Because the equipment is needed in such enormous volumes and in such near-infinite variety, Washington can't simply manufacture it on its own. The federal government contracts with private businesses to provide everything needed, from paper clips to aircraft carriers.
In the bidding wars tied to those contracts, there are winners and losers. And jobs. Lots of jobs.
That's likely what's behind a protest filed by Boeing Corp. over its losing bid to provide the next generation of air-refueling tankers to the Air Force. Boeing lost out to European Aeronautic Defence & Space Co. and its U.S. partner, Northrop Grumman, last month. This contract, worth $35 billion, is the first of three to replace the Air Force's aging tanker fleet. The entire process is estimated to take 30 years and cost as much as $100 billion.
The Air Force says it went with the EAD/Northrop team largely because the partners proposed a larger tanker than Boeing, which based its proposal on its 767. Part of Boeing's complaint is that the Air Force changed specifications to favor the larger plane.
Northrop Grumman CEO Ronald Sugar told The Associated Press the other day that both companies received the same specs and were free to develop their own proposals.
Now that Boeing has filed its protest, the Government Accountability Office has 100 days from the date of the filing to decide whether the contract will stand. But that won't stop Congress from getting involved where members see jobs disappearing in their home districts. Lawmakers from Washington state, where Boeing is headquartered, have charged that the Air Force's decision will erode the U.S. industrial base and send jobs overseas.
Although EAD is based in Europe, EAD/Northrop Grumman would assemble the tankers in Mobile, Ala., with many parts coming from Europe. Mr. Sugar pointed out that Boeing also would import parts if it had won the contract. The EAD/Northrop team also increased its job-creation projection this month to include 48,000 direct and indirect jobs in 49 states. That doesn't sound like sending jobs overseas.
Mr. Sugar also noted that if the contract isn't upheld, it could affect many projects down the road, not just the remaining tanker contracts.
"How do you get companies to bid when you discover at the end of the day that Lucy pulls away the football?" he asked in the interview with AP. "It would discourage companies from making significant investments to compete, and then the Defense Department wouldn't get full competition. The stakes are bigger than just one contract."
The Air Force is charged with getting the best bang for its defense bucks, not propping up U.S. manufacturing. And although keeping jobs in their districts is an understandable concern for lawmakers, it shouldn't factor into the government's contracting process, especially when it comes to defense contracts.
Protecting jobs at all costs could result in higher costs for taxpayers. It could even mean lower-quality products as manufacturers realize they won't have to compete with overseas companies. Boeing and EAD, parent company of Airbus, are two of the few companies in the world making large aircraft capable of being converted to tankers. Cutting out foreign competition would leave Boeing free to charge whatever it wanted. That's never a good deal for the taxpayer.
To see more of the Northwest Florida Daily News or to subscribe to the newspaper, go to http://www.nwfdailynews.com. Copyright (c) 2008, Northwest Florida Daily News, Fort Walton Beach Distributed by McClatchy-Tribune Information Services. For reprints, email tmsreprints@permissionsgroup.com, call 800-374-7985 or 847-635-6550, send a fax to 847-635-6968, or write to The Permissions Group Inc., 1247 Milwaukee Ave., Suite 303, Glenview, IL 60025, USA.
More News:
Market Updates |
Stock Alerts |
All Trading News |
Stock Index
|
|
