Boeing won a major victory Wednesday when the Pentagon scrapped the Air Force refueling-tanker competition, throwing out the contract awarded in February to an Airbus-built plane and leaving the next president to start over.

Share story

Boeing won a major victory Wednesday when the Pentagon scrapped the Air Force refueling-tanker competition, throwing out the contract awarded in February to an Airbus-built plane and leaving the next president to start over.

The decision, announced by Secretary of Defense Robert Gates, followed months of political pressure, a formal Boeing protest and a threat from Boeing management to pull out of the competition unless it got more time.

Boeing got a whole new game, possibly extending the tanker saga out several more years, and a new team to make the final decision.

Now, the outcome of the presidential election could determine whether a Boeing plane or Northrop-EADS’ Airbus plane becomes the $40 billion Air Force tanker.

Democrat Barack Obama’s political supporters in Congress and in labor unions, and the broad Democratic Party agenda, tend to favor the Boeing airplane, built by union workers in Washington state.

The Republican Party’s free-market agenda would tend to be neutral on the choice of companies, but Republican John McCain has clashed with Boeing in the past over the tanker. And McCain’s Southern political supporters favor the Airbus jet, with parts sent from Europe for assembly in Mobile, Ala.

Loren Thompson, a defense analyst with the Lexington Institute who is familiar with the politics of military procurement, sees two starkly different agendas.

“Obama is an economic nationalist,” Thompson. “For him, the tanker connects with much broader agenda items: the future of American industry, the trade balance, sending production offshore.

“Sen. Obama will look at where these two planes originate, where they are being built, and who is building them, and probably decide he prefers the Boeing tanker.”

Boeing supporters Sen. Maria Cantwell and Rep. Norm Dicks, both Washington state Democrats, backed that assessment of where Obama likely would fall.

McCain would inevitably cast the issues around the tanker competition differently, Thompson said.

Early involvement

In 2002, as chairman of the Senate Armed Services Committee, McCain objected to the original tanker deal because it was awarded without competition as a congressional earmark.

That deal unraveled after a procurement scandal that sent Boeing Chief Financial Officer Mike Sears to prison.

In 2006, with the Airbus A330 competing against the Boeing 767, McCain intervened again.

An Air Force requirement to consider allegations in the Boeing/Airbus trade dispute over illegal subsidies would effectively have excluded the Airbus plane in advance. McCain wrote to Deputy Defense Secretary Gordon England, asking him to remove the requirement to ensure a fair competition.

“His agenda is good government,” Thompson said. “We’ve had 30 years now of the Republicans pushing an agenda of free trade, deregulation and market forces. He’s going to look at this program a good deal differently than a Democratic president.”

A staffer close to McCain who has worked closely on the tanker said McCain does not favor either airplane.

“[Sen. McCain’s] only agenda is that the competition produces the best product for men and women in uniform at the best price for the taxpayer,” the staff member said.

Political reaction to the tanker news in Alabama and in Washington state was swift. At a news teleconference from Mobile, local politicians fumed at the Pentagon’s announcement.

If the tanker award to EADS and Northrop Grumman had been upheld, Mobile was set to break ground on a new large aircraft plant. It was to be the first Airbus jet plant in the U.S., rolling out military tankers and A330 commercial jet freighters.

“This is an outrage,” said Bay Haas, Mobile Airport Authority executive director. “I’m not disappointed; I’m disgusted.”

Win Hallet, president of Mobile’s Chamber of Commerce, said Boeing has “hijacked this thing twice.”

“How many times do we have to win this thing before it’s ours?” Hallet asked.

In contrast, Boeing and its supporters were surprised and relieved.

In a statement, Boeing welcomed the chance for a “thorough and open competition.”

The Obama campaign sent a statement from Washington State Democratic Party Chairman Dwight Pelz, calling McCain “one of the biggest enemies of Boeing.” It mentioned that some former McCain staffers had to quit after it was revealed they had worked as EADS lobbyists.

Cantwell said the tanker should now become more of an election issue between McCain and Obama.

“Before, you could just ask them what they thought,” she said. “Now one of the two of them will actually have a great deal of impact on it.”

Dicks sees Obama backing two key arguments from Boeing political supporters: the U.S. jobs issue and the relevance of the U.S. allegation at the World Trade Organization that Airbus gets illegal government subsidies.

“Obama will be more sensitive to the subsidy issue,” Dicks said.

But analyst Thompson said the president cannot make the tanker decision alone.

“If Obama wins, then Boeing is back in the game,” Thompson said. “They’ll have a friend in the White House.

“But that’s not the same thing as winning hands down. You’ve still got an acquisition process and laws governing that process. He cannot direct the outcome.”

Plenty of rules

How the new competition will shape up won’t be clear until the next administration sets the new tanker requirements in the spring.

Will the Air Force ask for a larger tanker, something A330-sized, as it did in its latest go-round? Or will it go back to the original medium-sized tanker requirement that would suit the 767?

An industry source close to the Northrop team said they almost certainly will offer either the A330 or the freighter version of the A330.

But Boeing’s offer is unpredictable. It could submit its 767 proposal again, or the bigger 767-400 or the really big 777.

Even if Boeing goes for a bigger plane, it still might be the underdog. It would take a long time for Boeing to develop a new 777 or 767-400 tanker. EADS, however, has an A330 tanker in late stage flight tests for the Australian Air Force.

The final tanker award remains unpredictable. For sure, the politics around the contract will get hotter.

Dominic Gates: 206-464-2963 or dgates@seattletimes.com