U.S. Air Force Tanker Award Expected Feb. 24

WASHINGTON - The U.S. Defense Department is expected to announce Feb. 24 the winner of a $35 billion Air Force aerial refueling tanker contract fought over by Boeing and European rival EADS for nearly a decade.
Congressional aides told AFP the award of one of the biggest procurement contracts in U.S. history would come Feb. 24.

The Pentagon declined to comment on the matter.
The Defense Department is seeking to replace 179 tankers in an aging U.S. Air Force fleet of Boeing KC-135s that date back to the 1950s.
In the high-stakes, politically charged battle, U.S. aerospace giant Boeing and the European Aeronautic Defence and Space Company, parent of France-based Airbus, delivered their final bids by last Friday's deadline.
EADS is looking like the favorite to land the contract, said Loren Thompson, an analyst at the Lexington Institute think-tank based just outside the U.S. capital.
"Judging from the frequency with which Pentagon acquisition chief Ashton Carter has been talking up the notion of a 'globalized' defense market recently, European aerospace giant EADS is the winner," Thompson said in an online blog.
Thompson said the Air Force would announce the winner Feb. 24 after the financial markets close.
The first time the contract was awarded, it went to Boeing, but it was subsequently canceled amid a Pentagon procurement scandal.
EADS won the contract in 2008 along with U.S. partner Northrop Grumman, but the decision was withdrawn after the Government Accountability Office upheld Boeing's objections that the process was flawed.
EADS is now competing without a main partner, but with support from a number of U.S. equipment makers.
EADS North America chairman Ralph Crosby said last week the firm had lowered the price of its final bid to a "very competitive price proposal."
Boeing's chief executive Jim McNerney earlier described his firm's bid as an "aggressive" attempt to beat its "subsidized" European rival.
This third attempt is marked by fierce lobbying from lawmakers seeking jobs in their states - for Boeing, in Washington state and Kansas; for Airbus, in Alabama - with the added dimension of a long-running trade dispute between the United States and the European Union at the World Trade Organization over public subsidies for Boeing and Airbus.
The Defense Department insists the winner will be decided on the merits of its bid.
Thompson cautioned that the Pentagon announcement may not close the book on the matter.
"Boeing could challenge the rating methodology and several other facets of the selection process, but since price is the key discriminator in the outcome, it is more likely to pursue a political strategy focusing on EADS use of prohibited trade subsidies in developing and marketing its planes," he said.
The rivals are offering militarized versions of their commercial aircraft and promising the contract would add tens of thousands of jobs to the post-recession U.S. economy still struggling with high unemployment.
The EADS KC-45 is based on the long-haul Airbus 330. EADS says it has 31 percent more capacity and a longer range than Boeing's offer, the KC-767.
It would be assembled in Mobile, Alabama, where EADS expects to produce at least 12 aircraft a year and says the program would create 48,000 jobs.
Representatives of Mobile area organizations, including city and county officials, plan to gather at the Mobile Convention Center to await the expected announcement and have scheduled a news conference, county official Peter Albrecht told AFP.
Boeing spokespersons were not immediately available to comment on the looming announcement.
Boeing is proposing the KC-767, or NewGen Tanker, built around its long-haul 767 plane. The bigger Boeing plane would be assembled in Everett, Washington, and equipped in Wichita, Kansas. Boeing says a win would provide 50,000 jobs.

New Shipyard's Board of Directors Named

Six prospective board members of the new shipyard to be formed from Northrop Grumman were named Feb. 22 in an internal company memo.
The six members include a former deputy chief of naval operations (CNO) and the former head of Newport News Shipbuilding.

The proposed Huntington Ingalls Industries (HII) would be spun off from the existing shipyards of Northrop Grumman, and would include the yards at Newport News, Va., Pascagoula, Miss., and New Orleans, La. Northrop has put the yards up for sale as a single entity, but also is moving ahead with plans to spin them off as HII should a satisfactory buyer fail to emerge.
The prospective board members were named in a memo from current Northrop shipbuilding head Mike Petters, who would also stay on as HII's head of shipbuilding. A copy of the memo was obtained by Defense News.
The six are:
■ Paul D. Miller, a retired U.S. Navy admiral who left the service in 1994 after serving as the deputy CNO and as the head of the U.S. Atlantic Command. From 1999 to 2005 he was chairman and chief executive officer for Alliant Techsystems, an aerospace and defense company.
■ Tom Schievelbein, lead director of New York Life Insurance Co. and Petters' predecessor as head of the Newport News shipyard from 2001 to 2004.
■ Robert Bruner, dean of the Darden Graduate School of Business Administration at the University of Virginia.
■ Artur Davis, a partner at the law firm SNR Denton, who served from 2003 to 2011 as the Democratic representative to Congress from Alabama's Seventh Congressional District.
■ Anastasia Kelly, a partner at the law firm of DLA Piper and, from 2006 to 2010, an executive vice president and general counsel with American International Group (AIG).
■ Karl von der Heyden, co-chairman of the American Academy in Berlin, Germany and, from 1996 to 2001, vice chairman of the board of directors of PepsiCo Inc.
Retired U.S. Navy admiral Thomas B. Fargo was named in November as HII's prospective non-executive chairman of the board.
No timetable has been publicly announced for the proposed spinoff, but, barring any major obstacles, it is expected to take place around April.

China Pledges Effort to Revive Stalled Nuke Talks

SEOUL - China will work to revive stalled talks on North Korea's nuclear disarmament and to maintain peace on the Korean peninsula, Foreign Minister Yang Jiechi said Feb. 23 during a visit to South Korea.
But Yang, in comments before he began private talks with his counterpart Kim Sung-Hwan, did not mention the North's uranium enrichment program, which has sparked international concern.

China will seek an early resumption of the talks "to realize denuclearization of the Korean peninsula and normalization of relations between related countries", Yang said.
The talks, which group the two Koreas, the United States, China, Japan and Russia, have been stalled since December 2008. The North abandoned them in April 2009 and conducted a second nuclear test a month later.
Seoul, Washington and Tokyo say Pyongyang should improve inter-Korean ties before the nuclear dialogue can resume.
Yang said China would work with other countries including South Korea "to pursue peace, stability and development" on the peninsula.
His visit was originally scheduled for last November but was postponed after the North's deadly shelling of a South Korean border island.
China's failure publicly to condemn the North for that attack sparked irritation in Seoul, as did its refusal to identify the North as the culprit in the sinking of a South Korean warship last March.
Minister Kim said some South Koreans "raised concerns about our bilateral relationship" following the two incidents, but that ties had improved.
South Korean officials said earlier they expected the ministers to discuss the North's uranium program.
The nuclear-armed North last November disclosed an apparently operational uranium enrichment plant to visiting U.S. experts, giving it a potential second way of making atomic bombs.
Pyongyang claims the program is for peaceful energy development but experts say it could easily be converted to produce weapons-grade uranium.
Japan and South Korea have urged the United Nations Security Council to take up the issue with a view to possible punishment.
China opposes taking the issue to the world body even though President Hu Jintao has expressed concern at reports of the program.
China has warned its Security Council partners that it intends to block publication of a report on the subject, a diplomat at the United Nations told AFP last week.
The report says the North almost certainly has at least one other undisclosed enrichment-related facility and describes the uranium program as a serious violation of U.N. sanctions.
Beijing insists on the issue being discussed when six-party talks are revived.
President Lee Myung-Bak urged China to play a "constructive role" in resolving the nuclear crisis when he met Yang later, according to the presidential office.
Lee also stressed that a genuine change in North Korea's attitude is necessary for peace on the peninsula, it said.
Yang reportedly reaffirmed Beijing's objections to Pyongyang's nuclear weapons development and expressed hope inter-Korean relations would improve.

Turk Armor Maker Wins $600M Deal in Malaysia

ANKARA - Turkish armored vehicles manufacturer FNSS, based here, has sealed a $600 million contract with a Malaysian partner for the sale of the Pars, its wheeled armored vehicle, officials here announced. This is the largest contract a Turkish company has won abroad.
Under the deal, FNSS will design, develop, manufacture and supply logistical support for the Pars, according to Nail Kurt, the company's general manager. FNSS' Malaysian partner, DEFTECH, will locally assemble the 257 vehicles under contract.

The agreement was signed here Feb. 22 on the sidelines of Malaysian Prime Minister Najib Razak's official visit to Turkey. "We have decided to raise our relationship to a strategic level," Razak told reporters in the Turkish capital.
Malaysia will be the first country where the Pars will enter service. The vehicle will come in four-, six- and eight-wheel types.
Earlier, FNSS sold to Malaysia other armored vehicles worth about $300 million. The company also hopes to sell the Pars to the Turkish army.
Turkish industrial conglomerate Nurol Holding owns 51 percent of FNSS while the remaining 49 percent is held by the American company UDLP. Since the late 1980s, FNSS has sold to the Turkish military thousands of mostly tracked vehicles.

Development of Improved Indian Arjun Complete: DRDO

NEW DELHI - India's state-owned Defence Research and Development Organization (DRDO) claims that it has completed upgrades on the Arjun tank, replacing existing German engines and transmission systems with homemade systems.
The Mark-II Arjun will incorporate up to 90 percent of indigenous content, compared with 58 percent in the current model, a DRDO scientist said, and should be ready for induction by 2014.

The Mark-II also will feature superior missile-firing capabilities, the scientist added.
Conceived in 1973, the Arjun tank was behind schedule by more than 15 years, resulting in the Indian Army choosing the Russian T-90 tank as its main battle tank. The Arjun had to go through a series of trials and retrials before the Army announced the tank fit for duty. Last year, the Arjun Mark-I had to be put on comparative trials against the Russian T-90, after which the Indian Army finally concluded that the Arjun tank performed to expectations.
Earlier, the Arjun faced problems concerning its fire control system and suspension, and its weight-restricted mobility.
Last year, the Indian Army ordered an additional 124 tanks, bringing the total to 248.

Indian Firms Push for More Flexibility in JVs

BANGALORE - Indian defense companies want the country's Defence Ministry to allow foreign companies to own more than 26 percent of joint ventures with domestic firms. They say this limitation is straining existing arrangements and undermining efforts to forge new ones.
But ministry officials are holding firm.

Related Topics

• Asia & Pacific Rim
• Air Warfare

In 2008, state-owned Bharat Electronics Ltd. (BEL) and Rafael of Israel declared their intention to create a joint venture to develop missile electronics. The deal was meant to help Rafael meet its offset requirements for exports to India.
Now, Rafael may pull out unless it can own more 26 percent of the venture, said H.N. Ramakrishna, BEL's marketing director.
Lova Drori, Rafael's executive vice president for marketing, said Rafael would prefer to tie up with a non-state-owned company so that BEL does not obtain more than 50 percent ownership.
The Defence Ministry has refused a request to ease the limit, ministry sources said.
An executive with the domestic industries lobbying agency, the Confederation of Indian Industries (CII), said that without an increase in the limit, no major overseas defense company would be likely to tie up with Indian entities in defense. The executive said that even India's Commerce Ministry favors increasing the limit to more than 50 percent.
A senior Commerce Ministry said that the ministry wants to raise the current limit.
One Defence Ministry official noted that the ministry sometimes grants waivers to the 26 percent limit. He cited the effort by Rafael and the ministry's Defence Research and Development Organisation (DRDO) to develop the Medium Range Surface to Air Missile, in which Rafael received a 50 percent stake.
The official also cited the Indo-Russian development of the Fifth Generation Fighter Aircraft (FGFA), in which Russia received a 50 percent stake.
But some deals do not receive such waivers.
In 2009, India's domestic automobile giant, Mahindra & Mahindra Ltd., part of the $6.3 billion Mahindra Group, formed a joint venture with Britain's BAE Systems, which accepted a 26 percent stake, Defence Ministry sources said.
Last year, the Indian government rejected a plan by EADS and Indian engineering giant Larsen & Toubro to manufacture electronic warfare systems, radar instruments and avionics. EADS was to receive 49 percent equity. The companies are drafting a new plan.

KMW To Repair Mercedes-Benz Trucks

BONN - Krauss-Maffei Wegmann (KMW) and Daimler AG signed a service framework contract Feb. 21 for the maintenance and repair of Mercedes-Benz trucks and G-type SUVs on international deployments by the German military and its allies.
The Munich-based company is to provide technical support for all Daimler military vehicles deployed on international missions carried out by NATO, the EU and the United Nations.

KMW already maintains and repairs armored wheeled and tracked vehicles in crisis regions. For this, it has a network of its own service personnel and repair facilities at allied camps in Afghanistan and Kosovo.
In addition to providing experts and workshops in the field, KMW's service in deployment regions includes a worldwide logistics system for spare parts. Also, technical specialists from the Munich service center can be directly connected to the field via satellite and the company's own telemaintenance system.