Pentagon's Europe deal angers Boeing

A satellite image shows the five-sided Pentagon building December 28, 2000 in Arlington, Va.

TEXT OF STORY

TESS VIGELAND: The shares in EADS, the parent company of Europe's Airbus, surged today. It was the first trading day following the Pentagon's surprise announcement that it's giving a $35 billion airborne tanker contract to a partnership of EADS and Northrop Grumman. The announcement was a huge blow to Boeing.

John Dimsdale reports, the decision to give such a massive military contract to a foreign company has sparked a backlash in Washington.


JOHN DIMSDALE: Norman Dicks is a Washington state Democrat, also known as the congressman from Boeing. He was at the Boeing plant Friday evening, ready to celebrate the Pentagon's announcement. He got quite a shock, and today he's still angry.

NORMAN DICKS: I also think it is wrong to outsource a contract of this magnitude to the Europeans. They would never do it for us. When we're in a recession, when we need everything we can possibly get to spur the economy ahead and then we're going to give this thing away. I mean it just doesn't make any sense.

Dicks, who's on the House Appropriations Committee, is hoping Congress will freeze the spending for the tanker contract and make the Air Force start the bidding over, but defense analyst Loren Thompson, at the Lexington Institute, says the Pentagon has proof the EADS deal is better.

LOREN THOMPSON: The reality here is that Boeing lost on the merits, and fairly decisively.

But Democrats point out that Republican presidential contender Senator John McCain opposed giving the tanker contract to Boeing five years ago, saying it would be too costly. Richard Aboulafia is an aircraft industry analyst with the Teal Group.

>RICHARD ABOULAFIA: Eventually you could find that the Democratic players involved use that as a rationale to politicize this contract and try to move against the contract because it's all gone to mostly Republican industrial districts.

After all, he says, while Boeing would have built their planes in Democratic districts in Washington and Connecticut, Northrup and EADS will be creating jobs in Alabama and North Carolina.

In Washington, I'm John Dimsdale for Marketplace.

About the author

As head of Marketplace’s Washington, D.C. bureau, John Dimsdale provides insightful commentary on the intersection of government and money for the entire Marketplace portfolio.

Comments

I agree to American Public Media's Terms and Conditions.
With Generous Support From...