by Frank Gaffney, Jr.
Within days, the Obama Pentagon is expected to decide which supplier  to rely upon for what is, arguably, the cornerstone of America’s ability  to project power for the next forty years: the next generation aerial  refueling tanker known as the KC-X.  The choice for this role – which is  worth conservatively $40 billion – would seem to be a no-brainer.  The  obvious winning candidate to produce and maintain for decades to come  179 tankers would be a reliable, experienced and responsible U.S.  manufacturer, Boeing.
It seems, however, that Team Obama is  poised to entrust responsibility for this vital defense capability to a  company that has none of those attributes – the European aerospace  conglomerate EADS.  The pretext apparently will be that the foreign  competitor is offering a lower bid than its American counterpart.
This  claim is preposterous on its face.  The Lexington Institute’s Loren  Thompson, one of Washington’s most respected defense program and budget  analysts, noted recently that each of the two bidders has to satisfy 372  mandatory performance requirements.  “Thus, the key discriminator in  who wins becomes price.”  Meeting or substantially undercutting Boeing’s  bid is problematic since the Airbus tanker based on the A330 weighs in   28 percent larger with 40 feet more wingspan than Boeing's derivative  of the 767.  “It appears that is exactly what the European company plans  to do, raising the obvious question of how such a bid is possible.”
How,  indeed?  The answer is not so hard to fathom if you look at the nature  of EADS.  As the Center for Security Policy documented in a white paper  issued in September 2010 (http://www.centerforsecuritypolicy.org/p18520.xml),  the company has relied on devious, unethical and unfair practices to  buy-into or otherwise win contracts.  It has then relied upon massive  subventions and/or cost-overruns to stay afloat.  For example, last  June, the World Trade Organization estimated that EADS garnered some $20  billion in illegal subsidies from its European governmental owners.
Then,  there are EAD’s endemic problems with bribery and corruption. Eleven  years ago, with the company’s Airbus sales in mind, former Director of  Central Intelligence R. James Woolsey told Europeans in an op.ed. in the  Wall Street Journal:  “Your companies’ products are often more  costly, less technologically advanced or both, than your American  competitors’. As a result you bribe a lot.”
In addition, EADS has  been under investigation in France for the past five years in  connection with alleged insider trading tied, presumably, to the  company’s abysmal financial track record.  In early February of this  year, the Paris judges said they were focusing the investigation on  Daimler.  In particular, EADS’ massive cost-overruns have gotten so bad  lately that the German government has scheduled an emergency summit on  February 23 to discuss bailing out Daimler, by nationalizing Daimler’s  7.5% stake in EADS.  According to the Financial Times, the EADS losses  cost Daimler €231 million in the last year alone.  Is this really the  kind of company we want the Pentagon to be keeping?
Here is what  U.S. taxpayers can expect in EADS performance. The company's A400M  military transport plane program is surviving only because of a $4.6  billion bailout forced from European taxpayers in November 2010 .  The  A400M program was originally to cost $27 billion; a recent study found  that final costs could now rise to $44 billion. The program is  three-to-four years behind schedule.
It is not easy getting a  company with such a dismal past cleared to win what may prove to be the  largest Pentagon contract ever.  In January 2010, then-Representative  Todd Tiahrt of Kansas wrote in Human Events: “Given the  well-known corruption practices by EADS, it would make common sense that  it not be awarded Pentagon contracts. In fact, Congress has passed the  Foreign Corrupt Practices Act that bars companies who engage in bribery  overseas from competing for United States government programs.
“The  U.S. Department of Justice has appallingly interpreted the laws to only  cover U.S.-based companies – therefore exempting EADS. But it gets  worse. The federal government has gone even further and exempted EADS  from the Buy American Act, the Berry Amendment, the International  Trafficking and Arms Regulations, and the Cost Accounting Standards.  Complying with these expensive regulations is mandatory for any American  company looking to do business with the Pentagon, but waived for a foreign competitor such as EADS.” (Emphasis added.)
If  these considerations were not grounds enough for denying EADS the KC-X  contract no matter what price it offers, there are other compelling  reasons to have these tankers made in America.  These include: EADS has a  highly politicized socialist workforce in Europe, one that has  exhibited profoundly anti-U.S. sentiments in the past. Do we really want  to rely on such workers in the event their efforts are essential to  future combat operations with which they vehemently disagree?
There  have also been issues of technology theft and commercial espionage  associated with EADS.  With the Kremlin owning a 5% stake in the  company, the security implications of such behavior cannot be  minimized.
Taken together, the arguments against turning the  future of a key determinant of America’s power projection capability  over to EADS are compelling.  If the Obama administration persists in  its efforts toward that end, it will likely find the Congress less  willing to ignore the strategic and economic repercussions of such a  step.  That is especially true insofar as doing so would give lie to the  universal mantra of politicians on both sides of the aisle to promoting  American competitiveness and the need to expand the number of skilled  jobs here at home.
Alternatively, the Government Accountability  Office may find irregularities in the KC-X award (notably, the  Pentagon’s inexplicable sharing with EADS last November of proprietary,  competition-sensitive data supplied by Boeing) that once again justify  overturning an ill-managed award.
Either way, the real loser will  be the servicemen and women who needed a reliable and capable new  tanker years ago – and certainly deserve no less now.
Frank Gaffney, Jr. is President of the Center for Security Policy (www.SecureFreedom.org), a columnist for the Washington Times and host of the nationally syndicated program, Secure Freedom Radio.
Copyright - Original materials copyright (c) by the authors.
2 comments:
This article has nothing to do with Middle East terrorism. Investigations by the World Trade Organisation found unfair government subsidies to both Boeing and Airbus, but did not find evidence supporting James Woolsey's assertion relating to Airbus EADS that "“Your companies’ products are often more costly, less technologically advanced or both, than your American competitors’. As a result you bribe a lot.”
In fact Airbus products are frequently technically superior to those of Boeing and certainly the A330 tanker is technically superior to the Boeing 767 tanker,
Airbus already won the order fair and square when the specification called for a larger tanker. The extra capacity is still needed by the USAF, but the Pentagon reduced the capacity
requirement for the contract in order to give Boeing a better chance of winning the order.
European air forces buy a lot of military aircraft from the USA. It is time to stop wingeing when the USA buys some aircraft from Europe.
After Airbus had won the order with a technically superior aircraft with greater capacity, the decision cancelled and it was put out to tender again. This time Boeing won the order for an aircraft with an older design and considerably less capacity than the aircraft that met the original spec for the USAF.
The spec was changed to ensure that Boeing won the order by significantly reducing the capability required of the winning aircraft.
Now Boeing have got the order, but in many situations their tankers will themselves need to return to base for refueling or more tankers will need to be used than would haver been the case if the original spec, which Airbus met, had been insisted upon.
Congratulations. The USAF will have less tanker capacity than they want, but it will be provided by Boeing and not those foreigners in Europe. (The Airbus tanker would have been assembled in the US and powered by US engines anyway.)
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