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Air Tanker Decision Leaves Suppliers In Limbo

Some military contractors could be out millions as they await outcome of Air Force's procurement process to determine if Boeing or Northrop wins its contract.

WASHINGTON (AP) -- The head of a Memphis-based supplier of aircraft fire-suppression equipment, John McNulty received some vacation-spoiling news this week when his business partner reached him in Cancun.

The Government Accountability Office, agreeing with a protest from Boeing Co., said Wednesday the Air Force should rebid a $35 billion refueling tanker contract awarded earlier this year to Northrop Grumman. That means McNulty's company, Aircraft Safety Equipment Inc., which had a tentative contract with Northrop, could be out millions of dollars in work.

''My son who runs the shop said he could retire off this one contract,'' McNulty said Thursday, speaking from Mexico by cell phone.

Stories like McNulty's are playing out in communities around the globe, as military contractors' potential fortunes sink or rise, depending on whether they get anticipated work from Boeing or Northrop Grumman and its partner, the European parent of Airbus.

Across the U.S., elected officials and businesses are anxiously awaiting -- and lobbying on -- the outcome of the Air Force's procurement process, which will determine who wins up to $100 billion and tens of thousands of jobs over several decades to build 179 refueling tankers.

Perhaps nowhere in the world of military contracting did the economic outlook get brighter and dimmer, respectively, than in Everett, Washington, a Boeing stronghold, and Mobile, Alabama, where Northrop would assemble the tankers.

The GAO ruling, which gives the Air Force 60 days to respond, forced Northrop to cancel a groundbreaking for its Mobile plant that was optimistically scheduled for next week.

''I think all of us are disappointed,'' Alabama Gov. Bob Riley said Thursday at the state Capitol. ''I don't think anyone saw this coming.''

The tanker -- a large, midair refueling plane -- is the kind of military procurement that comes along once in a generation and can influence local economies for years.

Boeing's suppliers include East Hartford, Connecticut-based Pratt & Whitney, which will make the plane's engines, and Cedar Rapids, Iowa-based Rockwell Collins Inc., which will make navigation and communication avionics.

Northrop/EADS would use GE Aviation engines built in North Carolina and Ohio, and an air refueling system made by Sargent Fletcher Inc. in Bridgeport, West Virginia.

The initial contract -- massive in its own right -- is just the first installment in a series of deals worth up to $100 billion to replace the entire fleet of nearly 600 Eisenhower-era planes over the next 30 years.

The political fight has centered on the Pentagon selecting a foreign-made plane by choosing Northrop Grumman and European Aeronautic Defence and Space Co., who are basing their tanker on the Airbus 330 commercial jetliner.

But while a smaller share of the Northrop/EADS plane would be built domestically, both tankers would include key foreign-made components while relying on domestic suppliers and labor for the majority of the work.

The decision carries particularly strong implications for the Northwest, which is at risk of seeing its aerospace industry slip, and the upstart South, where the Northrop/EADS team wants to create a major new aerospace presence.

Northrop/EADS would assemble its planes at a proposed 1,500-worker assembly plant in Mobile. More than 10,000 jobs would be created in Alabama, Tennessee and North Carolina alone.

Washington, meanwhile, is trying to maintain its position as a leading aircraft manufacturing base and keep a tanker contract it has had for decades.

Boeing, already the state's largest employer, would continue building its tankers in Everett, based on its 767 jetliner, creating an estimated 9,000 jobs. Final militarization of the planes would be done in Wichita, Kansas, with some 3,800 jobs there.

''Our workers have been building the Air Force tankers for 67 years,'' said Tom Wroblewski, president of the Seattle-based Aerospace Machinists' District Lodge 751, which has some 60,000 members. ''It was just inconceivable that the Air Force could pick Airbus.''

The GAO decision is not binding, and the Air Force could move forward with its initial decision. But with Boeing supporters in Congress already criticizing the Northrop/EADS award, it puts strong pressure on the Pentagon to reopen the competition.

In the meantime, any hopes that McNulty's company has for a potentially life-changing business boom must be set aside while the decision-makers in the nation's capital likely revisit the bids of Boeing and Northrop/EADS.

''We were getting geared up. Now it's up in the air,'' McNulty said. Of course, he added, if Boeing ends up with the contract it, too, will be in the market for fire-suppression equipment.

Associated Press writer Phillip Rawls in Montgomery, Ala., contributed to this report.

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