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Gordon Brown is expected to champion Airbus’s 11,000 British workers in discussions with the White House over the retendering of an £18 billion Pentagon contract.
The Pentagon announced on Wednesday that it had scrapped a deal with Airbus and its partners to supply mid-air refuelling tankers to the United States Air Force and will ask for fresh bids for the contract.
Boeing and Airbus will submit new bids in a competition that will run throughout the remainder of the US presidential election. Defence analysts and union leaders fear that political pressure in the US will force the Pentagon to award the contract, potentially the largest defence purchase so far, to an American company.
If Airbus wins the tanker contract the wings will be made at its factory at Broughton, North Wales. The deal would secure the 11,000 jobs at Broughton and be worth more than £4 billion to the British economy. A spokesman for the Prime Minister said yesterday: “He will support the Airbus bid in whatever way he can.”
Mr Brown wrote to President Bush at the end of last year to promote the Airbus tanker, which has already been bought by the Royal Air Force. Mark Tami, the Labour MP for Alyn & Deeside, which includes Broughton, said he expected the Prime Minister to take up the matter with Mr Bush again.
Mr Brown will also have an opportunity to raise the issue with Barack Obama, the presumptive Democratic presidential nominee, when they meet in London next week. Mr Obama questioned the Pentagon’s decision to award the tanker contract to a European company when the deal was initially announced in February.
Mr Obama, a US senator for Illinois, home where Boeing has its corporate headquarters, said that it was hard to believe that “an American company that has been a traditional source of aeronautic excellence would not have done this job”.
Mr Tami said: “It is obviously a pretty cynical political decision to recompete this contract. To many fair-minded people the Airbus offering was a superior product but we are in a US election year and this smacks of a cynical act.”
The contract for 179 aircraft is worth an initial $35 billion but this could eventually rise to $200 billion. The defence establishment was staggered when the deal initially went to the partnership of Northrop Grumman and EADS, which owns Airbus. Boeing has built all the US’s tankers and is the USAF’s largest supplier.
Boeing complained after it lost out and a Government Accountability Office investigation found that the bidding process had been “seriously flawed”. The competition will be rebid on the small number of areas with which the GAO found fault. This should play into Airbus’s hands but there are concerns that the process could be used as an excuse to give the contract to Boeing. Mr Tami said: “The fear is that having reopened this contract that Boeing will now take it.”
If Boeing is able to use its enormous political influence in the US to get the tanker contract it could trigger calls in the UK to make it harder for American companies to win Ministry of Defence business.
The tanker contract has become one of the most controversial defence deals so far. Boeing was given the contract in 2002 but lost it after it emerged that the company had offered a job to the Pentagon official who arranged the deal. Both the official and Boeing’s chief financial officer were sent to prison and the company was fined $615 million.
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any ethical person should cry foul. It took a LOT of soul searching for Boeing to challenge it's major customer and to suggest that their proposal had been given an unfairly biased evaluation. The fact is they are both great planes, but the specification did NOT allow for awarding extra 'points'
Mr B, San diego, USA
Sounds like Protectionism. I understand Airbus has moved some construction work to the cheaper US - maybe its time to bring that back to Europe.
In any event who can blame the US,when times are hard charity begins at home.
Steve Marchant, Newton Abbot, UK
Do Airbus want Brown's input? As far as I can see he has no experience in business and so far has shown no aptitude in dealing with people.
Edward, London,
Whooppee - so Gordon Brown is getting involved, well thats put the 'kiss of death' to this deal - does he really think the Americans will listen to him when they have their own economy to look after - I don't think so...
David Harrison, Grantham, England
Did Heathcliff Brown do a deal with Beoing 42 days ago?
Tony, LONDON, UK
brown will have no effect on the result of the american airbus tanker refuelling project. the americans have already made up their minds that boeing will win....
r.down, london, uk
Why not just reconfigure the factory to produce wind turbines: a growth business which can hardly be said of the airline business.
Government energy policy is build 7000 new wind turbines, none of which are currently manufactured in the UK.
Nigel, London,
Oh no. Brown on the side of Airbus. They are bound to lose.
Bob Hardie, Penzance,
Is it too much to ask that Brown will see the lunacy of EC Membership which, in similar circumstances prevents the UK buying British.
Clearly the much trumpeted "deal" earlier in the year was not in fact a contract at all; just spin and hype.
Alan Hargreaves, Holywell, UK
When its a bank, £50Bn public funds + state ownership quicker than you can spit.
With manufacturing, only expect the state to "do all it can".
As I recall, they "did all they could" for Rover, too.
Michael, Bay of Plenty, New Zealand