European aircraft maker may set up PAC

EADS North America is considering setting up a political action committee with its subsidiary, Airbus, to lobby to get the Air Force’s midair-refueling tanker program started and to gain more clout in seeking a slice of the action.

This would temporarily put it in the same camp as its archrival, Boeing, which also will be lobbying to get the program moving.

Northrop Grumman is EADS’s partner in the fight against Boeing for the tanker contract. But the European aircraft maker may decide not to rely solely on Northrop’s clout to get the program moving.

“We have discussed with our EADS partners the wisdom of establishing a PAC,” said Allan McArtor, the chairman of Airbus North America Holdings. It will take careful discussion because the companies do not have the same large numbers of employees as other U.S. defense contractors, he said.

“We try to engage in the political process on merits as opposed to political contributions,” McArtor added. “Some say we are at a substantial disadvantage to Boeing” for not having a PAC.

Nevertheless, EADS North America and Airbus executives have contributed close to $80,000 to politicians since 2001, according to data from the Center for Responsive Politics. Compared to that, Northrop Grumman contributed $599,500 for the 2006 election cycle alone.

EADS has chosen to receive congressional support by opening facilities in key congressional districts. One of them is Mobile, Ala., in the home state of powerful GOP Sens. Richard Shelby and Jeff Sessions, where EADS broke ground Monday on an engineering center that will employ at least 150 engineers. The center could lead to a much bigger industrial site if Northrop Grumman and EADS win a tanker contract.

Meanwhile, the two rival teams for the contract could find themselves in the crossfire between Congress and the Air Force, several defense lobbyists predicted.

The Air Force, which already is juggling several procurement priorities with its pricey F-22 Raptor and the Joint Strike Fighter program, is considering buying tankers in the near future, according to sources familiar with the details of the upcoming quadrennial defense review, a sweeping analysis of defense programs and strategies.

The Air Force has started scouting locations for its new tanker fleet, a defense lobbyist said. “It lends credibility to the fact that they are trying to buy it,” said the lobbyist, who asked not to be quoted by name.

To be able to buy new tankers, the Air Force has decided to purchase not more than 182 C-17 cargo planes, despite an amendment to the 2006 defense authorization bill that gives the go-ahead for at least an additional 40. The service is also looking at the possibility that the new tanker could also fly cargo.

The Air Force’s decision could start a war of vested interests in Congress between those such as Sens. Kit Bond (R-Mo.), Jim Talent (R-Mo.) and Joe Lieberman (D-Conn.) who fought to keep the C-17 production lines open and Shelby and Sessions, who would see hundreds of jobs created in the Mobile area if the tanker procurement gets started.

Another obstacle in the Air Force’s plan could come from the Pentagon’s analysis of alternatives intended to help it decide how to replace its tanker fleet. One conclusion of the analysis, conducted by the independent Rand Corp., is that there is no rush to buy new tankers.

The current fleet was bought within a five-year window, which means all the tankers could need replacing at the same time, creating problems for the Air Force, the lobbyist said.

Under today’s budget constraints, the Air Force will not be able to buy new aircraft in one swoop but gradually. Congress will have to decide how to budget for the replacements, the lobbyist said.

“The Department of Defense will call for a competition, and I believe that they will move it along at a rapid pace,” Sessions told The Hill. “The competitors will show their wares and put forth their cost and [the Pentagon] will choose one or more designs of what is best.”

The Air Force and Boeing were caught in a procurement scandal when the service decided to lease tankers from the company without considering other options. That $23.5 billion deal went sour and led to a three-year-long abuse investigation, the resignation of Air Force Secretary James Roche and the imprisonment of two Boeing officials.

“We are happy to see that there is progress and that the program can be moving forward now,” said Kerry Gildea, a Boeing spokeswoman. “We are ready for a fair competition and we have a variety of options that can meet the Air Force’s requirements.”

Boeing has argued several times that bidding against EADS would not be a fair competition because it receives subsidies from European governments. Boeing and Airbus are caught in a World Trade Organization dispute. Washington is accusing the European Union of providing unfair aid to Airbus, while the EU says Boeing gets unfair tax breaks from Washington.

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