Pentagon should ensure fair play on tanker bids

Like a card game where players pass cards to the left and right, competing in the global economy requires strategic vision and execution, with local Everett businesses working with foreign partners and competing on an international scale for a global pot.

However, when one player is sneaking extra cards from under the table, fair competition is ruined and the game is abandoned to those who can best rig the odds in their favor.

In a competition against Boeing to win a $40 billion Department of Defense contract to replace the Air Force's aerial-refueling tankers, French aerospace company EADS happens to be using a stacked deck.

The company proposes to win the contract by taking advantage of some $100 billion in illegal subsidies that our own U.S. trade representative has denounced as undermining the U.S. economy. Thousands of local jobs in America, billions in taxpayer dollars and even our foreign policy hang in the balance; but, the strangest part is that the Department of Defense isn't raising any objections.

Tanker-refueling aircraft are critical military assets that connect a U.S. military stretched across the globe, and the competition between Boeing and EADS should ensure that the Department of Defense gets the best plane for the taxpayer dollar — if the companies compete on equal footing.

However, EADS' aircraft design is based on its A330 commercial airliner, which is the direct product of $100 billion in illegal subsidies from both the French and German governments. These illegal subsidies are the subject of a massive lawsuit filed with the World Trade Organization, in which the Office of the U.S. Trade Representative claims they represent predatory policies designed to harm the U.S. airline industry. In fact, since the European subsidies began, Boeing has lost significant market share and been forced to cut some 65,000 jobs.

Oddly, the Pentagon has turned a blind eye to these illegal subsidies, even though they clearly give EADS an unfair advantage. After enduring stinging criticism from Congress when it awarded Boeing a no-bid contract to build tankers in 2004, many think the Defense Department is determined to keep bidding for the contract at least nominally competitive, which depends on keeping EADS in the competition. Ironically, the Department of Defense seems to be undercutting the spirit of the competition by allowing EADS to break the rules.

Unfortunately, American workers will be among those who suffer the consequences of this twisted bit of Washington, D.C., agency politics. A Boeing tanker contract would support 44,000 jobs — 9,000 in Washington state alone. In addition, Boeing's bid will lead to the hiring of hundreds of subcontractors, spreading the work nationwide.

EADS, on the other hand, has singled out only 1,000 jobs at a finishing plant in Alabama if it wins the tanker contract — it promises to bring thousands more American jobs, but since no one has seen any plans, many doubt they will ever materialize.

Even our own foreign-policy autonomy is at stake. At a time when global terrorism threatens us at home and abroad, can we really afford to cede manufacturing control of a vital piece of military equipment to nations that frequently disagree with our foreign policy?

If the European Union, France or Germany were to vehemently disagree with U.S. policy, they would be in a position to hold back tanker aircraft as a way to express their displeasure, threatening economic and national security.

EADS has sought to assuage these concerns about jobs and foreign policy by partnering with American aerospace company Northrop Grumman. But, the alliance exists more on paper than in practice. EADS plans to manufacture the critical parts of its tanker plane in Europe while it seems that Northrop merely lends its good name for press releases and currying favor in Washington, D.C.

In an 11th-hour ploy, EADS has begun to play a new card, suggesting a kind of tie: "splitting" the first batch of tanker planes between the companies.

While this might seem sensible — allowing everyone to win and giving the Defense Department more time to decide before ordering the rest of the planes — a split buy would only further postpone a tough decision. Worse yet, it would force taxpayers to pay twice for research and development, reduce economies of scale and increase the cost of maintenance. The department can avoid these costly inefficiencies simply by making the decision now instead of later.

As EADS and Boeing show their final cards in the tanker competition, the Department of Defense should ensure that everyone plays fair. If the U.S. government and the Air Force award contracts to companies that receive illegal subsidies and distort the market, then they are turning their backs on the global economy as well as local businesses and punishing those who play by the rules.

Don Brunell is president of the Association of Washington Business, www.awb.org, based in Olympia.