Tanker Deal Loses 'Buy America' Provision

A defense bill approved by Congress would allow open competition for a multibillion-dollar contract to supply refueling tankers for the Air Force.

President Bush is expected to sign the measure, squelching an earlier House-approved bill that would have helped The Boeing Co. by keeping the Pentagon from buying military equipment from the parent company of European jet maker Airbus SAS.

Boeing lost the lucrative tanker contract in 2004 amid an ethics scandal.

"Buy America" language had been inserted by Rep. Duncan Hunter, R-Calif., chairman of the House Armed Services Committee. However, Hunter agreed to remove the provision last month at the request of Senate leaders and administration officials, who said it could spark retaliatory measures by other countries and limit Pentagon flexibility. Congress voted final passage Dec. 21.

Harald Stavenas, a spokesman for Hunter, said this week the lawmaker would fight for it in the future.

Chicago-based Boeing lost the tanker deal in 2004, after revelations that it had hired a top Air Force acquisitions official who later admitted giving the company preferential treatment.

The deal would have allowed the Air Force to buy or lease 100 Boeing 767 planes for use as tankers, but it was killed by Congress in the 2005 defense authorization bill. The Air Force has said it is likely to reopen the deal to competition, although no formal timeline has been set.

George Behan, chief of staff to Rep. Norm Dicks, D-Wash., said withdrawal of the buy-America clause was expected.

"There's no question there will be an open competition. The real question is whether the Pentagon will ever award the contract to a company that has a major European component, given the (U.S.) complaints about illegal subsidies the parent company is receiving," Behan said.

Dicks' district outside Seattle includes thousands of Boeing workers.

The House bill would have barred the Pentagon from purchasing goods and services from foreign companies that receive government subsidies. While no companies were named, lawmakers said the amendment was aimed at disqualifying Airbus' parent company from bidding on the tanker contract.

Airbus, which is 80 percent owned by the European Aeronautic Defence and Space Co., has long received subsidies from European governments, sparking tension between U.S. and European officials.

EADS, which is based in France and Germany, has said it plans to team with Northrop Grumman Corp. to offer a tanker version of its Airbus A330 passenger jet to produce a new generation of aerial refueling tankers. The contract could be worth at least $20 billion.

Boeing spokesman Doug Kennett said Tuesday that "Boeing welcomes fair competition and the opportunity to tender the best proposal possible."

Randy Belote, a spokesman for Northrop Grumman, said the California-based company believes its partnership with EADS would produce an American-made product. Last year, EADS said it would build a manufacturing plant in Mobile, Ala., if it wins the tanker contract.