March 13, 2010 / 12:47 AM / 10 years ago

UPDATE 2-US arms buyer rejects protectionism charge

*”No protectionism going on,” Pentagon official says

* Pentagon says values European industrial contribution

* US may extend tanker bidding deadline, source says

* Kansas lawmakers reject any move to extend deadline (Adds comments from Kansas lawmakers, last 3 paragraphs)

By Jim Wolf

WASHINGTON, March 12 (Reuters) - The top U.S. arms buyer said no protectionism was involved in the potential $50 billion refueling-aircraft competition that Europe’s EADS EAD.PA quit this week along with Northrop Grumman Corp (NOC.N).

“We value the contribution of the European industry to the choices we can make as a department,” Ashton Carter, under secretary of defense for acquisition, told reporters at the Pentagon.

“There is no protectionism going on and so forth. It’s important to us. The wider technology base and the wider industrial base is good for the Department of Defense,” he said.

EADS’ and Northrop’s boycott left Chicago-based Boeing Co (BA.N) the sole remaining bidder to start building a new fleet of U.S. Air Force tankers, which are used to refuel other planes in mid-air.

In withdrawing Monday from what was to have been a rematch, Airbus’s corporate parent EADS and Northrop complained that the bidding rules were skewed to favor Boeing, a charge that several European leaders echoed.

The United States may extend the deadline for bids to build the new fleet to give EADS more time to weigh other options for vying against Boeing (BA.N), a source familiar with the Pentagon’s thinking said.

Asked at the briefing if the deadline might be extended, Carter gave no answer.

“I don’t have anything for you today” about the tanker contest, he said moments earlier.

Northrop and EADS won a previous competition in February 2008 with a bigger plane based on the Airbus A330. But the Pentagon canceled that deal after government auditors upheld a Boeing protest on grounds the Air Force had failed to apply its own judging rules.

Northrop said it would not protest the final bidding specifications to avoid any further delay in replacement of the current fleet of nearly 50-year-old KC-135 tankers, although it felt it had “substantial grounds.”

That leaves Boeing positioned to build up to 179 tankers based on its 767 airliner over the coming 18 years and could help position the company to bid for follow-on orders that could bring the total fleet value to $100 billion or more.

Three U.S. lawmakers from Kansas, where Boeing has large operations, on Friday rejected as “completely unacceptable” any move to extend the deadline for tanker bids, saying such a move would undermine the Pentagon’s drive for a fair competition.

If EADS could not meet the current deadlines, the Pentagon should award the contract to Boeing, Senators Sam Brownback and Pat Roberts and Representative Todd Tiahrt, all Republicans, said in a joint statement.

EADS has ruled out a solo bid under the current deadlines, but some company officials have suggested that EADS is keeping its options open if the Pentagon would allow more time. (Reporting by Jim Wolf, Andrea Shalal-Esa and David Alexander. Editing by Robert MacMillan, Gary Hill)

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