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Defense Focus: Air tanker wars -- Part 1

By
MARTIN SIEFF, UPI Senior News Analyst

WASHINGTON, July 10 (UPI) -- The impossible has happened: The U.S. Air Force has decided -- or been told -- to reopen bidding on its $35 billion air tanker contract.

The decision marks a dramatic victory for the world's biggest airliner manufacturer, Boeing, which also has provided the USAF with its jet air tankers for almost a half-century.

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And it is a huge setback for the European Aeronautic Defense and Space Co. and its U.S. partner, Northrop Grumman. On Feb. 29 those two companies landed the contract to build 179 of the U.S. Air Force's next-generation long-range air tankers for EADS' KC-45A tanker -- adapted from the A330 Airbus -- when the contract had been expected to go to Boeing for its KC-767.

Whoever landed the contract certainly would receive follow-up ones eventually totaling 600 of the giant aircraft worth $100 billion.

U.S. Defense Secretary Robert Gates announced the unprecedented reversal of fortune Wednesday. His decision followed a U.S. Government Accountability Office report that slammed the Air Force for the decision-making criterion it used to favor EADS and Northrop Grumman.

There was, in fact, a strong case to be made for reopening the bidding. But it certainly would not have happened if not for a number of unlikely ducks that had to be lined up in a row first.

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First, the controversy erupted in a presidential election year when the Democrats, who already control both chambers of the U.S. Congress, are pushing protectionist, America-first trade issues in congressional races and the presidential contest. Their presidential campaign standard-bearer, Sen. Barack Obama of Illinois, although in the past a moderate free-trader, has swung sharply to the protectionist left during the campaign.

Second, the Bush administration and the Republican Party in Congress did not want to be vulnerable on the issue either. Northrop Grumman had pledged to assemble the parts for the new aircraft -- mostly to be manufactured at its European main plants -- at a new factory to be built in Alabama. But Boeing argued the decision would cost scores of thousands of well-paying, irreplaceable aerospace and other high-tech jobs at its own plants and with its subcontractor partners across the United States.

Significantly, Gates' decision was welcomed not just by protectionist Democrats but also by traditionally free-trade Republicans, especially in states that stood to lose big if the contract stayed with EADS and Northrop Grumman.

Rep. Duncan Hunter, R-Calif., the ranking Republican on the House Armed Services Committee, Wednesday praised Gates' decision to recompete the aerial refueling tanker program.

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"Secretary Gates' decision to recompete the tanker contract is a win for America's workers and taxpayers, as well as our war fighters deployed around the world," he said in a statement.

Hunter also urged the secretary of defense to carefully define the parameters for making the choice between the competing aircraft in the competition -- something the GAO had severely criticized the first time around.

"Due to its superior range and fuel carriage capacity, the Boeing (KC-767) should be considered because it would provide increased military capability to our troops," he said.

"I'm pleased that the Air Force will incorporate the GAO's recommendations into the new competition; but one thing is clear, the Department of Defense's acquisition system is seriously flawed. The Pentagon has an obligation to the American taxpayers to fix these flaws so they are not repeated in the new competition," Hunter said.

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(Part 2: The political fallout from Gates' decision)

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