DoD to analyze Boeing, Northrop job estimates

House defense appropriators on Wednesday fully funded the Air Force’s troubled mid-air refueling tanker, which has been at the center of a bitter lobbying fight between Boeing and Northrop Grumman.

But the $893 million appropriation for the tanker comes with a caveat: The Pentagon will have to consider how the project will impact U.S. jobs and the defense industrial base in its evaluation criteria for contractors.

{mosads}House defense appropriators are directing the Pentagon to follow an already existing law that calls on the Secretary of Defense to consider the national technology and industrial base in developing and implementing plans for each major defense acquisition program. The $35 billion tanker program qualifies as a major acquisition. 

Pentagon and Air Force officials said several times in congressional testimony that their selection criteria did not include protections of the U.S. industrial base. The Air Force didn’t look into the impact on U.S. jobs when it first awarded the contract to Northrop Grumman instead of Boeing at the end of February. Instead defense officials have argued that they looked at the best value for the taxpayers as well as the best equipment for the military. 

That prompted complaints from members of Congress that the decision would lead to a loss of U.S. jobs, given Northrop’s partnership with the European firm EADS, the parent company of Boeing’s archrival Airbus. Boeing supporters claimed U.S. jobs would be shipped to Europe if Northrop Grumman won the contract.

In approving the 2009 Pentagon spending bill, members of the House Defense Appropriations subcommittee through the tanker language are basically prompting the Defense Department to analyze job-creation estimates from Northrop and Boeing as part of its decision — the third go-around in the Air Force’s attempt to replace its Eisenhower-era tankers.

Appropriators are also directing the Pentagon to comply with the findings of the Government Accountability Office, which sustained Boeing’s protest of the contract award to Northrop Grumman and EADS. 

The Pentagon is expected to issue an amended request for proposals by the end of the month or in early August.

Northrop counters that the contract would provide work for 230 U.S. suppliers and create 14,000 new jobs, including 2,000 in Mobile, Ala., where Northrop and EADS are planning to assemble tankers in a new facility.

Including jobs not directly impacted, Northrop boasts it would create a total of 48,000 jobs across the country if awarded the contract.

Northrop initially estimated a smaller number of jobs would be created, but raised its estimate during the competition with Boeing after talking to all its suppliers. That prompted criticism from Boeing and its supporters.

Boeing claimed it would create 44,000 direct and indirect jobs if awarded the contract. It said it would use 300 supplier companies across the country.

Industry sources acknowledged that job numbers promised by defense contractors often are not completely accurate, as each may choose to employ different calculation formulas.

While the Air Force received all its money for the tankers, other Pentagon programs are being significantly slashed. Overall, House appropriators approved a $487.7 billion 2009 defense appropriations bill — $4 billion below the president’s budget request.

Among the programs that will see reduced funding is the Army’s troubled Armed Reconnaissance Helicopter (ARH) made by Bell Textron, and the presidential helicopter under contract with Lockheed Martin and Agusta Westland. The ARH, whose fate is now in the hands of John Young, the Pentagon’s top weapons buyer, will see a reduction of $113 million for fiscal year 2009, or 13 helicopters.

Appropriators plan to cut the presidential chopper funding by $212 million because of uncertainty with more advanced helicopters being developed in the second phase of the contract. The lawmakers left $735 million to build five helicopters in the first phase, but only $100 million for the second phase.

Given the Navy’s recent announcement that it will stop building its next-generation destroyer, the DDG-1000, after completing two ships, the defense panel used the Navy’s initial request of $ 2.5 billion for a third DDG-1000 to boost other ship programs. It allocated $1.6 billion for an additional LPD-17, $397.6 million for advance parts buys for the Virginia-class submarine, and $941 million for two additional T-AKE cargo ships.

The defense panel also boosted the funding for the Army’s flagship modernization program, the Future Combat Systems — a network of manned and unmanned vehicles linked by impenetrable communications — by $33 million. That money would go to the acceleration of the unmanned aerial vehicle and the unmanned ground vehicle components.

Overall the bill would boost funding for the Pentagon’s intelligence surveillance and reconnaissance assets by $563 million. Defense Secretary Robert Gates has been pressing to get more of these assets into Iraq and Afghanistan.

The National Guard and Reserve will also receive $1 billion more than its initial request. The panel emphasized programs to help military families and boosted health programs in its funding, apportioning $608 million for family advocacy programs and $617 million for traumatic brain injury and psychological health. The committee also added $150 million above the president’s request for supply equipment to field hospitals and military treatment facilities.

House lawmakers want to increase the oversight of the Pentagon’s inspector general and added $25 million to fund additional personnel to provide oversight on contractors.

No more action will be taken on the bill until September. The Senate Defense Appropriations subcommittee will likely mark up its bill in the fall.