The Turbulence Over The Northrop Grumman/ Air Force Deal
Wednesday, March 05, 2008SUSIE GHARIB: Top Air Force officials came under fire on Capitol Hill today. At issue, the award of a multi-billion dollar contract to supply the military with airborne refueling tankers. Lawmakers are upset the Air Force selected the bid from Northrop Grumman and its European partner Airbus over Boeing. Stephanie Dhue reports.
STEPHANIE DHUE, NIGHTLY BUSINESS REPORT CORRESPONDENT: The refueling tanker contract is now worth an estimated $40 billion and could eventually top $100 billion. The decision to choose Northrop Grumman and its Airbus planes, over Boeing outraged many lawmakers, including Congressman Norm Dicks. He represents the district where Boeing would have built the tankers.
REP. NORM DICKS (D) WASHINGTON: This is a crown jewel of American technology. We are now giving away to the Europeans one of the most significant things we as a country can do.
DHUE: The Air Force defended its decision saying Northrop Grumman supplied the best overall value in a fair competition. By law, the Air Force must consider European allies on equal footing with American manufacturers. Air force acquisition executive Sue Payton sounded prepared for battle as she responded to law makers' questions.
SUE PAYTON, ASSISTANT SECRETARY FOR AIR FORCE ACQUISITIONS: There are three things that I've encouraged the Air Force team to always consider. The motive pure, the cause must be just and the process must be sound and we must have no fear and no favor. This is done in accordance with the law.
DHUE: Northrop Grumman says its tanker is an American tanker and will support 25,000 jobs in the U.S. Labor unions say it will take jobs from the U.S. and they want Congress to de-fund the contract. Defense Appropriations Chairman John Murtha seems prepared to take that step.
REP. JOHN MURTHA CHAIRMAN, DEFENSE APPROPRIATIONS SUBCOMMITTEE: This committee funds this program and all this committee has to do is stop the money and this program is not going to go forward.
DHUE: The program is also figuring into the presidential campaign. Senator John McCain originally pushed for the contract to be competitively bid. Senator Barack Obama and Senator Hillary Clinton have both criticized the choice of a European partnership over Boeing. Defense analyst Brett Lambert says the political battle may delay, but not derail the deal.
BRETT LAMBERT, DEFENSE ANALYST, THE DENSMORE GROUP: I think the Air Force has been very careful in its deliberation and from everything I can see so far, I would expect Northrop to ultimately proceed with the contract.
DHUE: Analysts expect Boeing to appeal the award. Company executives are scheduled to meet with Air Force officials on Friday. Boeing says it will determine its battle plan after that. Stephanie Dhue, NIGHTLY BUSINESS REPORT, Washington.
