The Wall Street Journal’s August Cole reports that a federal court overruled an Air Force contract that exclusively gives Boeing Co. the right to supply midair refueling tankers or "gas stations in the sky." The relatively small Alabama Aircraft Industries Inc. successfully challenged a 4-yr., $1.1 billion interim deal, which the Air Force rewarded as it was figuring out how to reward a much larger, long-term contract for more modern tankers.

The battle for that contract– which with a potential worth of $100 billion will be the largest in Air Force history– pits Boeing Co. against the combination of Northrop Grunman and European Aeronautics Defense & Space Co. The Air Force has twice botched rewarding the contract. Now a contract proposal that first surfaced in 2002 will likely not be settled until well into the first-term of the next administration.-MB

The New York Times‘ Solomon Moore reports on what has evidently become an annual event: Immigrations and Customs Enforcement officials arresting foreigners who belong to gangs. The practice first started in 2005 when the Dept. of Homeland Security’s ICE targeted the El Salvadoran MS-13 gang.

But already this year more than 1,700 people from a range of nationalities have been arrested and more than 800 face criminal charges. ICE has been heavily criticized for aggressive raids that overburden an already broken immigration court system. But local authorities, at least, seem to appreciate ICE’s assistance in gang-related issues.-MB

The Washington Post’s Robert O’Harrow gives us a cut-and-dried tale of corruption — highly ironic corruption — at the Food and Drug Administration.

As Understanding Government has detailed, lawmakers have held hearings and newspapers have run stories screaming that the FDA wasn’t doing its job. The (accurate) accusations ranged from not being able to handle Chinese imports to being too cozy with drug companies.

So the FDA handled the negative publicity by spending $300,000 to hire a public relations firm. Only they violated federal procurement rules by making it a no-bid contract. The agency gave the contract to Alaska Newspapers, Inc. — whose special privileges as an Alaskan Native company apparently overrides no-bid rules. The Alaskan company then immediately gave all the work to a sub-contractor, the D.C. p.r. firm Qorvis (yes, no "u"– that should have been a sign).

Mildred Cooper, who the FDA hired to run p.r., previously worked for Qorvis. Also, Qorvis represents the drug company trade group, PhRMA.

O’Harrow got his info from agency emails. The FDA has since dropped the contract and opened an internal probe. Hopefully it will be better-conducted than their food and drug inspections!-MB

…And now it goes back to the House. The Washington Post’s Lori Mongtomery and Shailagh Murray report that the Senate approved Wednesday night, 74-25, a plan to have the Treasury Dept. buy up to $700 billion in now almost worthless mortgage-related assets. The taxpayers would supply the $700 billion, which is why a group of rank-and-file House members sent the bill to a stunning defeat on Monday.

But the bill the House votes on today is different than the one that failed– and far different than the "clean" bill Treasury Sec. Henry Paulson first proposed. The Senate proposal includes an array of changes to the tax system, some with only a tenuous connection with the mortage crisis. For example, a loophole that allows hedge funds to avoid taxes by setting up offshore shell companies would be closed. There is also a provision to give tax breaks for people who do business in Washington, D.C. There are even tax credits for using alternative energy.

Another significant non-mortgage provision requires insurance companies to provide the same level of coverage for mental illnesses as other maladies. The basic fairness argument underlying "mental health parity" was primarily advanced by the late Sen. Paul Wellstone (D-Mn.).  It is heartening to see it finally pass the Senate.

That said, mega-bills like this one are the stuff of federal agency nightmares. Can the govt. execute major changes to the tax code and insurance system (I didn’t even get into Federal Deposit Inusrance Corporation changes here)? It seems that instead of a major overhaul to the financial regulatory system, this bill proposes dozens of smaller changes.-MB