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Competing To Carry the President

Firms Battle to Win Marine One Contract

By Renae Merle
Washington Post Staff Writer
Wednesday, January 5, 2005; Page E01

The camera-friendly Marine One helicopter has served as the backdrop for some of the most compelling presidential moments: President Richard M. Nixon's stiff-armed wave goodbye; President Bill Clinton's downtrodden walk across the White House lawn at the height of the Monica Lewinksy scandal.

Now the president's helicopter is at the center of one of the most contentious bidding competitions in years. As the Navy nears a decision this month on who should build the next fleet, the two competitors -- Sikorsky Aircraft Corp. and an international team led by Lockheed Martin Corp. -- are seeking the last-minute advantage in a long, grueling campaign. Supporters of Connecticut-based Sikorsky claim that Lockheed Martin's international group would send jobs and U.S. tax dollars overseas, while backers of the Lockheed team complain that Sikorsky is unfairly wielding its all-American status to win the contract.

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President Bush also has been unable to escape the debate. Bush and Italian Prime Minister Silvio Berlusconi were fielding questions on a range of topics last month when an Italian reporter turned discussion toward the competition, estimated at about $1.6 billion. Berlusconi quickly chimed in with a plug for the Lockheed team, which is using an aircraft designed by AgustaWestland, the Anglo-Italian unit of the defense firm Finmeccanica SpA of Italy.

"I can only say that I've been flying these helicopters for 30 years, and I'm still here," Berlusconi said of AgustaWestland helicopters.

"And you never crashed," Bush said. "That's a good start."

The contractors are engaged in the industry's version of a dignified brawl, plastering the D.C. region with slick advertising and staging media events around the country. Congress members who stand to lose or gain jobs in their districts based on the outcome have called for Government Accountability Office reports and lobbied the president and Defense Secretary Donald H. Rumsfeld. Bush has received personal appeals from Berlusconi and Prime Minister Tony Blair. "I'm very familiar with it," Bush said during the briefing with Berlusconi, referring to the competition.

The intensity of the competition has raised the possibility that any outcome may be protested by the losing contractor or at least be challenged by some in Congress. The Navy says it will base a decision on normal acquisition rules, including a requirement that 50 percent of any major system be American-made, a requirement both companies exceed.

The rivals are vying not only for the billion-dollar contract to build 23 helicopters for the president but also for a likely competitive edge in the sluggish market for military helicopters. The winner would also have a leg up in a competition for a multibillion-dollar Air Force contract to build more than 100 search-and-rescue choppers. The company that gets the Marine One contract also will benefit from billions of dollars in Pentagon research funds that will help it refine its helicopter and give it a further competitive edge, industry officials said.

For Sikorsky, a unit of United Technologies Corp., winning the contract is a matter of corporate pride. The company has maintained and built the president's fleet since the Eisenhower administration. But it has faced increasing competition from overseas competitors and views Marine One as key to staying competitive. It has spent hundreds of millions of dollars to develop the helicopter it entered into the Marine One competition. George David, chairman of United Technologies, has characterized the deal as a "must win."

Bethesda-based Lockheed, the world's largest defense contractor, is out to further a corporate strategy of breaking into new markets through partnerships with manufacturers of platforms it does not make -- helicopters and ships, for example. A win for Lockheed's international team would also appease overseas observers who have criticized the U.S. defense market as largely closed to foreign firms. Just 4.1 percent, or $8.6 billion, of the $209 billion that the Pentagon spent on procurement in fiscal 2003 went to foreign entities. Lockheed wants to be partner of choice for foreign competitors, the company's chief executive, Robert J. Stevens, has said.

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