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Could split contract solve Air Force tanker dispute?

WASHINGTON — Despite opposition from the Pentagon, one of the most powerful members of the House Appropriations Committee is considering including a provision in an upcoming supplemental defense bill that would split the $35 billion contract for Air Force refueling tankers between Boeing and a European competitor.

Rep. John Murtha, D-Pa., the chairman of the House defense appropriations subcommittee, says that with the U.S. fighting wars in Iraq and Afghanistan, additional delays in replacing the current fleet of aerial refueling tankers, some of which date to the Eisenhower era, are unacceptable.

Defense Secretary Robert Gates, however, said a split contract between Boeing and a Northrop Grumman-European Aeronautic Defense and Space Co. team would be a mistake that could end up costing taxpayers billions of additional dollars.

"I think it's bad public policy and I think it's bad acquisition policy," Gates said at a Pentagon news conference last week.

Murtha's move would be the latest development in the troubled effort, which began in the months after the Sept. 11, 2001, terrorist attacks, to replace the Air Force's aging fleet of 600 tankers. Setbacks included a major Pentagon contracting scandal and a decision to withdraw a contract awarded last year to Northrop-EADS after government investigators found crucial mistakes had been made in evaluating the bids.

Under the original timetable, the Air Force expected to start taking delivery of the tankers in 2013. A new contract competition could easily delay that by several more years.

The initial $35 billion contract would be for 179 planes, but eventually the deal could cost an estimated $100 billion.

The stakes for Boeing and EADS, Europe's largest defense company and the parent company of Boeing rival Airbus, couldn't be bigger.

Boeing has built jet fighters, bombers, transport planes and tankers for the Air Force for decades and has long been one of the nation's top defense contractors. If the company loses the current competition, it could soon be without a prime Air Force plane contract.

For EADS, the tanker contract would represent a major toehold in the lucrative American defense market and a major victory over a U.S. company.

Boeing would use a 767 model for its tanker airframe. The planes would be assembled at its Everett, Wash., plant and modified as tankers in company facilities in Wichita, Kan. At stake are as many as 9,000 jobs in Washington state and 1,000 in Kansas.

Northrop-EADS would use an Airbus A330 airframe for its tankers. The initial tankers would be assembled in Toulouse, France, though the team has promised to build an assembly facility in Mobile, Ala.

Boeing has been cool to the idea of splitting the tanker contract, though it has officially taken no position and continues to insist it would win any new competition. Northrop-EADS has said it would go along with a dual procurement if that was the fastest way to get tankers into service.

As early as this week, the Obama administration is expected to send Congress a $75.5 billion supplemental request to fund the wars in Iraq and Afghanistan though Sept. 30, the end of the current fiscal year.

Once the supplemental reaches Capitol Hill, Murtha — who has close ties to House Speaker Nancy Pelosi — will hold almost dictatorial sway over the legislation in the House of Representatives.

Retired Air Force Maj. Gen. Burt Moore said a split contract doesn't appear to make a lot of sense. Moore, who flew fighters, served as the deputy chief of staff for operations and as the Air Force's legislative liaison, said the idea is to buy the best plane possible.

"Why would you do a split buy, which means you get one plane that you want and another plane which is not exactly what you want?" Moore asked.

Moore said the Air Force has done split buys before, such as jet engines for fighter planes. The tanker order, however, is too small to justify splitting from a cost standpoint, he said.

At least one outside defense analyst, Loren Thompson of the Lexington Institute, a national security research organization in Arlington, Va., said Murtha's plan is attractive because, in the long run, it would save the Air Force from having to maintain its fleet of KC-135s, some of which have experienced corrosion problems.

"Unfortunately, 90 percent of the fleet is nearly a half-century old," Thompson said.

In the near term, a split contract would cost more because the Air Force would be buying twice as many planes, Thompson said. In the long term, however, it actually could end up saving money, and the old tankers would be replaced roughly twice as fast.

"It's a good idea if you can afford it," Thompson said.

Murtha has some influential congressional allies. He said his counterpart in the Senate, Sen. Daniel Inouye, D-Hawaii, supports a split buy. Rep. Neil Abercrombie, D-Hawaii, the chairman of the House Armed Services air land subcommittee, also is a supporter.

Murtha also has some tough opponents, however. Rep. Norm Dicks of Washington state, a Democrat who ranks behind only Murtha on the defense appropriations subcommittee, and Rep. Todd Tiahrt of Kansas, a Republican on the subcommittee, said that Murtha was wrong.

"I think there is going to be a lot of pressure from labor," Dicks said. "With these tough economic times, we shouldn't be building planes in Toulouse."

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