Subsidy rule added to tanker bid

Posted on: Apr. 26th, 2006 || Source: seattletimes.nwsource.com | E-mail Article | Print Article

Subsidy rule added to tanker bid

Boeing got a sweet surprise Tuesday in the fine print of the Air Force announcement that formally resumed the Defense Department's quest for new refueling tankers.

As one of the conditions for bidding this year on the multibillion-dollar contract, the team competing with Boeing — Northrop Grumman and its partner European Aeronautic Defence & Space, or EADS — is required to disclose any government subsidies.

Subsidies and "launch aid" for commercial airplanes made by EADS, the parent company of Airbus, are the subject of a thorny dispute between the United States and Europe in the World Trade Organization (WTO).

The Air Force's Request For Information (RFI) asks firms that want to build refueling tankers to explain how "launch aid," loans on preferential terms and penalties by the WTO would affect them. The RFI's language ties the commercial-subsidy issue to the defense-procurement area.

Military-procurement analysts said such language in an RFI was probably unprecedented. EADS and Northrop officials had not expected it, according to sources at both companies.

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