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Thu, Jan 29, 2009

Gates Says KC-X May Be Resurrected By Spring

USAF May Just Get A New Tanker After All...

The procurement by the US Air Force of a new aerial tanker, tentatively dubbed KC-X, has turned into a protracted political battle involving Boeing, Northrop Grumman and EADS.

Last year, the Northrop-EADS team won the $35 billion competition, but that contract award was challenged by Boeing, the Government Accountability Office agreed, and a new competition was ordered.

Then, amid concerns the service wasn't prepared to conduct the competition successfully, US Defense Secretary Robert Gates moved in July to strip the Air Force of oversight, handing control of the process off to John Young, a defense undersecretary in charge of procurement. Then, in September, concerned the process would still be open to challenges regardless who won the contract, Gates postponed the bidding indefinitely.

Now, the Seattle Post-Intelligencer reports that Gates, who's been kept on a Secretary of Defense in the Obama administration, is getting ready to try again. Gates told Congress Tuesday that once a new deputy defense secretary and a new chief weapons buyer have been confirmed, he hopes to restart the process this spring, and award a contract by early in 2010.

While a resurgence in "buy American" sentiment might favor Boeing, Northrop makes strong arguments for why its Airbus-based tanker, which would undergo final assembly in Alabama, is just as American as Boeing 767-based proposal. One of those reasons is that both planes share key subcontractors, in much the same way that "American" automobiles usually have greater foreign content than manufacturers let on.

"While Boeing's 767 is assembled in Seattle, WA from parts built in Japan, Italy, UK and Canada, Northrop Grumman's tanker would be assembled in Mobile, AL, built from parts produced in NATO countries -- UK, Spain, Germany and France," Northrop notes.

In the end, that public relations effort is a political subtlety. By treaty, the Pentagon is required to give contractors based in NATO countries, and the employment they create, the same weight as US contractors...

Though as we saw the last time around, jingoistic concerns have a way of intruding in that process nevertheless.



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