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Northrop Grumman Fires Back on Tanker Debate

CNBC.com with Wires
Wednesday, 5 Mar 2008 | 4:46 PM ET

Northrop Grumman said its victory over Boeingfor a roughly $35 billion Air Force refueling tanker contract will support thousands of US jobs, firing back at opponents of the deal who take exception with Northrop's partnership with France-based aerospace company EADS.

"Since the Air Force's decision to award Northrop Grumman the KC-45A contract was announced, numerous erroneous comments have been repeated in the media and in Congress," Northrop Grumman said in a statement.

Construction of the KC-45A tanker by Northrop and Airbus parent EADS will not result in the transfer of any jobs to the United States to France, said Northrop, adding that the project will support more than 25,000 domestic jobs.

The KC-45A's supplier base will include 230 companies in 49 states, Northrop said. The aircraft is slated to be built at a facility in Mobile, Ala.

Northrop also said the deal will result in about 2,000 European jobs moving to the United States, but EADS quickly refuted that claim, according to Reuters.

EADS, which faces concern from French union CFDT about possible job cuts in France, said the Mobile facility will create new US jobs, but not result in jobs moving from Europe.

On Tuesday, Kansas Sen. Sam Brownback, a Republican on the Senate Appropriations Committee, vowed to fight funding for the tanker dealafter it was awarded to Northrop and EADS.

Boeing would have built its rival 767 tanker in Washington state and modified it for military use in Kansas.

A number of other U.S. lawmakers, including Speaker of the House of Representatives Nancy Pelosi, a California Democrat, have also expressed surprise at the contract choice, saying the decision to bypass Boeing will lead to job losses in the United States.

Defense Secretary: 'Merit-Based Decision'

The U.S. Air Force competition won by Northrop and EADS was fair, Defense Secretary Robert Gates said on Wednesday.

"I believe, based on the briefings that I've received, that it was a fair competition and a merit-based decision," Gates told reporters.

Boeing, the No. 2 U.S. defense company, has not yet decided whether to protest the decision.

The Pentagon chief would not speculate about the impact that congressional action on the Air Force decision could have on relations with European partners.

But he noted that defense manufacturing was a global business, something he said lawmakers understood.

"The reality is that we sell aircraft and ships and weapon systems all over the world," he said. "The four countries that I just visited in Asia and in the Middle East -- Australia, Indonesia, India and Turkey -- all have an interest in acquiring American aircraft, as an example.

"So there is a global aspect to this business, and I think that there's an understanding of that" in Congress, he said.

- Reuters contributed to this report.

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