8/29/2014 Bullying for Boeing - WSJ

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REVIEW & OUTLOOK

Bullying for Boeing

'Buy American' is bad defense policy.
Updated April 23, 2010 12:01 a.m. ET

The contest to build a new fleet of aerial refueling tankers for the U.S. military is one of the longest running melodramas on Capitol Hill
—and it is heading to its finale with all the histrionics of a soap opera. On Tuesday, Airbus parent company EADS announced it would
compete against Boeing for the $35 billion deal to make 179 new tankers amid a new round of protectionist yowls.

This is the military's umpteenth try at replacing a fleet of workhorse planes that have been around since the 1950s, but the prospect of
competition against Boeing was none too welcome in some quarters. In his best Vito Corleone impression, Washington state
Democrat and House Defense Appropriations baron Norm Dicks suggested that U.S. defense firms shouldn't join with EADS if they
knew what was best for them: "If they ask me, I am surely going to tell them what I think about it. I would hope that they wouldn't."

EADS has already won this contract once. In 2008, the European firm, in partnership with America's Northrop Grumman, beat out
Boeing in a competitive auction, only to see the contract cancelled after a protest filed by Boeing with the Government Accountability
Office. When the competition was renewed last September, the Pentagon rejiggered the selection criteria in a way that favored
Boeing. Instead of judging the planes on an overall scale, the new criteria emphasized price, giving the smaller Boeing planes an
advantage. With the playing field thus tilted, Northrop bowed out, leaving Boeing as the only bidder.

That arrangement would have suited the Congressman from Boeing, er, Washington state, just fine, but it isn't the way to ensure the
military is getting the best product. Mr. Dicks has said that his comments weren't intended as intimidation and that he was merely
offering his "opinion" and that, anyway, it shouldn't matter since "I don't conduct the competition."

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8/29/2014 Bullying for Boeing - WSJ

But everyone knows he has significant sway over Pentagon procurement, and his comments suggest creeping U.S. protectionism.
Pentagon rules bar the Department from weighing the impact on jobs in procurement decisions, and rightly so. A company like
Boeing is a major player in the global economy that does significant outsourcing to other countries. And a "buy American" policy rings
hollow when a company like EADS buys more than $11 billion annually in American aerospace goods and services, making it the
largest foreign customer for U.S. aerospace products. If EADS wins the tanker bid, the planes would be assembled in Alabama.

We're glad to see EADS rejoin the bidding, even without a U.S. partner. What Americans should want is for the Pentagon to buy the
highest quality tanker at the lowest possible price. Competition—including from foreign-owned companies—is still the best way to
increase value for taxpayers.

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