EU warns US against protectionism in Pentagon deal

[March 09, 2010]  BRUSSELS (AP) -- The EU on Tuesday warned the United States against protectionism after a European-led consortium pulled out of the bidding for an Air Force contract, saying the terms had been altered to favor a U.S. company.

EADS, the parent company of Airbus, had partnered with Northrop Grumman to vie for the tanker project, but their consortium pulled out on Monday. They said the terms of the deal appeared designed to eliminate its design in favor of a smaller jet offered by rival Boeing Co.

The announcement left Boeing as the only bidder for the project.

"It is highly regrettable that a major potential supplier would feel unable to bid for a contract of this type," said EU Trade Commissioner Karel De Gucht. "Open procurement markets guarantee better competition and better value for money for the taxpayer."

In 2008, the EADS-led consortium was awarded a contract for the tanker fleet, but Boeing protested and the deal was annulled later that year.

Last December, Northrop Grumman/EADS expressed serious concerns to the Pentagon and the Air Force that the criteria for the project were slanted in favor the Boeing design.

"The European Commission would be extremely concerned if it were to emerge that the terms of tender were such as to inhibit open competition for the contract," the statement said.

It noted that the trade balance in defense equipment with the 27-nation EU has traditionally been heavily in favor of the American side, and that in 2008 the US exported $5 billion worth of defense materials while importing only $2.2 billion from the European side.

"The Commission will be following further developments in this case very closely," the statement said.

[Associated Press]

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