February 24, 2011 in Nation/World, Region

Air Force to award $35 billion tanker contract

Associated Press
 

WASHINGTON — After a decade of delays and embarrassing missteps, the Air Force is poised to award one of the biggest contracts in military history — a $35 billion deal to build nearly 200 giant airborne refueling tankers — to either Chicago-based Boeing Co. or European Aeronautic Defence and Space Company.

The decision will be announced at the Pentagon after the financial markets close today and it is certain to set off celebrations in the states where the tanker will be manufactured.

If Boeing wins, production would occur in Everett, Wichita, Kan., and several other states. If EADS wins, the tanker would be assembled in Mobile, Ala., at a long-shuttered military base. The two companies say either way, some 50,000 jobs would be created in a recession-weary nation.

The losing states — and their lawmakers — will weigh any challenge to the decision.

Replacing the 1950s-era KC-135 planes — the equivalent of a flying gas station — is crucial for the military. Pilots who weren’t even born when the last aircraft was delivered in 1965 are operating air tankers that the Pentagon is struggling to keep in flying shape.

The refueling tankers allow jet fighters, supply planes and other aircraft to cover long distances, critical with fewer overseas bases and operations far from the United States in places like Iraq and Afghanistan.

The $35 billion contract calls for producing 179 new tankers. Boeing would base the tanker on its 767 aircraft while EADS would use the Airbus A330 built in Europe as its model.

The amount could end up being a first installment on a $100 billion deal if the Air Force decides to purchase more aircraft.

Through the years, the Air Force’s efforts to award the contract have been undone by Pentagon bungling and the criminal conviction of a top Defense Department official.

Initially, the Air Force planned to lease and buy Boeing planes to serve as tankers, but that fell through. The Air Force later awarded a contract to Northrop and EADS, but in 2008 the Government Accountability Office upheld Boeing’s protest of the contract.

The GAO said it found “a number of significant errors” in the Air Force’s decision, including its failure to fairly judge the relative merits of each proposal.

The Air Force reopened the bidding in 2010 only to be embarrassed again as it mistakenly gave Boeing and EADS sensitive information that contained each other’s confidential bids.

The contract has generated some of the fiercest and costliest lobbying in Washington. The two companies have spent millions on advertising, including radio and subway ads in the nation’s capital, and hired dozens of lobbyists.

In the past year, Boeing has spent $5 million on print advertising to promote its version of the tanker while EADS has shelled out $1.7 million to boost its prototype, according to Evan Tracey, president of the Campaign Media Analysis Group, which typically monitors advertising for political campaigns.

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