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EADS 'Will Bid,' Sarkozy Says


French President Nicolas Sarkozy said today that the Franco-European defense giant EADS "will bid" on the tanker contract after receiving assurances from President Obama that the competition will be "free and fair."

And in what looks like a clear signal to EADS that the Pentagon will seriously consider opening the bid to EADS, the Air Force Chief of Staff told my colleague Andrea Shalal-Esa of Reuters that, "they have to say they're serious and then the department will decide how much time to allow." He spoke to Andrea at an event hosted by Air Force Association.

"If you say to me that the competition will be free and fair and transparent, then we say EADS will bid and we trust you," Sarkozy said at a joint White House press conference.  Obama said that Sarkozy's "trust is justified."

And, just in case anyone wondered whether Obama was stepping on Defense Secretary Robert Gates' procurement toes with his declaration, the president made it clear he was not.

"The Secretary of Defense makes procurement decisions. The president does not meddle in these decisions and that's a long-standing policy, so I maintain an arms-length approach. I have assurances from Secretary of Defense Gates that, in fact, the rebidding process is going to be completely transparent and completely open and a fair competition," Obama said.

Obama's declaration comes after major European leaders blasted the United States for being protectionist after Northrop Grumman dropped its bid for the KC-X tanker. Even Britain's Gordon Brown said at the time that he was "disappointed." The administration, keenly aware of the importance of its allies' help in Afghanistan, clearly decided to make the nicest noises possible during Sarkozy's visit.

The question to be answered -- after EADS decides whether to bid or not -- is whether EADS North America will place the bid or the company will look for a large American partner like Lockheed or another larger company like Raytheon.  I'm skeptical that Lockheed would take the political risk of aligning itself with EADS on this program (but not on the A400M).  Any other American company would also have to grapple with the prospect of angering Rep. Norm Dicks, chairman of the House Appropriations defense subcommittee, and a host of other powerful lawmakers. Whether EADS North America would be sufficient political cover for EADS is open to question.

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