At first, last night's House vote left me flummoxed. In a lopsided 410-to-8 decision, our lawmakers dictated that when choosing a winner for the KC-X Tanker contract in July, the Pentagon must consider whether subsidies EADS receives in the development of its A330 airframe decrease the plane's cost and help it to underbid Boeing's
Boeing immediately hailed the decision as a righteous blow against the "unfair competitive advantage that EADS/Airbus, a foreign company, gained from decades of illegal launch aid subsidies worth billions of dollars."
On the face of it, this was a clear and convincing win for Boeing and team members United Technologies
Victory is Boeing's.
Or is it?
But here's what's got me wondering: According to Boeing, it has the best tanker offering by far -- more fuel-efficient, cheaper to maintain, and delivered in a convenient, bite-size package. It also has public policy on its side, in that there's a national, and rational, bias in favor of buying strategic defense equipment from domestic suppliers.
So ... why the continued obsession with price? Why does Boeing risk an international backlash, declamations of American protectionism, and perhaps lost business in the offended European countries, by arguing over EADS' cost to produce the A330?
Here's why: Remember how, back in 2007, EADS dropped out of the Denmark/Norway fighter aircraft competition in a huff, complaining that "changes in the timing and structure of the bidding process" favored the competing consortium of Lockheed Martin
Boeing shareholders can rightly cheer yesterday's House vote. But at the same time, beware: Dollar revaluation may pose headwinds to this export-oriented company.