Boeing is set to go head-to-head once again with European rival EADS for the lucrative $35 billion Pentagon contract to build refueling aircraft for the US Air Force.
The Pentagon first invited bids to replace the aging fleet of tankers several years ago, and has actually awarded the contract twice (once to each side), but successful challenges have forced it to start the process all over again. Meanwhile the US Air Force is still flying takers which date back to the late-1950s.
The closing date for this round of bids is today, Friday 9 July, and European Aeronautic, Defence & Space Co., the parent company of Airbus, was the first to submit its bid (yesterday) for the $35 billion contract. Boeing will do so today.
“We have delivered an 8,000-plus page proposal to the U.S. Air Force,” said Ralph Crosby, chairman of EADS North America, at a news conference in Arlington, Virginia yesterday. “It’s a fully compliant proposal that meets all the 372 requirements” listed by the Air Force, he said.
The EADS offering is based on its Airbus A330 aircraft, while Boeing’s is based on its 767 model. The Air Force expects to award a contract for 179 airplanes to the best bid by November this year.
EADS, with its then partner Northrop Grumman, thought it had won the contract in 2008, only for government auditors to overturn the award when Boeing complained about how the bids had been judged. Northrop dropped out of the partnership earlier this year, leaving EADS to go it alone.
Boeing, based in President Obama’s political stronghold in Chicago, is the early favorite, and is already using the World Trade Organization’s ruling against illegal subsidies to Airbus to strengthen its case. EADS, meanwhile, is confident the WTO will issue a similar ruling about alleged US subsidies to Boeing, when it gets round to making its judgment. W.T.O. officials said Thursday that an interim ruling in that case, which had been expected on July 16, would be delayed until September.
In the current economic climate, the other major issue is jobs. Boeing supporters argue that the contract should remain with a US company, and Boeing claims a victory would result in 50,000 new US jobs in its supply chain. EADS says if it wins the contract it plans to establish an assembly plant in Mobile, Alabama to build the tankers, as well as an A330-based freighter aircraft, creating a similar number of US-based jobs.
The Pentagon has said its main concern is to get the best deal. We shall see.
