Airbus has followed up its whopping U.S. deal of in-flight refueling tankers with a second, slightly smaller sale of similar aircraft to Britain. The British deal, confirmed by EADS chief Louis Gallois in an interview with a French newspaper, will be worth approximately $26 billion (£13 billion) over 27 years. The RAF will take 14 of the tankers from AirTanker, a European consortium led by EADS, the defense subsidiary of Airbus, using the airframe of the A330 civilian airliner. Their date for entering service is 2011. The contract reportedly will create 600 new jobs and safeguard another 3,000 in Britain, where the wings are built for the Airbus airframe.

The UK sale marks the second big defeat for a major military sale in less than a month for EADS’s chief rival in the United States, Boeing. The U.S. contract, initially worth $35 billion, is being formally challenged by Boeing, which is confident of being able to mobilize strong support in Congress to make the Air Force re-examine the decision to award the contract to a European consortium. If there is an all-out showdown with the Pentagon, Congress could refuse to fund the program, making the Air Force modernize its existing fleet of Boeing-made tankers.

Boeing has filed an official complaint about flaws in the procurement process that it lost last month, and “it is a list of specifics that look too serious to just be brushed aside,” according to John Pike, who heads GlobalSecurity.org, an on-line service of strategic analysis based in Washington..

The complaint must be reviewed by the Government Accounting Office (GAO), so, Pike said, “it is too soon for EADS to start counting any chickens” in this deal.

Related Post:

Pentagon Contract a “Massive Breakthrough” for European Companies, 6 March 2008

See Also:
KC-X Boeing Protest, GlobalSecurity.org

EADS wins £13bn RAF tanker deal, BBC News, 27 March 2008

EADS: Unveiling $26 Billion Deal With United Kingdom, Stratfor Strategic Forecasting, 27 March 2008

Airbus parent EADS wins British tanker refueling deal, International Herald Tribune, 27 March 2008

Air tanker deal set to be sealed, Financial Times, 27 March 2008

As we noted here last week, the surprise selection of an EADS-Northrop Grumman joint bid for a $35 billion Defense contract last week has been the source of much consternation on Capitol Hill. Some lawmakers, outraged that the European conglomerate which owns Airbus was picked over U.S. aerospace giant Boeing, seem determined to keep the deal from going forward. Officials from the U.S. Air Force and Northrop Grumman scrambled to defend the contract this week amid allegations in Congress of “a European economic stimulus plan” and threats to withhold funding for the project.

From yesterday’s Politico:

Other critics argue that hiring the European-based EADS to provide military equipment raises national security questions.

Northrop Grumman, though, dismissed the national security concerns as a red herring, stressing the fact that the Los Angeles-based company is the prime contractor on the program.

“What we are doing is exactly what Boeing would do,” said Northrop Grumman spokesman Randy Belote. “There are no issues relative to any U.S. secrets, any transfer of technology out of the United States to Europe. It just doesn’t happen under our process.”

See the full story at Politico.com.

Today’s Politico has an extensive report on the Northrop/EADS team’s lobbying strategy as it fights Boeing’s formal protest of the award, filed Tuesday with the GAO.

Related Posts:
Pentagon Contract a “Massive Breakthrough” for European Companies, 6 March 2008

See Also:
Air Force slammed in Congress for Boeing contract, Politico, 12 March 2008
Defence contract was won fair and square, Op-ed, Sen. Richard Shelby (R-Ala.), Financial Times, 10 March 2008
Northrop rallies lobbying troops to save contract, Politico, 12 March 2008

The surprise selection of a European corporation for a major U.S. military contract - to build $35 billion worth of in-flight refueling tankers - has sent shock waves through the world of defense contractors. There were strong reactions both in the U.S. and Europe as officials and executives grappled with the political implications of the choice of the EADS/Northrop Grumman consortium over Boeing, which had been heavily favored to replace the existing fleet of Boeing-built tankers with a new model. But Pentagon officials said the tanker model proposed by EADS with its junior U.S. partner clearly came out ahead in four of the five categories that were the basis for the contract. The common-sense assumption in Washington is that the Northrop/EADS offer must have been far superior for the Bush administration to risk alienating domestic interests in an election year by choosing an airplane perceived by many in Congress as being largely built by a “French” company. (more…)

France has decided more ground troops to Afghanistan for combat missions against Taliban insurgents in the mountainous battle zone close to the border with Pakistan, according to press reports in Paris.

The French commitment, which includes elite special forces, comes at a critical moment for NATO, which it direly needs reinforcements to ratchet up its campaign against guerilla fighters infiltrating eastern Afghanistan from their sanctuaries in the tribal areas of neighboring Pakistan.

By sending in fresh combat units, expected to number up to 500 men, President Nicolas Sarkozy seems to be acting on his pledge that France wants to work more closely with NATO. With the Bush administration asking European nations for more military help in Afghanistan, a Sarkozy adviser was quoted in Le Monde newspaper saying that “France is the only country that can — if it decides to – make the crucial difference.”

(To see related articles, please click on Read the rest of this entry)

(more…)

From the Guardian (UK) (Feb 23, 2008):

The Bush administration yesterday urged the EU to stop dithering over the building of a $6bn (£3bn) gas pipeline from the Caspian basin to central Europe and reduce its growing dependence on Russia’s Gazprom.

“Follow your wallet,” Matthew Bryza, US deputy assistant secretary of state, said, arguing that the troubled Nabucco project made sound commercial sense and would cut Europe’s dependence on Gazprom by up to a quarter.

Bryza’s outspoken comments came after talks with senior EU officials, including energy commissioner Andris Piebalgs, and took sideswipes at the “gigantic rents” [excessive prices] Gazprom is charging Europe for gas. They underline the growing geo-political importance of gas.

“Helping Europe diversify its gas supplies has become extremely urgent,” said Bryza, adding that US backing for Nabucco was in the country’s national interests even though no American companies are involved….

“We want to help Gazprom to move from a monopoly towards more market-based behaviour,” he said. “We want it to be reliable and produce more gas at home in a more competitive domestic market rather than buying up as much infrastructure here in Europe or the cheapest possible gas it can find in Central Asia.”

Related Article: U.S. official says Europe needs alternatives to Russian natural gas, Associated Press, 22 February 2008.