McCain endorses Pentagon process on tanker bid as legitimate

Sen. John McCain (R-Ariz.) endorsed the Pentagon’s bidding process for a $35 billion tanker contract as “legitimate” on Tuesday and said he was not worried about Boeing, the only competitor left for the contract.

McCain, who six years ago was instrumental in scuttling a $23.5 billon deal in which Boeing would have leased 100 tankers to the Air Force, said he would have liked Boeing to have competition for the bid.

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Northrop Grumman on Monday announced that it would not compete for the new contract, arguing that the structure of the bidding rules designed by the Air Force favored Boeing. As a result, Northrop and partner EADS North America, the parent company of Airbus, said they would not stand a chance of winning.

McCain said he was disappointed that Northrop Grumman decided not compete, but said he understood it was a “business decision.”

 “We can’t force anyone to bid,” McCain said. He called the Pentagon’s new bidding process for the new tanker contract “legitimate.”

He also promised continued congressional scrutiny. “I guarantee you we will monitor it [the contract] very closely. I promise you,” he said.

McCain, the senior Republican on the Senate Armed Services Committee, said that he so far had not found any flaws with the Pentagon’s bidding process.

McCain’s position is significant because of his previous role in the tanker controversies, and could indicate that at least some members of Congress will not meddle with the Air Force’s new effort to replace its Eisenhower-era tankers.

The leasing deal that McCain helped scuttle landed two Boeing officials in prison for corruption. The scandal also led to the departure of top Air Force officials and Boeing’s chief executive.

McCain touted his role in the investigation, including during the presidential race against Barack Obama, saying it saved taxpayers about $6 billion and brought down a corrupt contract.

It led to a new competition won by Northrop Grumman and EADS North America in 2008. Boeing supporters, including several lawmakers from states where Boeing has major operations, blamed McCain for Boeing’s loss at the time. 

But Boeing successfully protested the award with the Government Accountability Office and the Pentagon last fall decided to start a new competition.

“I am not particularly worried about Boeing,” McCain said on Tuesday. “I am worried about the consolidation of the industry.”

With the tanker contract, Boeing would in effect be building the majority of the military’s refueling aircraft and would have an advantage in any future competition if it performed well on the new Air Force contract.

Sen. Carl Levin (D-Mich.), the chairman of the Senate Armed Services Committee, said Tuesday he has yet to study Northrop Grumman’s arguments and has not taken a position on whether the competition favored Boeing.

European Union officials warned against U.S. protectionism on Tuesday and said the decision could have negative consequences for future defense deals between Europe and the U.S., according to Deutsche Welle, Germany's international broadcasting station.

“It is highly regrettable that a major potential supplier would feel unable to bid for a contract of this type,” European Union Trade Commissioner Karel De Gucht said in a statement. “The European Commission would be extremely concerned if it were to emerge that the terms of tender were such as to inhibit open competition for the contract.”

The U.S. government gave Boeing a clear advantage, and competition shouldn’t be hindered in defense contracts, German Economics Minister Rainer Bruederle said in a statement, according to European media outlets.

“Particularly in the current economic crisis, even a hint of protectionism is damaging,” Bruederle said.