WASHINGTON (AFP) — A battle over a US Air Force tanker contract heated up Wednesday, with vanquished Boeing hinting it would protest and winner Northrop Grumman mired in corrections of "erroneous" information.
The sensitive issue of job losses and gains on both sides of the Atlantic was highlighted in a testy panel hearing in Congress and dueling statements between the victors Northrop Grumman and its European contract partner EADS, which already is facing pressure from European unions.
Sparks flew between the companies as a House of Representatives panel peppered a top air force procurement officer with protests, largely protectionist, over Boeing's rejection for the 35-billion-dollar aerial refueling tanker contract.
The air force announced late Friday, to widespread surprise, that it had picked the team led by Northrop Grumman Corporation and the European Aeronautic Defense and Space Company (EADS).
The Boeing Company had been heavily favored to win the contest to provide 179 new KC-45A tankers, an initial phase in replacing the air force's aging Boeing-made fleet.
With its defeat, Boeing's arch-rival in commercial aircraft, EADS subsidiary Airbus, based in France, will now assemble commercial 330s in Alabama. Separately, Northrop Grumman will convert the planes into tankers using sensitive military technology that is not to be shared.
Boeing suggested it may protest the air force decision, which has sparked a backlash in Congress over the spending of tax dollars on a military project that will partly profit a foreign company.
"In our view, there's a disconnection between what they talked about during their press conference and the requirements we read in the documents," Jim Albaugh, president and chief executive of Boeing Integrated Defense Systems, said in a conference call with analysts.
Albaugh criticized the potential effectiveness of the Northrop Grumman/EADS tie-up, describing it as "two companies that'll be working for the first time together, two different cultures, two different notions."
He spoke before a volley of contradictory statements by Northrop Grumman and its European partner.
Responding to criticism that the contract will cost US jobs, the Los Angeles-based defense company said in a statement the contract would result "in the in-sourcing of approximately 2,000 jobs from Europe to the United States."
Northrop Grumman said it sought to make "clear" its position, saying "numerous erroneous comments have been repeated in the media and in Congress."
EADS denied that jobs would be moved to the US.
"There is no relocation of jobs," a spokesman for the European group told AFP, adding that jobs will be created in the United States, but not moved from Europe.
Northrop Grumman hours later pulled back from its statement.
The communique "was not clear," Northrop spokesman Randy Belote told AFP.
Belote, queried about the shifting of jobs across the Atlantic by the partnership, said, "No, we're not."
"It's insourcing the capability" but not transferring jobs from Airbus, he said.
The commercial battle took on protectionist hues in Congress as air force procurement chief Sue Payton faced heated questions at a hearing of the House Appropriations Subcommittee on Defense.
"This is a crown jewel of American technology we are now giving away to the Europeans," said Norman Dicks, a representative of Washington state, where Boeing assembly operations are located.
Todd Tiahrt, a Kansas Republican, said: "It's outsourcing our national security."
"Choosing a French tanker over an American tanker doesn't make sense to the American people," he added.
Payton said the Northrop Grumman/EADS team "met and exceeded the requirements" of the bid criteria and jobs creation had not been considered in the evaluation, "according to the law."
She said the air force's plans to debrief Boeing on its decision on Friday.
Defense Secretary Robert Gates told a news conference that he believed "it was a fair competition."
"If there is a desire to change the rules of the game, in terms of how these competitions are carried out, clearly the Congress can do that," he said.
Congressman Phil Hare, a Democratic member of the House Trade Working Group, backed House Leader Nancy Pelosi's call for a congressional investigation into the awarding of the contract.
"This contract represents the largest foreign acquisition of American defense products in United States history -- an unprecedented break from the Buy America policies of the past," he said.
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