Sep 26 2006

Alabama lawmakers object to criteria on Air Force tanker deal

The Associated Press

By Ben Evans

Alabama lawmakers are objecting to proposed bidding criteria for a major Air Force contract, saying it could unfairly hurt the chances that a new, multibillion-dollar fleet of airborne refueling tankers would be built in Mobile .


The Pentagon plans to submit a "request for proposals" within days that would include questions about how a pending international trade dispute involving U.S.-based Boeing Co. and European jet maker Airbus SAS could affect the companies' ability to take on the project.


The companies are leading contenders for the contract. European Aeronautic Defence and Space Co., the majority owner of Airbus, has teamed with Northrop Grumman Corp. on its bid and plans to build the KC-330 plane in Mobile if it wins the work.


"It looks to me that if it's included, it will tilt, or try to tilt, the playing field toward Boeing," Sen. Richard Shelby, R-Ala., said after a Wednesday meeting with Deputy Defense Secretary Gordon England. "He should be interested, in my opinion, in getting the best tanker at the best price for the American taxpayer."


Although the bidding proposal is only a draft, Shelby said England did not back away from it.


"We had no satisfaction out of the meeting," said Shelby, who was joined at the meeting by Rep. Jo Bonner, R-Ala., and staffers for Sen. Jeff Sessions, R-Ala.


A contract for the project could be awarded as soon as next year. Boeing has proposed a tanker version of its 767 jetliner, which is built at Everett, Wash.


In the trade dispute, pending before the World Trade Organization, the United States filed a complaint against Airbus in 2004, arguing that subsidies from European governments gave the company an unfair advantage over Boeing.


The European Union retaliated with a countersuit targeting tax breaks and other subsidies given to Boeing, which is based in Chicago .


Boeing supporters in Congress have argued that the European company should have to account for advantages that such subsidies give them in competing for Pentagon contracts. But EADS backers, pointing to U.S. support for Boeing, say the military should not get involved in a complex trade dispute and should focus specifically on the tanker contract.


The Air Force is asking how subsidies would help pay for design and development of the refueling tanker and how potential retaliatory duties might affect the project.


Sen. John McCain, R-Ariz., a critic of the tanker deal and leading member of the Armed Services Committee, has joined Alabama lawmakers in opposing the military proposal, saying it would reduce competition.


In a Sept. 15 letter responding to McCain's criticism, England said "lingering issues" involving the dispute could affect the contract award and that the military must take into account the companies' views on "potential WTO impacts on contract performance."


"In my judgment, it's important that all matters be openly addressed and clarified prior to a final RFP being issued," he wrote.


EADS announced its decision last year to build the plane at Mobile's Brookley Industrial Complex, a former air field, choosing the Gulf Coast port city over several other Southern cities. The $600 million plant could bring 1,000 jobs to the state, the company said.