Tankergate UPDATE: It's dead, John McCain must be happy

Today the Pentagon announced that is terminating the competition for a new airborne refueling tanker.

The tanker deal that tanked.

Bottom line, the politics of the whole thing got too hot for them.  As many know, European Aerospace Defense System (EADS) subsidiary Airbus beat out Boeing for the contract; a bid that also included US-based Northrop Grumman.  Everyone expected the Chicago/Seattle-based aerospace maker to land the contract, but the EADS product proved more appealing to the Pentagon.  You see, the plane that Airbus had submitted was much larger than the one Boeing had proposed.  

Indeed, Airbus's offer did include some American work, primarily through Northrup Grumman.  And it is true that Boeing has been outsourcing a lot of work, as we noted the other day.  But the Machinists Union and Boeing claim that most of the planes would be made here, versus what EADS/Northrup Grumman would end up doing.  There was nothing, as the union and the Chicago/Seattle giant said, to stop EADS from later producing more of the plane in say France.  Secondly, the bulk of the domestic work would be done in non-union shops.

Airbus/Northrop Grumman's victory set off a fire store of controversy.  Many were dismayed, including this author, that our tax dollars were going to a European company versus a domestic one.  We highlighted the fallout here and updated here, about the politics involved.  The Machinists Union reacted negatively and naturally so did the loser in the competition, Boeing.  Accusations of EDS getting help in the form of subsidies or other financial breaks from the European states that hold major percentage in the company flew about.  Other news stories were highlighting how John McCain's campaign was being managed by the same folks that represented the Airbus.  To this day, I still refer to the Arizona Senator as John "Airbus" McCain, in all honesty, he did come out in favor of the deal.

The uncomfortable skies for folks like Secretary Gates?

As time progressed, it was announced that Boeing would make a second attempt at landing the deal.  Though the competition was closed, they and their allies in this episode, were pushing to open up the books. But then reports started coming forth that Boeing instead was now looking to just pull out.

Well today, as mentioned in the beginning, the government has decided to hold off on purchasing the air tankers.  The political costs simply proved too much.  It's not that the Pentagon won't be purchasing a replacement fleet, just the timing now has become...well shall we say politically inconvenient.

Senior Defense Department officials notified key lawmakers Wednesday morning that Pentagon officials had determined that it would be impossible to meet a deadline of selecting a new winner by the end of the year.

According to a statement, Defense Secretary Robert Gates said he believed it was time for a "cooling off" period. Over the past few weeks, Mr. Gates concluded the competition had become too emotionally charged and compressed to rush. The decision will now be made under the next presidential administration, virtually guaranteeing that one of the most controversial defense acquisitions of the Bush administration continues for the foreseeable future.

"It is my judgment that in the time remaining to us, we can no longer complete a competition that would be viewed as fair and objective in this highly charged environment," Mr. Gates said in a statement.

- excerpt from "Pentagon Cancels Tanker Competition", WSJ, 2008.

When the Pentagon decides to proceed once more with this project, they could face a prickly situation. You see, as the Wall Street Journal rightly noted, the biggest opponent Boeing would still face would be John McCain.  Now he originally cited his opposition to that bid because he thought the proposal was "too expensive to the tax payer." This, keep in mind is in reference to EADS offer.

A political opportunity to be had

Of course, there is another fact on the ground that could prove politically exploitable for the Democrats. John McCain's campaign is still home to advisers who put together the EADS deal.  Why can't the Obama/Biden campaign make issue of Tom Loeffler, McCain's finance chair?  He was the chief lobbyist for Airbus!  And I'm sure there are others as well.  The GOP has been trying to make themselves the party of change, but here we have visible proof that could serve as that lie's achillies heel!  

Had Obama or someone on his team been part of such a deal, do you not think even Conservative talk radio would be on it?  They already make a big deal over Obama's friendship with Ayers. The fact that the Pentagon had to suspend the Airforce tanker deal proves that there is a big stink here, and that odor probably goes all the way to Senator John "Airbus" McCain!

<sup>Cross posted on
The Economic Populist
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A Community Site for Economics Freaks and Geeks
</sup>

Tags: 2008, Air Force, Airbus, Barack Obama, Boeing, EADS, Election, John McCain, Machinists Union, pentagon (all tags)

Comments

1 Comment

Tanking McCain 08 tips jar

Folks, thanks for reading my latest piece.  You know, I smell an opportunity here to attack John McCain.  Something tells me that EADS connection with his campaign folks will highlight how he isn't such a maverick.  

by johnny venom 2008-09-10 12:30PM | 0 recs

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