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Extended Interview: Sen. Richard Shelby, R-Ala.

May 6, 2008 at 3:35 PM EDT

KWAME HOLMAN: Senator Shelby, let’s go back to the beginning of this process … what were you thinking might happen for Alabama in those early stages of getting this tanker built?

SEN. RICHARD SHELBY, R-Ala.: Well, you know actually I didn’t know but we were always hopeful that the proposal by Northrop Grumman/[European Aeronautic Defence and Space Co.] sounded to me like a good proposal, a newer body, you know that is the mainframe of the aircraft with a little larger that would carry more fuel, more people, more cargo than the 767 proposal and I thought we might have a chance there, but you know you don’t know.

At the end of the day it’s up to the Air Force to evaluate these proposals, because they’re the customer. They’re buying this for the war fighter. They’re buying it for future years and I always believe it shouldn’t be a political decision. It shouldn’t be made by us. It should be made by the Air Force, or the Army or the Marines or the Navy that have expertise in this area. And at the end of the day the Air Force selected the proposal by Northrop Grumman/EADS and you’re familiar with why they claim they made that selection.

KWAME HOLMAN: What’s their presence now in your state and what would this contract mean?

SEN. RICHARD SHELBY: Well, they have a presence. They have built a design engineering center in Mobile, Ala. They’ve been contemplating this. They have been working on some smaller planes dealing with surveillance for the Coast Guard, but this is much bigger deal. This would be, mean a lot to our state. It would mean that Toulouse, France, Seattle, Wash., and Mobile, Ala., would be the three big assemblies for airplanes in the world.

So it would mean a lot of jobs, but most of the jobs would be supply jobs all over the United States, not just in Alabama. Probably they would be a couple of thousand jobs, more or less, directly connected to the assembly of the plane, putting it all together and so forth. But there would be other suppliers, I think in 48 states, 49 states. And all over the world that would make things that would go into this plane that would be put together in Mobile, Ala.

Economic boon in the South

KWAME HOLMAN: People have talked in terms of an industrial corridor, an aeronautics corridor in the Southeast growing out of this.

SEN. RICHARD SHELBY: Well, we like that. The South is growing very fast. Fastest growing area in the United States, and Alabama is on a roll economically. We've attracted a lot of industry. Our unemployment's about 3.7 percent -- way below the national average. We'd like it to stay this way. We have attracted a lot of foreign direct investment, from Mercedes Benz to Honda to Hoesch-Krupp, you know, the big German steel, in Mobile, by the way, and north Alabama, we have in Huntsville the missile defense, missile command, all of this where Boeing incidentally has nearly 4,000 employees and they do a good job there.

KWAME HOLMAN: Were you surprised at all when it came decision day, Northrop Grumman over Boeing?

SEN. RICHARD SHELBY: I was happy. I was pleasantly surprised because I didn't know what the proposals were, but what I would read about it. But I always thought if the Air Force looked at it real closely that I had studied the situation that the Northrop Grumman/EADS proposal would carry more fuel, more cargo, and at the end of the game I think it would be cheaper, so and it was, had more advanced engineering in a lot of areas.

But that was a decision that the Air Force had to make. It was not one that I should have been involved in and I wasn't. As a member of the Defense Appropriations Committee, if -- we have never let Congress make selections on weapons systems, because we don't have the knowledge that the other people do. We make decisions on the funding of weapon systems, but at the same time we don't make the initial decision.

KWAME HOLMAN: Surprised a little, senator, because Boeing has such a long history? Because they've done this kind of thing before?

SEN. RICHARD SHELBY: Absolutely. Because Boeing had been there, but I always thought that if the Air Force looked at it as objectively as they should have, that Northrop Grumman and EADS would have more than a fighting chance and that's what happened. They put them, put these proposals side by side, evaluating them as you could and in most of the most critical areas from what I read and that's all I know, that the Northrop Grumman proposal was far superior to Boeing, but that was the Air Force decision. And I was pleasantly, I was happy about that. But that was not my decision.

KWAME HOLMAN: What do you make of this reaction from Boeing and its supporters?

SEN. RICHARD SHELBY: Well, I understand it's politics. I might react the same way if I had a 767, which is an old plane that they're about to discontinue the line anyway in a year or two, if we'd lost it. Because there will be winners and losers in this. Alabama would win jobs. Florida would win jobs. Cincinnati, I mean Ohio, would win jobs. North Carolina. A lot of other states, but there will be other places that will lose jobs. Kansas, Washington state and probably Connecticut with Pratt & Whitney you know is I but that's the nature of the marketplace. You have that going on everyday.

And I hope at the end of the day that things work out and the proposal is confirmed by the General Accounting Office. As you well know that is the next step. It's evaluation process that's mandated by Congress when one side protests against the other, the loser protests, the winning award and we'll await that. I believe they have 100 days to make a decision on that and we will abide by the decision by the General Accounting Office. If they confirm that I believe they will, but I will have to await the decision. If they confirm what the Air Force did in awarding the tanker contract to Northrop Grumman/EADS, that's a second step in I think the right direction.

But one thing you have to remember, Congress has never interfered with the procurement process like that. So we have a due process situation here with General Accounting Office. We will anxiously await what they do. They could confirm that. They could amend it. They could reject it and rebid it, whatever, but they're a powerful seat and I believe they will make sure that this was done properly that I believe it was, but that's their job to do this, to evaluate it.

KWAME HOLMAN: ...What about those charges that the Air Force helped Northrop's bid along?

SEN. RICHARD SHELBY: Well I think the Air Force wanted competition. We all benefit from competition in the marketplace. The procurement process at the Pentagon will benefit. We do not need sole-source contracting. Boeing obviously wanted a sole-sourse contract. They didn't want any competition. They didn't want a competing system to come about because they felt they might be at risk and they were. We all believe in competition and we benefit as taxpayers. I believe the war fighter benefits and at the end of the day America will benefit.

KWAME HOLMAN: The Boeing people say ... the Northrop plane is too big.

SEN. RICHARD SHELBY: Well that was raised at the Defense Appropriations Committee and the secretary of the Air Force said he didn't think so at all. He said that this plane can land anywhere, you know just about. It carries more cargo. I think it's just sour grapes. Boeing got out-competed on this. They build a lot of good planes. This proposal was not their best day. And I think, and I think and I hope that at the end of the day that the Air Force award will prevail.

Made in the USA?

KWAME HOLMAN: (Sen.) Patty Murray (D-Wash.) said "putting the sticker on the plane in the United States that says "Made in America" doesn't make it American-made. We're talking about the entire tanker being built overseas and shipped over here in some process. We're giving a foreign company owned by foreign countries the capability of the research and development that are the absolute backbone of the entire military."

SEN. RICHARD SHELBY: Oh, first of all she's being very parochial and she knows that, as I would be. She's looking after her constituents there in Seattle, Wash., area. But she's absolutely wrong. If you look at Boeing right now, they're building a Dreamliner, a big airplane, most of the components come from overwhelming stake in the components come from overseas. There's a lot of these components will come from overseas, but over 60 percent of the components will come from the United States of America, maybe higher, and there will be 25-30,000 jobs in the United States of America. They just won't be in Seattle, Wash.

KWAME HOLMAN: These two gigantic multi-national corporations, is it fair to charge either of them as being not American-based enough?

SEN. RICHARD SHELBY: Boeing is a huge company, so is Northrop Grumman. As a matter of fact the largest contractor, defense contractor's Lockheed Martin. They're not involved in this fight directly. Boeing I think is next and then Northrop Grumman. They're huge American companies but they do business all over the world. They buy all over the world. They sell all over the world. Both of them. So I think this is a false argument that they're putting forth and they're saying, gosh we're just going to build an American plane in Seattle.

Look at the components that go into that plane, just do an item by item thing of what Boeing's doing. They're buying all over the world, just like EADS does, buys a lot of America components. A lot of jobs. We do business just like that. We sell to Europe and they sell to us, but at the end of the day this plane's going to be built, put together. This plane's going to be finished by American workers in America, in Mobile, Ala., by over 60 percent American components and who's it for? The war fighter, for the future, not the past.

The 767 is, is an old engineering plane that nobody wants. The Air Force didn't want it. Boeing is about to discontinue it. And I think they were trying to put that on the Air Force and they failed.

Alabama's workforce

KWAME HOLMAN: Some of the things that are said to us include Alabama doesn't have the workforce to handle (the contract).

SEN. RICHARD SHELBY: Oh yeah, you ought to ask the Boeing chairman that because he said something, then he backed off because they have over 4,000 -- right at 4,000 -- Boeing employees in Huntsville, Ala., which are in the higher end chain of engineering, of research, more than just assembling an airplane and they're all in Alabama. Those are more employees than would be coming with Northrop Grumman to Mobile, Ala. And he knows better than that and he had to back up on it, too.

KWAME HOLMAN: No problem with finding skilled workers to carry out this contract?

SEN. RICHARD SHELBY: Well, we've got the workers and we've got the -- they'll come from Mississippi, they'll come from Florida, they'll come from everywhere because in the corner there, in Mobile, but I want to make one other point. Most of the jobs created by the Northrop Grumman/EADS award will be all over the United States. Most of them won't be in Alabama. Alabama will be the assembly point. You know where they put them all together, but I believe it's 49 states will benefit immensely from this. They'll create a lot of new jobs and that's why we're going to have a lot of support in the Congress.

KWAME HOLMAN: How does this sort of battle (between) these two titans -- is it helpful or potentially harmful in terms of a delay? 

SEN. RICHARD SHELBY: Well, I think at the end of the day, what we need to learn, find out what's the GAO's going to do. If the GAO as I said earlier ratifies this, confirms this, then that's another step up the ladder and I hope that that will move us on the right direction to building the plane because the Air Force needs it and they need it soon. But we'll have to wait for due process and that's what it's all about, not politics.

KWAME HOLMAN: Is this fight harmful?

SEN. RICHARD SHELBY: Oh, I don't know if it's harmful, but it's politics involved and you have winners and losers and, and a lot of states will be winners and Kansas and Washington will be losers here, but they've got so many things going for them. Boeing's got a huge backlog of planes other than this and everybody at the end of the day will win, but what's the bottom line? The bottom line, what's best for the war fighter and the Air Force made that decision and they should make that decision. We shouldn't do that.

KWAME HOLMAN: If the shoe were on the other foot, would you be saying what the opponents are saying -- all options are on the table including perhaps defunding the deal, taking some action in the supplemental appropriations bill? Is that fair play?

SEN. RICHARD SHELBY: Well I wouldn't go that far. I'll tell you, I've been on the Defense Appropriations Committee and Patty Murray's on it, too, a long time and my friend (Rep.) Norm Dicks (D-Wash.) on the House side, we served in the House together. I would see what the process brought forth. The Air Force made the award after looking at both bids. This award's been protested, which is called for in statute, to the General Accounting Office.

If the General Accounting Office award, confirms that and if the shoe was on the other foot, I would step back and I would say look, this is Air Force decision, it's not something that I have the expertise or they have the expertise to decide this, it's just pure raw politics.