Tanker deal may benefit McCain, Ala.

Sen. John McCain (R-Ariz.) played a major role in ending the notorious Boeing Air Force mid-air refueling tanker deal several years ago.

McCain, who will become the chairman of the Armed Services panel next year should the GOP retain its majority in the Senate, is now stepping in again just as Air Force officials have declared the addition of a new tanker program to be their No. 1 priority.

This time, McCain’s reach and influence on the program could not only bring good fortunes to the state of Alabama, but could in some ways benefit his own 2008 presidential bid because Southern support will be essential for the GOP moderate.

Alabama has added appeal for 2008 presidential candidates because earlier this year the state legislature voted to move up the primaries to the spring. And McCain would bolster his candidacy with a strong showing in the early primaries.

Just last week, McCain appeared in Mobile, Ala. with GOP Gov. Bob Riley, who is up for reelection this year, to talk about an open competition in the tanker program. And Riley, along with the Alabama congressional delegation, worked out a deal with EADS, one of the defense giants competing for the contract. The Alabama lawmakers stand to gain from the open competition as they aim to make Mobile a magnet for aerospace business.

During his tenure on the Armed Services Committee, McCain has positioned himself as a relentless and effective Pentagon watchdog, ensuring that government acquisition practices are ethical and do not waste taxpayers’ money. In keeping with his watchdog reputation, McCain has called for a totally open competition in the Air Force’s new tanker program.

The Air Force’s second attempt at renewing its aging tanker fleet is pitting defense giants Northrop Grumman and EADS North America against Boeing, and the competition is intense, according to several defense industry sources — so much so that one said it has the potential to turn into a “knuckle fight.”

Northrop Grumman, which has lost some significant contracts this year, is considering the multi-billion dollar tanker program as one of its top priorities. Meanwhile, Boeing, which is still reeling from the debilitating scandal involving a thwarted tanker lease with the Air Force a couple years ago, is charging ahead to try to win the program.

The competition has its fair share of controversy this time around as well. For the first time, the Air Force has included questions about a bitter dispute pending in front of World Trade Organization in its draft request for bids issued to contractors.

The Northrop Grumman team is offering a commercial Airbus A 330 jet. EADS, a European defense conglomerate, is a parent company of Airbus. The United States and the European Union have accused each other of illegally subsidizing their respective top aircraft manufacturers, Boeing and Airbus.

In the U.S. side of the dispute, trade officials claim that government loans and other assistance gives Airbus an unfair advantage over Boeing. But the EU argues that Boeing also receives assistance in the form of large state tax breaks and research and development grants.

Executives at EADS North America have been well aware of the Air Force’s need to replace its aging tankers for several years now and view it as one of the ways the company could secure a strong foothold in the U.S. defense market. 

Without opening the contract to competition, the Air Force originally chose Boeing under a $20 billion lease program for 100 planes. But the deal evaporated after months of criticism about its high costs and Boeing’s move to hire the Air Force official who worked on the program.

The tanker lease landed two Boeing officials in jail and prompted the resignation of Air Force Secretary James Roche.

Now the Air Force has opened the program up to competition.

EADS has amassed strong support in Alabama where the company has promised to build a plant to assemble the tanker should the Air Force select the Northrop Grumman-EADS team. EADS has committed to bringing 1,000 new jobs to the Mobile area.

Northrop Grumman also has committed to building a facility to transform the commercial airplane into a military one.

And Alabama will play a significant role in the tanker competition, according to several defense industry sources.

“The Senators and Representatives are on key committees and have an interest in seeing that the state of Alabama is provided with the opportunity to compete and develop another aerospace center in the United States,” said Randy Belote, Northrop Grumman’s corporate spokesman.

“This is an opportunity to build an aerospace center of excellence that would rival any parts of the United States.”

Alabama lawmakers are ready to fight tooth-and-nail for the tanker program. Sen. Jeff Sessions (R), a defense-authorizer, Sen. Richard Shelby (R), a defense appropriator, and Rep. Jo Bonner (R), also a defense authorizer, have been vocal proponents of opening the competition, something they argue would provide a level playing field that could bring EADS business into their states.

Gov. Riley has been one of the strongest advocates of the program and also of giving EADS a chance to compete.

McCain’s Straight Talk America presidential PAC has endorsed Riley’s campaign for governor against Democratic Lt. Gov. Lucy Baxley.

“The EADS project that Gov. Riley has been in the forefront for months, is very important to the state,” said Jeff Blades, the governor’s spokesman.

But McCain, who has refused contributions from defense contractors since he joined the Armed Services Committee, has returned a $5,000 check from EADS North America’s political action committee, according to federal election records and McCain’s Straight Talk America spokesman.

EADS is new to the PAC-fundraising business, only establishing a PAC of its own just last year.

McCain is one of the few, if not the only, members of the Armed Services Committee who does not accept money from the defense industry.

Recently, Boeing released a study on the economic state of Alabama showing that the company is a powerful economic force in the state, contributing about $1.5 billion to the state’s economy last year and creating more than 10,000 direct and indirect jobs.

Most of the work that Boeing does in Alabama involves missile defense centered around the city of Huntsville and satellite launch rockets based in Decatur, which are both located in North Alabama.

“We do the economic impact studies for states every year; [the Alabama one] was not driven by the tanker, but the timing worked well for us,” said William Barksdale, a Boeing spokesperson.

Boeing is planning to build its tanker planes in Everett, Wash. Chief among the company’s supporters is Rep. Norman Dicks (D-Wash.), a longtime defense appropriator, who can become even more powerful if the Democrats take the House in November.

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