Air Force defends tanker contract

Air Force procurement officials Wednesday said they strictly followed the letter of the law in their controversial decision to award a lucrative contract for aerial refueling tankers to Northrop Grumman and EADS, the European consortium behind Airbus. Facing tough criticism from several members of the House Defense Appropriations Subcommittee, the officials said the contract in no way violates long-standing Buy America regulations established by Congress limiting the amount of foreign-made content in U.S. defense hardware. They also said they led an open and fair competition that complied with other acquisition laws.

"I will tell you we have a very, very capable new KC-45A" tanker, said Sue Payton, Air Force acquisition executive. "Northrop Grumman brought their A-game based on the law that I must abide by." Last Friday, the Northrop Grumman/EADS team bested Boeing Co. for a contract for 179 tankers potentially worth $40 billion, igniting a fury among Boeing's many congressional supporters. Boeing has built Air Force tankers for more than 50 years.

House Defense Appropriations Subcommittee Chairman John Murtha, D-Pa., and other lawmakers aired concerns about selecting the European-designed Airbus A330 airframe over the homegrown Boeing KC-767. But Payton stressed that the Buy America law provides exemptions for several U.S. allies, including France, home of Airbus' headquarters. Those countries "are to be viewed as [the] U.S. views our own industrial base," Payton said. "I look to the legislative branch to write the laws of this country and I am sworn to enforce the laws." Payton likewise said U.S. industrial capacity was not weighed during the competition because it is not part of federal acquisition laws. Northrop Grumman says its tanker will create more than 25,000 U.S. jobs, while Boeing has asserted it would create 44,000 domestic jobs.

During the hearing, some panel members appeared eager to revisit Buy America provisions, although Murtha said after the hearing that is unlikely. But Murtha, who will convene a closed hearing after both the winning and losing bidders receive post-contract award briefings by the Air Force, did not rule out the possibility of addressing the tanker in the fiscal 2009 Defense spending bill. "You said you budgeted, but we're the ones who appropriate the money," he said. But Rep. James Moran, D-Va., sounded a note of caution: "When we let politics trump policy, then we get into very dangerous ground."

Meanwhile, Reps. Norman Dicks, D-Wash., and Todd Tiahrt, R-Kan., whose districts stood to gain jobs from the Boeing tanker, argued that EADS' reliance on subsidies from foreign governments created an unfair playing field. The Air Force did not weigh the subsidies issue, the subject of an ongoing World Trade Organization suit between Boeing and EADS, in it decision, Payton said. But both competitors pledged they would not drive up tanker costs should they lose the suit and incur penalties, she said. Dicks also questioned whether the Air Force changed its criteria for the program during its selection process to unfairly favor the EADS bid, which offered a significantly larger aircraft than Boeing's KC-767. "If bigger was better, the Air Force should have said that upfront," Dicks said. Payton, however, emphasized that the Air Force did not alter its final request for proposals and was open with both competitors throughout the process.