March 4, 2011 in City

EADS won’t appeal Boeing contract

Rob Hotakainen McClatchy
Ted Warren photo

Boeing Co. workers stand next to a Boeing 767 being assembled in Everett, Wash. in this photo taken Friday, Feb. 25, 2011. The European plane-building company that lost out on a $35 billion refueling tanker deal isn’t appealing the Air Force’s decision to go with Chicago-based Boeing. The European Aeronautic Defence and Space Co. said Friday it won’t ask the Pentagon to review the decision to have Boeing build nearly 200 giant airborne refueling tankers.
(Full-size photo)

WASHINGTON — Boeing’s victory in the decade-long aerial tanker saga will stand.

The company’s European competitor for the $35 billion aerial refueling tanker contract said Friday that it won’t appeal last week’s decision by the Air Force to accept Boeing’s bid.

The contract is one of the largest ever awarded by the U.S. military.

Officials with the European Aeronautic Defense and Space Co., the parent of France-based Airbus, made the announcement at noon at the National Press Club in Washington.

“Let me cut to the chase. … After meeting with the Air Force and the Department of Defense and evaluating the information that they provided to us in their debriefing, EADS North America has decided not to protest the KC-X contract,” said Ralph Crosby Jr., the chairman of EADS North America.

He said the company’s reasoning was simple: “The outcome was decided by price. Boeing’s offer was at a lower price than ours.”

Sean O’Keefe, the chief executive of EADS North America and a former NASA administrator, added: “We put our best effort into this.”

The contract calls for producing 179 new tankers. But the deal eventually could be valued at more than $100 billion as the Air Force replaces its fleet of 600 or so Eisenhower-era tankers.

The Boeing tanker will be based on a 767 airframe built at its factory in Everett, Wash., and converted to military use in Wichita, Kan.

EADS officials congratulated Boeing and said its rival had submitted a very aggressive bid to win the contract.

“In the end, we don’t believe the interest of the war fighter, the taxpayer or our company would be served by protesting the award,” Crosby said. “We’re certainly disappointed as you might imagine, not just because we weren’t selected. We’re, frankly, of the view that in the end the tanker with the greatest capability wasn’t selected.”

The announcement drew immediate praise from Boeing’s supporters on Capitol Hill.

“Today’s announcement makes official what Washingtonians know in our bones: We build the best airplanes in the world,” said Sen. Maria Cantwell, D-Wash.

EADS had been considered the favorite in the competition. And before the Air Force awarded the contract, Boeing backers had complained that EADS had the upper hand because it received foreign subsidies that would make it possible to submit a lower bid.

That turned out not to be the case.

Sen. Patty Murray, D-Wash., said she’s thankful that the competition had produced “a clear winner.”

“While this is a tremendous win for jobs and the economy of our state, it’s also a huge step forward toward meeting the needs of our men and women in uniform,” she said.

But EADS’ loss is a blow to Alabama. Had EADS won the contract, it planned to assemble the planes at a new plant in Mobile, creating jobs in a region still reeling from Hurricane Katrina and the Gulf oil spill.

Sen. Jeff Sessions, R-Ala., called the announcement “a great disappointment to Mobile” and said he will continue “to scrutinize the results to ensure the contract award was fair and justified.”

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