USAF Says It Will Disregard WTO Disputes
Airbus got an unexpected
boost in its competition for a new US Air Force tanker contract.
The service removed a requirement for bidders to discuss trade
disputes lodged with the World Trade Organization in their
proposals.
In a move widely seen as benefiting Airbus, Special
assistant to the Air Force Secretary Ken Miller told the Associated
Press Tuesday bidders no longer have to show how penalties deriving
from WTO disputes might affect their ability to meet contract
obligations.
Airbus' US partner Northrop-Grumman has bitterly complained that
requirement would have all but eliminated its chance to bid
competitively against Boeing.
Northrop Grumman spokesman Randy Belote said, "Having that issue
as a part of the (bidding) would have made it nearly impossible to
compete. We have consistently maintained that the WTO issue was
difficult, at best, to resolve within the confines of the tanker
acquisition program."
The US filed a complaint with the WTO about subsidies Airbus
receives from European governments. Airbus fired back that Boeing
gets tax breaks and lucrative defense contracts from the US
government. The dispute, simmering since 2004, has rekindled recently with
fresh protests coming from both sides.
Industry observers say the WTO should settle the dispute by next
October.
Airbus and Northrup Grumman are developing a tanker based on
Airbus's A330 airliner in the US. The partners have already
announced plans to build the aircraft in Mobile, AL. EADS says it's
prepared to shell out $30 million in the coming contract
competition. That may seem a lot, but industry experts have pegged
the value of a new tanker contract at more than $20-billion.
The Air Force has not published all the evaluation criteria for
bidders as yet. CEO of EADS North America Ralph Crosby told Reuters
the company hasn't ruled out withdrawing from the competition
depending on what it sees in those criteria.
EADS faces an uphill battle in the competition. It faces stiff
opposition from US lawmakers intent on keeping large defense
contracts at home. In addition, not only are they facing the home
team in Boeing, but the US plane maker's 707 derivative KC-135 has
been the Air Force's primary aerial refueling platform for five
decades -- a legacy sure to be highlighted in Boeing's bid.
For its part, EADS says it believes the military will conduct
the competition fairly. Besides, the European conglomerate just won
another lucrative US military contract to supply the US Army with
322 light utility helicopters.
The USAF is expected to begin accepting bids for a new tanker
later this month.