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Air Force restarts tanker contract bidding

Tue., Sept. 26, 2006

WASHINGTON – Companies hoping to build a new generation of refueling tankers must show how a possible international trade dispute might affect their ability to take on the project, the Air Force said Monday.

Restarting a competition for a lucrative contract to build at least 100 planes, the Air Force said “treaty compliance” is among the criteria that interested companies must meet.

The language is a reference to a dispute before the World Trade Organization involving U.S.-based Boeing Co. and European jet maker Airbus SAS. The United States has complained that Airbus receives subsidies from European governments. Airbus in turn has argued Boeing also receives government support.

Chicago-based Boeing and European Aeronautic Defence and Space Co., the majority owner of Airbus, are the leading contenders for the tanker contract, potentially worth more than $20 billion.

EADS has teamed with Los Angeles-based Northrop Grumman Corp. on its bid and plans to build the KC-330 plane in Mobile, Ala., if it wins. The Boeing planes would be built in Washington state.

A contract for the project could be awarded as soon as next year. The tanker program has been on hold for more than two years, after Boeing lost the contract amid an ethics scandal.

In recent days, Alabama lawmakers have objected to inclusion of language referring to the WTO trade dispute in the proposed bidding criteria. They say such restrictions would unfairly hurt the EADS-Northrop team.

“It looks to me that if it’s included, it will tilt, or try to tilt, the playing field toward Boeing,” Sen. Richard Shelby, R-Ala., said last week after a meeting with Deputy Defense Secretary Gordon England.

Airbus has received billions in subsidies from European governments over the years, and Boeing supporters in Congress have argued that the European company should have to account for advantages that such subsidies give it in competing for Pentagon contracts.

The Pentagon “must necessarily account for the advantage that these illegal subsidies have given the company, especially because they have come at the cost of U.S. jobs,” said Rep. Norm Dicks, D-Wash., whose district includes thousands of Boeing workers.


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