least part way toward defusing a controversy that has arisen over USAID plans to limit its contracts to U.S. firms. The agency almost always awards American companies a large portion of its contracts, but international criticism erupted after recent news reports that the USAID had limited the selection process for the biggest contracts to a handful of huge U.S. multinational firms, some of which are well connected to the Bush administration. Those firms include a subsidiary of Halliburton Co., the company once headed by Vice President Cheney. The agency's handling of the matter, and the implication that international organizations and other aid agencies would be left out, was denounced as "exceptionally maladroit" by Chris Patten, the European commissioner for external relations. The amount of aid that is needed for reconstruction, although still far from determined, is certain to dwarf the sum that the USAID is planning to spend on the contracts in question, and that is one major reason that U.S. officials say they would welcome involvement by international agencies and other countries. Many experts have cited estimates ranging from $25 billion to $100 billion for the full reconstruction, while the largest contract the USAID is planning to award at this stage is for about $600 million. That contract, to repair the country's infrastructure, including roads and bridges, is to be awarded early next week. The field of competitors was narrowed from seven to two or three, and the companies have been asked to submit their "best and final offers," agency officials said. Two contracts to administer Iraq's seaport and airports may be awarded as soon as today. The total cost of the USAID's plan is still unknown, Natsios said, and will be allocated in a supplementary appropriation bill that President Bush plans to submit to Congress soon. According to people who have seen contract documents that have been distributed to some of the firms, the USAID effort is intended "to provide tangible evidence to the people of Iraq that the U.S. will support efforts to bring the country political security and economic prosperity." Even if Washington does not intend to have U.S. firms dominate Iraq's reconstruction, officials of many nongovernmental organizations (NGOs) that have been actively involved in aid are upset about the USAID plan because it apparently envisions a minor role for them. NGO officials contend that they have far more expertise than giant companies in the on-the-ground work in local communities that is required to build successful health and education systems. "We've received verbal assurances from the U.S. government that NGOs will be involved in reconstruction activities, but we'll believe it when we see it," said Sid Balman Jr., a spokesman for InterAction, an umbrella group of NGOs. "There's been a worrisome trend we've been seeing, based on what we saw in Afghanistan, where the Bush administration seems to be turning to a small pool of mainly large U.S. contractors for most reconstruction activities."
protection rents redux
Bush won't sign bill to release stores involved in meat recalls By Emily Gersema, Associated Press, 3/13/2003 WASHINGTON - The Bush administration will oppose any legislation that would make meat companies tell consumers which stores received meat that was recalled because of possible contamination, an Agriculture Department official said yesterday. Elsa A. Murano, the department's undersecretary for food safety, told a House subcommittee that consumers wouldn't benefit, because companies send meat to places other than grocery stores and restaurants. Representative Rosa L. DeLauro, Demcorat of Connecticut, said she was considering legislation after food-poisoning outbreaks killed nine people last year. She said a law requiring processors to tell consumers which markets sold the meat would protect the public. ''This is not about a company's bottom line,'' DeLauro said. ''This is about the public's safety.'' The department asks companies for lists of retailers and wholesalers when checking which ones may have sold the meat before it was recalled. However, the agency cannot release the lists to the public because they are considered proprietary trade information. Murano said the department has the authority to demand the lists. If a processor refuses to hand over a distribution list to the department, the department could take it to court, she said. Murano said companies wouldn't be as cooperative if they were forced to share information. If too much time was spent getting the processors to release lists, then more people would be at risk of getting sick, she said. Consumer advocates argued that consumers need to know whether stores are selling recalled meat. ''If even one person took action based on having the information and therefore avoided getting sick, it would be worth having that information available,'' said Carol Tucker Foreman, head of the Consumer Federation of America's Food Policy Institute. ''I think that USDA has decided once again to protect its political contributors in the meat industry, rather than to protect public health,'' she said. The meat industry would oppose any move to make them tell the public who their trading partners are, said Janet Riley, spokeswoman for the American Meat Institute. ''The most important thing for the consumer to know is all of the establishment codes and the product code dates,'' Riley said. ''That's what tells them whether they've got the product or not.'' When announcing a recall, the department releases the names of the meats being pulled and the days they were processed. Also on Tuesday, Democratic lawmakers who have been critical of how the department handles recalls wrote to Agriculture Secretary Ann M. Veneman, calling for an investigation into ConAgra Foods. The company's Greeley, Colo., plant was linked to 42 illnesses last summer, prompting the recall of 19 million pounds of ground beef after inspectors found harmful bacteria, E. coli, in some hamburger meat.
