Tanker wars: politics, jobs and security
By Robert M. Engstrom
The Boeing Corporation is back in the bidding battle for the contract to replace military aerial tankers, citing national security risks of a foreign supplier and gaining support for the American manufacturer in the House of Representatives.
Mystifyingly, Boeing floated rumors earlier this month that the company might not bid on the $35 billion contract for 179 air-to-air tankers to replace an aged fleet of airplanes crucial to the United States military.
Just over a month ago Boeing, with a 50-year history building aerial refueling tanker, appeared to have a lock on the contract as the sole bidder. The European Aeronautic Defense and Space Co. had withdrawn from the process after American partner Northrop-Grumman analyzed the numbers and declined to bid. The Pentagon was prepared to award Boeing the contract.
The cloud of mystery over Boeing’s threat not to bid for the lucrative KC-X contract cleared when the U.S. House of Representatives voted 410-8 to approve HR-5136. The National Defense Authorization Act, a bipartisan-sponsored bill, requires the Department of Defense to consider previously ignored government subsidies from European nations backing EADS.
After EADS dropped out, the plot thickened. Amid European accusations of American protectionism, counter-charges before the World Trade Organization of illegal Boeing subsidies, and a closed-door White House visit by French President Nicolas Sarkozy, EADs requested time to reconsider.
Mere days before the May 9 deadline, EADS was granted an additional 60 days to cobble together a proposal without a North American partner. The Department of Defense changed the KC-X Request for Proposals from a contract award date of August 16, to a contract start date of Nov. 12, and changed the RFP submission date to July 9.
EADS, backed by France, Britain, Germany and Spain, wants a larger share of U.S. defense contracts. President Barack Obama needed French support, which has been lukewarm at best, for United Nations sanctions against nuclear upstart Iran. Sanctions, which will be too late and too soft to halt Iran’s nuclear program, have not been imposed—and replacement tankers are again delayed.
A deal to swap White House support for a foreign-built airplane in return for French support, and possibly its EADS’ partners as well, for ineffective U.N. sanctions is a bargain with a built-in threat to national security and military effectiveness. Boeing’s senior vice president for government operations Tim Keating pointed out that the foreign manufactured alternative to a Boeing tanker poses a risk of foreign suppliers withholding parts and supplies for the urgently needed tankers. Keating said it has already occurred in the past.
A U.S. Air Force study says the current aerial tanker capability, a combination of 59 Air Force KC-10s, 450 KC-135s and 79 U.S. Marine Corps KC-130s, falls up to 20 percent short of needed capability.
As first EADS, then Boeing, wavered on bidding, quickly squashed rumors swirled that Russian state-owned United Aircraft Corp., with an unnamed American partner, intended to submit a four-engine Ilyushin Il-67 tanker that would be “the most American airplane” offered.
Industry analysts estimate EADS’ cost to reenter the bidding at up to $100 million on top of monies spent over a decade as the contract was awarded and rescinded to Boeing, then EADS. The scandal-plagued process delayed replacing a tanker fleet already long past its predicted life span. The KC-135s in service are older than the crews flying them.
The WTO ruled in March that EADS subsidies violated international trade laws. Five billion dollars in government subsidies financed development of the EADS A330 tanker now called the KC-45. EADS is appealing the ruling and complained to the WTO that U.S. government research grants, state and local tax incentives received by Boeing also violate trade law. A ruling is pending.
A Senate bill mirroring HR-5136 introduced by Sen. Sam Brownback, R-Kan., is scheduled for debate following the Memorial Day recess. The amendment to the 2011 National Defense Authorization Act is meant to level the field between competing bidders offering markedly dissimilar airplanes.
Sens. John McCain, R-Ariz., Richard Shelby, R-Ala., and Jeff Sessions, R-Ala., supported Northrop-Grumman and Airbus in the previous competition while Democrats supported Boeing and it’s mostly unionized work force. In an election year with voters focused on jobs and the economy, both parties are leery of sending additional tax dollars and jobs overseas—and desperate to find bipartisan issues to show voters elected officials working together on an issue of military and national importance.
According to Boeing’s web site, the NewGen Tanker program will support an estimated 50,000 U.S. jobs with Boeing and more than 800 suppliers in more than 40 states. Estimates of jobs “saved and created” if Boeing wins the contract total 168,500 jobs and a $14.5 billion boost to America’s economy.
EADS claims 48,000 American jobs will result from U.S. built tankers and freighters. Major airframe components manufactured in European plants would be shipped to ports near a proposed Alabama assembly plant.
Boeing builds 767J tankers for Japan and Italy. EADS has contracts for KC-45 tankers from Australia, Saudi Arabia, the United Arab Emirates and the United Kingdom. Both company’s airplanes are flying and performing in-flight refuelings.
By comparison, the much larger EADS/Airbus A330 costs an estimated $40 to $50 million more apiece than a Boeing 767. The Airbus A330 burns about a ton more fuel per flight hour than Boeing’s 767. Over the 30-year life span of the new tankers, EADS airplanes will cost the United States about $10 billion more to acquire and operate than Boeing’s NewGen 767 tankers. That $10 billion does not include the significant costs of upgrading airfield runways and facilities around the world to handle the bigger Airbus airplanes.
The A330’s problematic flight performance, composite structural construction, the Airbus computer controlled flight system, and combat survivability issues previously cited by Human Events outweigh EADS’ claims that their larger, more expensive airplane is the best tanker for the USAF. The smaller NewGen 767 tanker meets all the requirements of the DoD’s RFP and production would not depend on the whims of foreign manufacturers.
Considering what the Air Force needs now and for the future, American jobs, the economy and national security, Boeing’s NewGen tanker is the right choice. Political chicanery and closed-door diplomatic deals must be put aside in the best interests of the country—along with any politician who would sell out America for foreign interests.