Air Force-European Defense Contractor Deal Irks Many in Congress

Outrage is brewing in Congress as members take stock of a $40 million contract awarded to Europe-based Northrop Grumman/EADS (European Aeronautic Defense & Space) by the U.S. Air Force to build a new generation of in-flight refueling tankers.

Lawmakers in the House and Senate are again raising the specter of foreign intervention in U.S. national security as they object to the "outsourcing" of U.S. military manufacturing.

The controversy has the air of the political explosion of 2006, when Dubai-based company DP World bought management operations at six U.S. ports. The DPW deal was scuttled in the face of massive congressional opposition.

"The Air Force's decision to award the contract for a much-needed modernization of the nation's aerial tanker fleet to Northrop Grumman and Airbus raises serious questions that Congress must examine thoroughly," House Speaker Nancy Pelosi said in a statement Tuesday, noting that up for review are the U.S. national security implications of choosing "an aircraft supplied by a foreign firm."

"At the very least, there should be congressional hearings," Senate Majority Leader Harry Reid, D-Nev., told reporters on Tuesday.

The current deal is different, however, from the DPW contract, which ended up with the sale of the company that won the U.S. port security contract to a U.S. firm. Members today are divided along the lines of states who are winners and losers in the contract.

The losers are hauling Air Force officials before Congress to explain the deal and calling for the investigative arm of Congress to probe the contracting process. Still other members are concerned that the Air Force is not "buying American."

Already scheduled is a House Appropriations subcommittee hearing on Wednesday in which top Air Force officials will be on the hot seat regarding the $35 billion contract. This is sure to be the beginning of grilling that began with closed-door meetings among members of Congress who are Boeing Aircraft supporters and Air Force Secretary Michael Wynne and his special assistant for acquisitions, Kenneth Miller.

Boeing, the second largest U.S. defense contractor, was widely expected to win the deal. The company, based in Washington, would have built its tanker in Everett, Wash., and modified it for military use in Kansas.

"We are hemorrhaging manufacturing jobs to foreign countries already, so I cannot imagine why at a time like this our government would decide to take 44,000 American jobs, good jobs, and give them to the Europeans," Washington Sen. Patty Murray, a top Democrat on the Appropriations Committee and member of the Democratic leadership, said on the Senate floor, . "Instead of securing the American economy and our military while we are at war, we are creating a European economic stimulus plan at the expense of U.S. workers."

Murray also raised the menacing specter of foreign governments meddling in U.S. affairs of state, "What happens if France or Russia, which is pushing to increase its stake into EADS, by the way, decides it wants to slow down our military capacity because it doesn't like our policies? Do we want another country to have that kind of control? I think that's one of the questions that we need to answer."

Wynne and Miller met for more than an hour with the Washington and Kansas state delegations earlier this week. Sen. Pat Roberts, R-Kan., described the event as tense.

"It was not pleasant. We had what we call meaningful dialogue. I am still not satisfied with their conclusion. In fact, I think there are many more questions that must be answered before this conclusion should move forward," Roberts said.

Still, the surprise choice was good news to Alabama, where the tankers will be assembled. Republican Sen Jeff Sessions, who's hometown of Mobile will be the beneficiary of a new assembly facility, said his state will see thousands of new jobs from the deal.

"In reality, what we're talking about is the insourcing into America of an aircraft production center that will bring ... jobs to our area — 5,000 for my state and more importantly 25,000 for the United States," Sessions said Monday.

"Some falsely proclaimed that our military was selling out to a foreign country that this award would outsource U.S.. jobs, that these planes should be made in America," said Sessions' fellow Alabaman, Sen. Richard Shelby. "The facts behind this selection should allay any of my colleagues' fears or concerns. (The) tankers will be made in America by American workers. Any assertion that this award outsources jobs to France is simply false. This award does the exact opposite."

Sen. Maria Cantwell, D-Wash, questioned the Air Force's decision-making process, saying that had Boeing known the Air Force was seeking a larger plane, it would have based its proposal on the larger Boeing 777 instead of the 767.

While Cantwell expressed dismay that the larger planes could cost less in the long run, given the high cost of fuel, Sessions countered, "You need 19 fewer of Northrup teams' aircraft than if you bought the other aircraft. Big savings in itself."

Cantwell also argued that "nothing in the contract" says the contractors "have to build jobs in the U.S," raising the possibility that the skill set that exists with Boeing workers might be lost. "What skills are you willing to outsource?" she asked in a rhetorical question to the Pentagon.

For some members, it's all about the "Made in America" label.

Rep. Duncan Hunter, R-Calif., a fierce "Buy America" advocate, is outraged over the deal and is reportedly weighing his legislative options, a House Republican aide said.

Still other members are worried about the toll any delay will take on the troops. Air Force veteran pilot Sen. Ted Stevens, R-Alaska, says he wants to see the controversy wrapped up swiftly.

"These planes the Air Force has now ... need to be replaced right now. I don't want to see this significantly delayed," the senator warned.

Stevens and other senior senators are saying that nothing can likely be done to undo a government contract, but he is looking at trying to legislatively to require that a certain percentage of the final product be "Made in America."

Democratic Sen. Joe Lieberman, who's state would have benefited with Connecticut-based Pratt & Whitney building the tanker engines, said he could not think of an incident where Congress had overridden a government contract.

"I understand the disappointment. I am disappointed. ... Obviously it's money, but it's about jobs ... and it's about pride," he said

However, Congress has no business getting involved, Lieberman said. Instead, Boeing should work through the regular government process to protest the decision.

Boeing today asked the Air Force for an earlier debriefing. It was previously scheduled for March 12.

In May 2003, a similar tanker contract was awarded to Boeing, but it was quashed after fraud was exposed by Congress. Led by presumptive Republican presidential nominee John McCain, Boeing paid a record $615 million-dollar settlement to the government and one Air Force official was imprisoned.

Through a spokeswoman, McCain made the following statement, “Having investigated the tanker lease scandal a few years ago, I have always insisted that the Air Force buy major weapons through fair and open competition — helping to assure that it will acquire the most capable, most cost-effective option, for the benefit of the joint war-fighter and the taxpayer. I will be interested to learn how the Air Force came to its contract award decision here and whether it fairly applied its own rules in arriving at that decision.”