Conservatives Debate Airbus Tanker Bid

Posted: Oct 23, 2009 12:56 PM
Kerri (Houston) Toloczko, a Senior Vice President for Policy for the Institute for Liberty, asked me to post her response to a recent blog post authored by my good friend, Quin Hillyer. 

What follows is her response:
In Quin Hillyer’s recent American Spectator article, Pentagon in the Tanker, Mr. Hillyer notes that two years ago Northrop Grumman won the $40B contract for new Air Force refueling tankers “fair and square” and then had it “stolen away from them.”

Where to start?  Northrop Grumman was the minority American partner of Airbus/EADS, the French company that was initially given the contract. 

Last month, the World Trade Organization ruled against Airbus in an illegal subsidies case brought by the United States Trade Representative, determining that Airbus had won the original bid because of massive subsidies provided by France and other EU nations – designed intentionally to underbid America’s Boeing.  “Fair and square” is an interesting reworking of “guilty as charged” by the WTO in a U.S. Government case.  [# More #]

The tanker bid was “stolen” from Airbus when the Government Accountability Office determined that there were too many irregularities and too much political interference for the contract to reasonably proceed.

Northrop’s plane was indeed bigger.  At the request of John McCain - champion of Airbus – the Air Force changed the original specs to accommodate the large Airbus plane.  In modern warfare, aerial tankers need to be agile in the air with the ability to land in deserts or on crappy airfields under less than ideal conditions.  Had the Airbus contract gone forward, the Air Force would have had to spend even more money updating airfields and hangars to fit the Airbus’ wingspan  – and forget deserts, short airstrips and crisp evasive maneuvers.

As Airbus is still holding the subsidies from the EU in its pocket, it would seem fair and square to include the value of these subsidies in the new decision as American companies – without huge EU subsidies – are at a significant economic disadvantage. 

Mr. Hillyer does not mention national security concerns that France’s Airbus/EADS also provides planes to China and Russia, and has relationships with Iran and Venezuela - raising issues of downline technology transfer.  It is also currently the center of several bribery, corruption and insider trading cases.

America has lost five million manufacturing jobs since 2000, many of them in defense and military facilities.   Our Defense Department is already having significant problems sourcing domestic content for military equipment.  Jobs connected to the new refueling tankers, paid for by American taxpayers, should be American jobs. 

And if the WTO case was brought on behalf of the United States government, shouldn’t its decision bind all the parts of the U.S. Government? 

It’s understandable and even reasonable for some interested parties, including Senators, to have a regional bias.  But Mr. Hillyer’s cheap shot at Secretary Gates - inferring that he has a Boeing bias because he wants to retire to Seattle - is way out of line.   Mr. Gates did not create this mess, he inherited it, as Mr. Hillyer, the “Oracle of Mobile”  (coincidentally the production center for tankers under an Airbus/Northrop contract) well knows. 

Mr. Hillyer is absolutely correct that our warfighters desperately need these tankers and we owe it to them to fastrack the bidding process.  But if Airbus won the bid “fair and square” the first time and still has the best plane as Mr. Hillyer claims, then what’s all the fuss about anyway?