Mar 04 2009

Tanker split faces uphill struggle

By George Talbot

Count U.S. Sen. John McCain among a list of Washington, D.C., power brokers opposed to the idea of splitting the Air Forces contract for refueling tankers.

McCain, R-Ariz., said in an interview with Bloomberg News that the Air Force should conduct a winner take all competition between Boeing Co. and a Mobile-based team led by Northrop Grumman Corp.

"Just because of politics, we shouldn't split the contract," McCain told ace Pentagon reporter Tony Capaccio. "It would only be a political decision."
U.S. Rep. John Murtha, D-Pa., is pushing a plan to divide the order between Boeing and Northrop. His plan, which has picked up the endorsement of U.S. Rep. Neil Abercrombie, D-Hawaii, is aimed at breaking a political stalemate between the two defense contractors.

John Murtha Support has been mixed, even among the Alabama delegation. U.S. Reps. Jo Bonner, R-Mobile, and Artur Davis, D-Birmingham, could help Murtha build consensus in the House. Alabama's two Republican senators, Richard Shelby and Jeff Sessions, were less favorable.

"It shouldn't be political," Shelby said during a recent visit to Mobile."We won the first round because we offered a better product at a better price. We have no reason to compromise."

McCain, a former Navy pilot, is viewed as an authority on the tanker program by his peers in Congress - and not just because he's the ranking Republican on the Senate Armed Services Committee. McCain won respect for his one-man crusade against the Air Forces ill-fated 2001 deal to lease tankers from Boeing.

The $23.5 billion contract collapsed in scandal when McCain exposed a corruption scheme between the company and the Air Force's top weapons buyer. The sole-source deal would have ripped off taxpayers by as much as $6 billion.

McCain told Bloomberg that he backs Defense Secretary Robert Gates, who is adamantly opposed to buying two planes. Gates has said that a split would add millions of dollars in costs with no justifiable benefit to the military.

"I think the idea of a split buy is an absolutely terrible idea and a very bad mistake for the U.S. taxpayer," Gates told the House Armed Services Committee in January.

Political backers of Boeing - led by U.S. Rep. Norm Dicks and U.S. Sen. Patty Murray, a pair of Democrats from Washington state - have vowed to fight any attempt to divide the contract. The company itself has been conspicuously quiet on the subject.

My conversations with Boeing employees and others close to the company suggest there is disagreement within Boeing over whether to embrace Murtha's proposal. Members of the company's defense unit, many of whom have spent years chasing the tanker contract, tend to take a more practical view of the split.

"Let's start building some airplanes," one veteran member of the Boeing tanker team, who asked not to be identified because he is not authorized to speak for the company, told me last week.

It is within Boeing's commercial division where opposition is said to be strongest. The reason is simple: Boeing doesn't want to see its archrival, Airbus, get a foothold in the U.S.

The European aircraft company is a partner on Northrop's tanker team, and would expand the Mobile assembly plant to include production of commercial freighter aircraft.

"My sense is the Boeing commercial side is absolutely committed to keeping out Airbus," said defense analyst Loren Thompson. "That's a major motivation for them."