Bill orders Pentagon to review subsidies on tankers

The Pentagon would need to review foreign subsidies when awarding the Air Force tanker contract, based on language inserted into a bill approved Wednesday by the U.S. House of Representatives.

That could benefit the Boeing Co. when the lucrative contract to supply the government with aerial refueling tankers comes up for bid under the next administration. This month, Defense Secretary Robert Gates called off a controversial rebid of the lengthy competition, initially won in February by Northrop Grumman and EADS, parent company of Airbus.

Both Boeing and Airbus have made cases to the World Trade Organization, claiming the other gained an unfair advantage through illegal government subsidies. In its complaint, Boeing named Airbus’ A330 aircraft, which Northrop and EADS used as the basis of their tanker, as an illegally subsidized aircraft.

The final defense authorization bill approved by the House includes a provision instructing the defense secretary take subsidies into account in awarding the next tanker contract.