People have been speculating for months what impact a Republican takeover in Congress might mean for the KC-X competition. With last night's Republican takeover of the House of Representatives and a KC-X contract due in the near future I thought I'd ask a few analysts who've been watching the contest for years to chime in with their latest.
First up is Teal Group aviation analyst Richard Aboulafia who points out that the Republican takeover might embolden outgoing House Appropriations defense subcommittee chairman Rep. Norm Dicks, D-Wash., in his pro-Boeing fights since he won't hold the powerful chairmanship -- which I've heard some speculate caused him to rein in his blatant support for Boeing -- much longer.
"Dicks never did much to disguise his pro-Boeing intentions and he may get even more pro-Boeing," Aboulafia said. "But I'm not sure that matters much now" that he's going to lose his chairmanship. "There's always the chance that the politicians on both sides agree to step out of the way and abide by the Air Force's choice, but given the history here, but what are the odds that will happen? And since neither side has a lock on governmental power, this election paves the way for more KC-X gridlock."
Meanwhile, Lexington Institute analyst Loren Thompson -- who has been pro-Boeing in the latest KC-X fight -- says that Dicks' loss of the chairmanship will hurt the Chicago-based company.
"It appears that Boeing's political position has been eroded somewhat by the election while that of EADS has been strengthened," Thompson said. While "there won't be any immediate impact on the tanker competition" as a result of the elections, "political influence could be decisive in the days after a winner is chosen."
Iris Independent Research's Rebecca Grant, who last month released a study on KC-X that seemed to favor a larger jet with more fuel offload capacity (sound like EADS' KC-45, anyone?), expects "a tussle between key defense Republicans on the House side."
Rep. Todd Tiahrt, R-Kan., "came on strong for a U.S. plane with U.S. jobs, while presumptive HASC Chair, Buck McKeon [R-Calif.] has been all about running a fair competition," Grant said.
"The real questions is whether Dem or GOP members would try to end-run an award to EADS," Grant added. "For example, DoD has ruled out considering the twin World Trade Organization cases in its evaluation of KC-X bids. Could Congress pass a law demanding exploration of price subsidy allegations? Or pass a law barring a “foreign” prime [bidder] contrary to Secretary Gates’ and President Obama’s stance welcoming open competition?"
I think that latter one will be tough considering that it's EADS' North American division, complete with a Special Security Agreement with the U.S. government, who is technically the prime contractor for the KC-45 bid. However, Grant may have a point with regards to legislation being aimed at the WTO subsidies cases. For months now, Boeing allies in Congress have been working to introduce laws that would require the DoD to factor in subsidies EADS receives from European governments into the price of the tanker.
Still, "all these sound far-fetched despite emotions running high at times on KC-X," Grant admits. "Altering the KC-X competition now or blocking an award to EADS if that happens would take a lot of energy from a new House Republican majority focused on bigger issues."
-- John Reed
