Another blow to state economy?
by The Anniston Star Editorial Board
Feb 05, 2010 | 1350 views |  2 comments | 9 9 recommendations | email to a friend | print
Alabama’s benefit from winning the Air Force tanker contract would be immense. Industry and jobs would give the Mobile area an economic jolt.

Now, it may take a miracle for that to happen.

Two years ago, Northrop Grumman and its European partner, EADS, won a $40 billion contract to build the next generation of Air Force tanker planes. The aircraft would be assembled at a $600 million plant near the Port City.

More than 1,000 jobs would come with it.

Then Boeing, whose bid lost, won its challenge and the Pentagon rewrote the bidding guidelines. With that, the process ceased to be about which plane is best for the Air Force. Instead, it became about which company has the most political clout on Capitol Hill and in the White House.

As it turned out, Boeing lobbyists had the influence because the new guidelines favored its smaller, less-versatile tanker over the one made by Northrop Grumman. As a consequence, Northrop Grumman has made a tentative decision that unless there is a significant change in the selection criteria, it will withdraw from the bidding and the contract will go to Boeing, the Mobile Press-Register has reported.

“Northrop’s startling reversal of fortunes,” said Loren Thompson, of the Lexington Institute, which analyzes military and defense policy, “is traceable to the collision of two forces: a new administration determined to tighten up terms on contractors, and a new CEO determined to assess rigorously the risks and rewards of business opportunities.”

Some might want to point fingers at President Obama, whose Chicago background meshes conveniently with Boeing, which is headquartered there. The tilt toward Boeing had started before the president took office, though he apparently did little — if anything — to correct the course. Thus, the final blame can’t go there.

More likely, however, is the fact that Northrop’s new CEO, Wes Bush, is looking hard at the company’s profitability in this recession economy. He’s determined that the new bidding criteria, as Northrop’s Randy Belote told the Press-Register, does not meet “the test of true competition.”

In other words, Northrop/EADS have been priced out of the market. If the company cannot make a reasonable profit with its plane — which many analysts feel is better suited for what the Air Force needs — then it will retreat from the bidding process.

If that happens, Boeing should be careful. Having already been caught up in a tanker scandal in 2003, the company will be closely watched for any irregularities. If its bid comes in too high, accusations of exploiting the situation are sure to follow.

For now, let’s expect that Northrop Grumman/EADS will get fair treatment, and that Sens. Richard Shelby, R-Tuscaloosa, and Jeff Sessions, R-Mobile, will make a last-ditch effort on its behalf.

However, the way things are going, fair treatment seems increasingly unlikely. If that’s the case, Northrop/EADS will lose; Alabama will lose; and the Air Force will not get the better-suited plane.

Everyone loses — but Boeing.
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Another blow to state economy? by The Anniston Star Editorial Board

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