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US extends tanker contract deadline amid charges of protectionism

Video by Carla WESTERHEIDE

Text by Khatya CHHOR

Latest update : 2011-01-04

The Pentagon says it will extend the bidding deadline for a contract to supply aerial tankers if it receives notice that European aerospace giant EADS will make an offer. The move comes amid charges that the bidding process favours US firm Boeing.

The Pentagon said on Wednesday that it may extend the bidding deadline for a contract to supply the US military with aerial refueling tankers to allow European aerospace giant EADS enough time to apply. The move follows European allegations that the US Department of Defence favoured US manufacturer Boeing by changing the bidding terms of the $35 billion contract.

“If we receive formal notification from EADS of their intention to make an offer, we will extend the deadlines for bids from May 10 to July 9,” Pentagon spokesman Geoff Morrell told a press conference on Wednesday, a move that would give all bidders an additional 60 days to submit their offers. EADS, the European Aeronautic Defence & Space Company and parent company of Airbus, had earlier asked for a 90-day extension.

Spokesman Guy Hicks said in an email that the European contractor had already “firmly indicated that a 90-day extension would be the minimum time necessary to prepare a responsible proposal” but that EADS would “consider” the new deadline.

EADS withdrew from the tender on March 8 after its US partner, Northrop Grumman, refused to compete, charging that new bidding requirements had been altered to favour rival manufacturer Boeing. The partners claimed the new terms proposed by the Pentagon were skewed in favour of Boeing’s modified 767 model, which an EADS statement called a “smaller, less capable aircraft” than its own Airbus 330.
 
Official outrage
 
The suspicions of US protectionism sparked anger in Europe, with several European Commission officials criticising the new terms of the tender. One German minister warned that Berlin would take up the matter at the World Trade Organisation.
 
Speaking to reporters after bilateral talks in London on March 12, French President Nicolas Sarkozy and British Prime Minister Gordon Brown were also vocal in their displeasure, with Brown saying he was “disappointed” at the Pentagon's decision to alter the bidding rules.
 
“These are methods which are not good for the partners of the United States,” Sarkozy said, while also noting that France's relations with the United States remain “close”.
 
Another French official was not so circumspect. “This is a serious matter,” said France’s minister for Europe, Pierre Lellouche, after a March 10 cabinet meeting. “I can assure you that there will be consequences,” he added.
 
Morrell said on Wednesday that the terms of the competition were based only on US military requirements and denied that politics had played any role in the decision to extend the deadline nor in any part of the bidding. “Politics are not a part of this process. Never have been. Never will be,” he said.
 
During Sarkozy's visit to the United States this week, US President Barack Obama pledged that the competition for the 179 tanker planes would be “free and fair”. Sarkozy, for his part, said he had faith in Obama’s assurances and indicated that EADS would likely submit a proposal.
 
But some US politicians have decried an extension of the bidding, with the governors of Washington, Oregon, Connecticut, Kansas and Illinois saying in a March letter to Defense Secretary Robert Gates that any new deadline would unfairly favour EADS.
 
"Delaying the process because a potential bidder cannot assemble a responsive bid in a timely manner amounts to favoring that vendor," they wrote.
 
Another US politician said any delay could put US troops at unnecessary risk. “I believe in a fair and open competition, but this is no time to put American service members and workers on hold while a foreign company waffles,” wrote Senator Patty Murray, a Democrat from Washington.
 
Third time lucky?
 
The award of the contract has been fraught with tensions, reversals and cutthroat competition from its beginnings almost a decade ago. Boeing won the original contract in 2001, only to lose the deal after revelations of collusion between a former Air Force procurement officer, Darleen Druyun, and Boeing’s chief financial officer at the time, Mike Sears. Both Sears and Druyun were dismissed from Boeing and subsequently served time in prison.
 
A Northrop-EADS partnership took over the contract in February 2008, but the award was reneged after US government auditors found flaws in the procurement process that they said unfairly penalised Boeing.
 
The Pentagon expects to issue a final award for the lucrative contract by “early fall” as announced despite the deadline extension, Morrell said.
 

Date created : 2010-04-01

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