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US Air Force tanker award expected Thursday

by Staff Writers
Washington (AFP) Feb 23, 2011
The US Defense Department is expected to announce Thursday 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 US history would come Thursday.

The Pentagon declined to comment on the matter.

The Defense Department is seeking to replace 179 tankers in an aging US Air Force fleet of Boeing KC-135s that date back to the 1950s.

In the high-stakes, politically charged battle, US 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 US 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 Thursday 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EADS won the contract in 2008 along with US partner Northrop Grumman, but the decision was withdrawn after the Government Accountability Office upheld Boeing's objections that the process was flawed.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 US 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 US 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.

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