Takes Flight

02 May 2008
Boeing's Efforts Against Northrop Grumman Stoking Anti-American Sentiment Abroad
Government Executive magazine is warning that Boeing's efforts to overturn Northrop Grumman's Air Force contract to build America's next generation of aerial refueling tankers could have profound and far-reaching negative consequences for all defense contractors–including Boeing.

Government Executive notes that false accusations by Boeing's backers that the contract went to a foreign country–Northrop Grumman is based in Los Angeles–is stoking anti-American sentiment abroad, at a time when foreign countries increasingly have been buying parts and products from U.S. defense contractors.

"A decision by Congress to overturn the contract would be virtually unprecedented and could have long-term ramifications for the federal procurement market," Government Executive reports. "Many analysts, for example, fear that offended European nations could reciprocate in kind by blocking future deals with U.S. defense contractors."

"There are a whole bunch of European companies that are just licking their lips; their mouths are practically watering at the prospect that something like this might be reversed, because then they will go to the European Union and say, 'We want to completely change the business,' " Ronald Kadish, vice president at the consulting firm Booz Allen Hamilton, and a specialist in defense contracting, told Government Executive. "The United States sells a lot more than we buy from Europe. And this will give the European Union essentially the opportunity to become a fortress Europe. I am not sure this is what our industry wants."

That's because, as figures from the Office of the United States Trade Representative show, for every dollar that America spends buying military materiel abroad, foreign governments spend more than $4 buying U.S. defense products.

The Buy American Act mandates preferences for the procurement of domestic products, but makes exceptions for foreign allies like Britain, France and Germany when considering contracts. Government Executive asked Cy Phillips, an attorney who specializes in the Buy American Act, what he thinks of efforts by Boeing backers in Congress to either kill the Northrop Grumman contract or alter the Buy American Act to eliminate defense contracting exemptions.

"To whine...is senseless. We've gone way beyond that," Phillips said. "We can put the genie back in the bottle if we choose to. We can withdraw from the international economy if we choose to. But, it strikes me as a little too late . . . and ill-timed, ill- founded and stupid, to be quite blunt."

To read the entire Government Executive story, go to: http://www.govexec.com/story_page.cfm?filepath=/features/0508-01/0508-01na1.htm

What Others Are Saying:

Congressional Quarterly and others are reporting, meanwhile, that there is no appetite in the Senate for overturning Northrop Grumman's win.

CQ, the Mobile Press-Register and the Seattle Post-Intelligencer all note that the Senate Armed Services Committee passed the annual defense appropriations bill for fiscal year 2009, which includes funding for Northrop Grumman's tanker contract. The measure now goes to the full Senate for its consideration.

As CQ put it, "The committee decided not to take action to block the controversial Air Force decision to award a $35 billion contract to build aerial refueling tankers to a team of companies" that includes Northrop Grumman. "The losing firm, Boeing Co., is protesting the decision to the Government Accountability Office, and most Senate Armed Services members are inclined to await the results of that review."

The Seattle newspaper wrote that Northrop Grumman "cleared a key legislative hurdle," and interviewed Senator Jeff Sessions, an Alabama Republican, who said: "This is great news for the tanker project."

Read the entire Congressional Quarterly story (NOTE: subscription required.)

Read the entire Seattle Post-Intelligencer story

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