Backers of Boeing Co pushed the Pentagon to factor an international trade ruling into a renewed competition between the US aerospace giant and its European rival, Airbus.
At stake is a projected $35 billion (R266 billion) contract to supply mid-air refuelling aircraft to the US Air Force, which intends to purchase an initial 179 aircraft to start replacing its aging KC-135 fleet, Reuters reports.
The Defense Department is expected to kick off the re-competition this fall.
Lawmakers from states that stand to gain jobs if Boeing wins the tanker deal this time did not wait for an official US readout of the confidential, preliminary World Trade Organization report on alleged illegal subsidies to Airbus.
Instead, they said the US Defense Department must take into account what they described as the WTO’s pro-Boeing findings before awarding the long-delayed tanker contract.
Boeing would vie again for the contract against a transatlantic team made up of Northrop Grumman Corp and Airbus parent EADS, which is offering a modified Airbus
A-330
Relatively early on in the previous tanker selection saga, the Defense Department decided that the WTO decision would not factor into the selection of a winner in the tanker competition.
US Rep. Norm Dicks, a Democrat from Washington State, where Boeing does much of its aircraft manufacturing, said Friday that turning a blind eye was not acceptable in light of the WTO ruling such as he described it.
"The US government cannot reward illegal market actions that have harmed US manufacturers and stolen US aerospace jobs," he said in a statement.
Todd Tiahrt, a Republican from Kansas where the Boeing tankers would undergo final assembly added: "The Department of Defense can no longer put its head in the sand and ignore internationally confirmed illegal subsidies that have for years tipped the scales in favour of European workers."
Tiahrt said he had been briefed on the ruling by the Office of the US Trade Representative.
"It is time to move forward with the only clear solution to the replacement of the KC-135 aerial refuelling tanker," he said, referring to the 767 offered by Boeing in the last competition. "We need an American tanker built by an American company with American workers."
Sen. Patty Murray, a Washington Democrat, said the Defense Department "needs to answer to how this violation of WTO rules will be considered in the competition for the vital aerial refuelling tanker."
The Defense Department declined to take a stance.
"It would be inappropriate to comment on any findings that have not been made public," said Cheryl Irwin, a Pentagon spokeswoman.
Dicks said the interim ruling from a three-person WTO panel "definitively" upheld a US contention that European jet-maker Airbus received illegal subsidies to the detriment of Boeing, the No. 1 US export earner.
His statement followed consultations with US officials who had read the ruling, said George Behan, a spokesman for Dicks.
On the other side of the tanker tussle, US Senator Richard Shelby, a Republican from Alabama where an Airbus-based tanker would be assembled if Northrop wins the contract said the WTO findings were irrelevant.
"It is important to remember that this preliminary report pertains to an ongoing dispute involving civil not military aircraft," Shelby said.
"Whatever its findings, they should not affect the upcoming tanker acquisition," he added. "Any attempt to conflate these two separate processes detracts from that paramount goal" of buying the best tanker.
Analysts said it may take many years to reach a resolution on the trade dispute, making it hard for the Pentagon to weigh the dispute in its calculations.
"Both the US and Europe view aerospace as strategic industries, and I doubt that either would want to unilaterally concede anything on this funding issue," said Rob Stallard, an analyst at Macquarie Research.
Pic: Boeing logo
