Air Force contract under fire after U.S.-French bid wins

Times Staff Writer

Members of a House subcommittee grilled Air Force officials today over the surprise decision to award a $40-billion aircraft contract to Northrop Grumman Corp. and European partner Airbus, with lawmakers arguing the decision would send coveted jobs overseas.

Sue C. Payton, assistant Air Force secretary for acquisition, told the panel that the Northrop-Airbus aerial refueling tanker proposal provided a better “overall value” than that of rival Boeing Co.

But several lawmakers angrily argued that U.S. weapons systems should be made by American companies. Airbus is based in Toulouse, France.

“All the major parts of this plane will be built in Europe,” Rep. Norm Dicks (D-Wash.) said while pointing at Payton. “There’s going to be very little added to that in the United States. I just think this is totally unfair, and I hope we can do the right thing, which is to build this with an American company with American workers.”


Northrop, which is based in Century City, said shortly after the hearing that in fact 60% of the parts for the plane would be made by U.S. companies and that it would be assembled in Mobile, Ala.

The congressional backlash to Friday’s contract announcement was expected.

Payton said that while she understood the committee’s concerns, the Buy American Act doesn’t allow the Air Force to consider job creation among criteria used in evaluating bids.

“I wish I could reward someone I like,” Payton told the committee. “But according to law, these things can’t enter into the decisions made in acquisitions.”


Defense Secretary Robert M. Gates said in a Pentagon news conference Wednesday that the contract was awarded based on rules created by Congress. “And if there’s a desire to change the rules of the game in terms of how these competitions are carried out, then clearly the Congress can do that through statute,” he said.

Payton said she could not discuss specifics of the Air Force’s decision until executives of Chicago-based Boeing were briefed on why the contract was awarded to the Northrop-Airbus consortium. The briefing is expected to take place Friday, with a follow-up meeting with Northrop expected next week.

After that second briefing, Rep. John P. Murtha (D-Pa.), chairman of the House defense appropriations subcommittee, said Air Force representatives would be called back for a closed-door meeting with the panel in which details could be discussed.

Boeing’s top executive for its defense business said during a New York analysts’ conference Wednesday that the company remained firm in its belief that its proposal, a version of the Boeing 767 jetliner, was superior to the Northrop-Airbus entry, a modified Airbus A330 passenger plane.


“We offered an airplane that was more cost-effective, we offered an airplane that met the requirements better than the competition, and of lower risk,” said James Albaugh, president of Boeing’s Integrated Defense Systems unit.

But he added that Boeing would formally protest the decision only “in the event that we think there is an irregularity in the proposal phase.”

Lt. Gen. John Hudson told the subcommittee that the Northrop-Airbus entry was rated better on nine key performance measures used by the Air Force.

Dicks, however, accused the Air Force of using “bait-and-switch” tactics in the bidding process. Dicks said Boeing executives told him that they learned the Air Force preferred a larger aircraft only after it was too late to alter their bid.


Northrop, however, disputed that account. “Throughout the process, both competitors in the KC-45A acquisition hailed the Air Force for conducting a fair and open competition,” the company said in a statement.




Times staff writers Peter Pae in Los Angeles and Julian E. Barnes in Washington contributed to this report.