Economy

James Lowe: Some Government Contractors Cannot Be Trusted

Not all government contractors can be trusted. When dealing in the defense space this is especially true. Contractors must be trustworthy and free of any history of foul play. Our freedoms depend on it.

When the United States finds itself in a shooting war, it needs to know it can rely on the weapon systems that it buys from contractors. American lives will be on the line. But it can’t count on a contractor who cheats. If it cheats in one area, why would it be honest in others?

That’s why it matters that the French company Airbus is being fined for cheating on its contracts. Specifically, the company has been taking illegal subsidies from the European Union to edge American jet makers out of markets. The last administration started trade wars over subsidies, but the Biden administration seems to be ok with ethically-challenged foreign-owned companies unfairly beating out American companies for U.S. taxpayer-funded contracts.

“For years, Europe has been providing massive subsidies to Airbus that have seriously injured the U.S. aerospace industry and our workers. Finally, after 15 years of litigation, the WTO has confirmed that the United States is entitled to impose countermeasures in response to the EU’s illegal subsidies,” the U.S. Trade Representative announced in 2019.

The WTO fined Airbus $7.5 billion: the largest such fine it has ever handed out. That amount was based on estimates of just how much harm Airbus’s cheating had caused American companies over the years. The decision was blamed for starting a trade war, but it really just brought the dispute out of the shadows. Airbus was caught cheating; the U.S. defending its interests was not the problem.

Despite this, Airbus is still in the running for military contracts. For example, it is teaming up with Lockheed Martin on a bid to build tanker jets for the Air Force. It would hire some workers in Alabama, so members of that state’s congressional delegation are backing the bid. But it is a bad idea.

Airbus not only cheats, it’s also offering a second-rate aircraft.

As military analyst Loren Thompson has noted, the Airbus version is inferior to the existing tanker. “The Airbus tanker is 40% heavier than KC-46 and takes up nearly 50% more space on the ground,” Thompson wrote in Forbes. This matters in areas with short runways and crowded airspaces, such as Asia and the Pacific. It also means the Airbus version burns a lot more fuel. When the shooting starts, fuel often becomes scarce. The U.S. can’t afford to have its tankers grounded because they burned up all the fuel the fighters were supposed to use.

Awarding Airbus a piece of the tanker contract would also be wasteful because it would reduce economies of scale.

When the Air Force buys planes from one manufacturer, it can spend less on repair and training. All the mechanics know how to work on all the planes because they are the same. If there are two different types of tankers, mechanics must either be trained on both systems, wasting time and money, or there must always be two trained mechanics on duty at all times everywhere the plane flies, also wasting time and money.

Finally, Thompson notes, “The Airbus tanker is built on a commercial assembly line and then modified at a different location. Installing all the necessary features, such as offensive and defensive systems, is likely to generate unusual engineering challenges.” It could take years to sort out those difficulties, if they can be settled. In the short term, the Air Force would be forced to settle for a less capable tanker, and there is no reason for that.

There may also be no time for it, with threats in Europe and the Pacific rising by the day.

The U.S. military simply can’t trust a company that actually gets us into a war – even if that’s just a trade war. Airbus spent years accepting illegal subsidies that harmed dealings between the U.S  and our European allies. The Pentagon shouldn’t be doing business with Airbus until it can prove it isn’t still cheating American taxpayers.

Show More

James Lowe

James Lowe, is a public policy analyst, and a two-decade-long radio industry veteran who host's of his own nationally syndicated radio show based in Kansas and carried on the Iheartradio App.

Previous/Next Posts

Related Articles

Leave a Reply

Back to top button