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Fri, May 23, 2008

Defense Chief Warns Pentagon, Lawmakers About KC-X Decision

Says Capabilities -- Not Jobs -- Should Decide Winner

Defense Secretary Robert Gates gave lawmakers strict instructions this week regarding the hotly-contested KC-X US Air Force tanker contract: don't listen to statements from either side noting how many US jobs might be created.

The Seattle Post-Intelligencer reports Gates, in testimony before the Senate defense appropriations subcommittee, also cautioned lawmakers from taking action to limit the ability of foreign companies to bid on US defense projects -- as has been suggested by some in the wake of the Air Force's selection of an Airbus-sourced plane to handle future aerial refueling duties for the Air Force.

As ANN reported, on February 29 the USAF selected the KC-45A, offered by a partnership between EADS and Northrop Grumman, over Boeing's KC-767. Boeing has protested the contract award to the Government Accountability Office; several lawmakers have also come out in favor of the 'home team,' and some have threatened measures to curb foreign companies from bidding on US defense work.

Bad move, says Gates... as such protectionist attitudes swing both ways, and could harm American contractors bidding on work overseas.

"The law is very explicit, as I understand, that we cannot look at anything else" when awarding contracts, Gates said, except technology, cost and capability. In other words, what product best suits the service's needs.

"So the only way to correct that would be to change the law," Gates continued. "But my only caution in changing the law is that all of our companies sell a lot of equipment to other countries, and so I think we need to be very careful about how we limit access and bidding and the criteria we take into account, because what we gain over here we may lose over there."

In statements intended to sway support from lawmakers, military wonks, and the general public, both Northrop/EADS and Boeing have stressed how many new US jobs would be created by their respective proposals.

In particular, Northrop says its KC-45A would "generate approximately 48,000 new direct and indirect jobs in the United States," according to spokesman Randy Belote. Most of those jobs would come from the new plant in Mobile, AL tasked with outfitting the KC-45A, as well as Airbus' upcoming A330-200 Freighter.

Boeing supporters -- including Senator Patty Murray, who represents Boeing's home state of Washington -- counter most work on the KC-45A will benefit the overseas workers actually building the plane. That's why, in Murray's words, Congress has "the duty to do what the Department of Defense can't do" by considering additional factors in selecting companies to handle defense-related work... including concerns about sharing US technology.

"We have to look at the long-term security implications, and we have to look at how this affects our industrial base and capability," Murray said.

The GAO is scheduled to rule next month on whether Boeing's protest of KC-X is valid.



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