Larsen: Force Pentagon to consider subsidies in tanker deal

Dec 14, 2010

Seattle PI

By Aubrey Cohen

Congress must make the Pentagon consider illegal subsidies in the Air Force aerial refueling tanker competition, U.S. Rep. Rick Larsen, D-Wash., said Monday.

"Congress needs to act to force the Department of Defense to stop ignoring the illegal subsidies that Airbus has received from European governments," Larsen said in a news release. "This session of Congress is coming to an end, but I am not stopping my fight to make sure that Boeing workers build the next generation of tankers for our military."

Specifically, Larsen called on the chairman and ranking member of the House Armed Services Committee, of which he's a member, to include such a requirement in the defense budget congressional leaders are working to pass in the current lame-duck session. Larsen said he would send the letter after giving colleagues a chance to sign it.

A World Trade Organization panel ruled earlier this year that European nations illegally subsidized Airbus programs, including the A330, which is the basis for EADS North America's proposed KC-45 tanker. A separate WTO panel found in an interim ruling that Boeing also received illegal subsidies.

Here's the text of the letter:

Dear Chairman Skelton and Ranking Member McKeon:

As you complete work on the Fiscal Year 2011 National Defense Authorization Act, we write to express our support for language to ensure a fair competition for the Air Force tanker contract. We urge you to include section 848 of H.R. 5136, which requires the Department of Defense to take into account the impact of illegal subsidies on the KC-X tanker competition.

Specifically, section 848 requires the Department of Defense, when awarding a contract for the KC-X aerial refueling program, to consider any unfair competitive advantage that an offeror may possess. In this section, the term 'unfair competitive advantage,' with respect to an offer for a contract, is defined as a situation in which the cost of development, production, or manufacturing is not fully borne by the offeror for such contract.