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Congress to examine EADS military deal

Latest update : 2008-03-04

US House Speaker Nancy Pelosi said Congress would examine the US military's decision to award a 35 billion dollar aircraft deal to EADS and partner Northrop Grumman instead of US rival Boeing.

WASHINGTON — Congress will examine the US military's decision to award a 35 billion dollar aircraft contract to Europe's Northrop Grumman/EADS group instead of US rival Boeing, leading lawmakers said Monday.
  
"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.
  
"Given the ramifications of this decision for the United States, the Air Force must explain to Congress how it meets the long-term needs of our military and the American people," she said.
  
The Defense Department announced Friday that it was awarding the deal for a fleet of in-flight refueling craft to the group that includes EADS, which makes the Airbus aircraft, instead of US aerospace giant Boeing.
  
Pelosi, who leads the Democratic Party majority in the House of Representatives, said among the questions lawmakers should examine are the implications for US national security of choosing "an aircraft supplied by a foreign firm" and the effect on the country's employment and "technological base."
  
The surprise choice of EADS marks the European group's entry into the lucrative US defense market, and came as a serious blow to Boeing.
  
While European political and industry leaders have hailed the decision, US lawmakers have expressed outrage, particularly senators from the states of Washington and Kansas, who wrote to Defense Secretary Robert Gates on Monday demanding an explanation.
  
"The Airbus contract is a European Stimulus Plan subsidized by the American taxpayer," wrote Senator Patty Murray of Washington state.
  
"We need to be investing in the American aerospace industry and the high-wage, high-skill jobs it supports," Murray said.
  
Boeing, the second leading US defense contractor after Lockheed Martin, had been considered the heavy favorite for the contract.
  
Boeing and the EADS-Northrop team had been competing for more than a year for the prize, which offers a cushion for decades in case of a downturn in the highly cyclical market for commercial aircraft.
  
EADS's winning offer is a modified version of the Airbus 330. The commercial plane will be militarized by Northrop Grumman and its American partners to prevent the transfer of sensitive technology to a foreign entity.
  
Boeing had proposed a version of its long-haul cargo plane, the 767-200.
  
In May 2003, a similar tanker contract was awarded to Boeing, but it was annulled under allegations of procurement fraud, for which Boeing paid a record 615-million-dollar settlement to the government.
  
Senator John McCain, now the leading Republican contender in the race for the White House, was sharply critical of the Pentagon at the time.
  
 

Date created : 2008-03-04

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