Boeing Co. is the underdog to land a $35 billion contract for aerial refueling tankers that the Pentagon is expected to award as early as Thursday, analysts said.
If conventional wisdom is right, EADS North America would win its first major U.S. Defense Department deal and be the front-runner to replace the entire half-century-old tanker fleet in contracts expected to total more than $100 billion.
The tanker contest is one of the longest-running procurement dramas in Defense Department history, and it may not end with the announcement of the winner of the initial contract.
The losing party could have grounds for appeal because U.S. officials in the fall inadvertently gave Chicago-based Boeing and Netherlands-based European Aeronautic Defense and Space Co., parent of EADS North America and France-based Airbus SAS, proprietary data on each other’s bid.
The Pentagon’s inspector general last week told seven U.S. senators that the contest wasn’t irreparably harmed by the data mix-up and that Boeing and EADS could take any concerns to the Government Accountability Office, the contracting officer or federal court if they believed they were adversely affected by the event.
The European contractor has a greater chance of winning the award for 179 refueling planes, the first in a series of contracts to replace the U.S. Air Force’s fleet of 446 Eisenhower-era tankers, said Howard Rubel, aerospace analyst with investment bank Jefferies & Co. Inc., in a research note Wednesday.
Several factors point to a likely Boeing loss, said Loren Thompson, defense analyst with conservative think tank Lexington Institute, which has conducted research for Boeing in the past.
“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 research note Wednesday.
Thompson expects the EADS plane to come out on top because the European side is known for aggressive discounting and because its plane “received a higher warfighting-effectiveness rating” from the Pentagon.
Boeing officials successfully challenged an earlier win by a Northrop-EADS team in 2008, protesting to the GAO that the process had been fatally flawed and biased against a remodeled Boeing 767 aircraft.
Boeing declined to respond to analysts’ comments. An EADS spokesman could not be reached for comment.
In a Feb. 10 statement marking the submission of its final tanker proposal to the Air Force, Boeing made the case for its plane, saying its lower operating costs and greater fuel efficiency would save taxpayers “tens of billions of dollars” over the next 40 years.
If Boeing loses, it may opt to make its case for reversing the decision to Congress, which controls Pentagon spending, rather than the GAO, Thompson told the Tribune.
Boeing could argue that EADS was able to offer a sweetheart deal that Boeing couldn’t match because the A330 was among the planes determined by the World Trade Organization to have benefited from about $20 billion in illegal subsidies from European governments.
“Boeing may not file a formal protest if it loses because the issues are too obscure for the GAO to interpret,” Thompson said. “The more likely course of action is to appeal to Congress over the Airbus illegal subsidies.”
Reuters contributed to this report.
jjohnsson@tribune.com
Makes perfect sense that we would spend $100B with an international firm rather than a domestic one. God forbid my tax dollars stay in this economy.
This is every bit as much about Airbus/EADS getting an aircraft final assembly on US soil, and making Mobile, AL a new aerospace center.
Tell me there is no risk in having an American defense product built by a work force that is yet to be hired and trained in buildings with tooling that have yet to be built.
Thank you John McCain and your former EADS lobbyist former campaign staff for turning over the manufacturing of a vital defense product to the fickle French.
And, does anyone think the EU will allow Boeing parity on French, German, Spanish or British soil?
The Air Force has its head where the sun don’t shine on this procurement exercise, which in the end will cost even more because of the beddown requirements, hangars and longer reinforced runways where these huge EADS tankers will be depoloyed. Makes on wonder what they would be capable of in a real war.
That’s what happen everywhere around the world!!! why it could not be in the US???
am a USAF operations planner. I would like you to just take for one moment and understand this tanker issue. Boeing EADS, whoever, the point is that you cannot understand it is the number of refueling booms in the air for a strike package or airlift deployment that is the key and always will be. Back in 1996 I planned President Clinton’s visit to Asia. Due to the large airlift requirement, I had to deploy 3 KC-135s to Pago Pago due to the large number of airlifters passing through to Australia. The EADS Tanker could barely fit on the tarmac there if it was in service. Also, the EADS tanker could not be in three refueling rendezvous at once. With a total of 245, 00 lbs of fuel capacity (KC-10 350,000lbs) and that includes fuel for him to return to base, he would be fuel offload limited. Now we could send three more EADS tankers down to Pago Pago, but only one can land there, so you have burn up tons of fuel and more assets then really required whereby you send three 767 tankers at around 202,000 pound of fuel per plane and you have a offload capacity of around 420,000 lbs of fuel versus the EADS offload of 200,000lbs……does the light bulb come on? Do you see that it is more than a European or American thing, it is called force projection and if we mix our tanker fleet will all large aircraft………let’s just say you do not put all your eggs in one basket or large tanker, you need variety. I will be flying one of the aircraft one day, and I hope it will last 50 years like the KC135. We will be in a pickle when our European friends embargo us over a disagreement, Remember the Libya raid, where we could not overfly or fly out of France and Spain…..amazing times really have not changed that much…Libya in the news again..
General John Handy, the retired Air Force Commander, U.S. Transportation Command, and Commander, Air Mobility Command (he was the chief tanker guy for the Air Force until his retirement in 2005)has said for the last five years that the EADS offering is too close to the KC-10 in size and will limit flexibility for AF needs.
I continue to be amazed at how Pentagon procurement folks have languished in this thing for so very long and made so many mistakes. I keep wondering if they will make yet another, which will kick this thing over to Congress for yet another round and costly delays affecting our ability to move forward, and continues to put military personnel at risk flying 50+ year old Boeing products. Heck, there is no Airbus product that has lasted that long, to my knowledge. They are throw away airplanes, based on what most commercial airlines think of them. They are just cheaper and that is why they fly them, and they are cheaper because EAD/Airbus does not play by the rules (Can you say subsidies?).
After reading all the messages I came to one conclusion , The USAF workers are dumb, stupid aND SPOILED. MAYBE WE SHOULD HAVE Some AUSTERITY MEASURES IN THE USAF. I CHALLENGE REPUBLICANS TO START HAVING AUSTERITY MEASURES . GUESS THEY CANNOT OUTSOURCE THIS UH? THESE DUMB AMERICANS CANT EVEN DECIDE HOW TO HANDOUT A CONTRACT WINNER, WHY BECAUSE DUMB ***** WORK FOR THE USAF, SO HOW DO YOU LET A ******* DECIDE A WINNER, LIKE SAYING A DONKEY DOES NOT KNOW THE TASTE OF GINGER. I SAY START FIRING STARTING FROM GATES AND DOWNWARDS. THIS DUMB ***** WILL BANKRUPT THIS COUNTRY WITH ALL THEIR BICKERING, BECAUSE ALMOST EVERYBODY HAS NO MORALS. LET THE 6 GRADE KIDS DECIDE WHO SHOULD BE THE WINNER, THEY PROBABLY WILL HAVE BETTER APPROACH AND LOGIC PROCESS.
So another country will build our defense planes? For some reason this makes me uneasy. So much of our tax money going out of this country at a time when we need to keep it at home. You bet it will cost more than the original bid. Has an Airbus stayed together in an emergency as well as the Boeing planes. Airbus will build a plant here? How much of this bid will actually stay here? Wages + ?
So they say there are a few flaws in the Boeing plane design? Sounds like this should be an easy fix. Sounds like an excuse.
This also gives me the sense that the Pentagon does not have faith in our American work force.
I cannot express enough the shame I feel for the way our Country is heading.
Not only have the domestic industry jobs gone over seas, now our major military is sending more. Not only have we lost the ability to have a strong blue collar force, which I think of as the strengh of a country, but the loss of pride in accomplishing this with integrity.
How much paper can a country shuffle before these jobs are gone.
I am just an American wife, mother, sister, daughter, whose family members have been sent, volunteered, and are still fighting for this country.
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The EADS North America plane will be built in Mobile, Alabama. That’s in America, and I am glad to see the corruption era of Boeing about to end. If you don’t beleive me, look at the history of this contract. I believe people went to jail trying to fix it so Boeing would win. EADS (and Alabama) won it the first time, and everything is pointing in that direction now. Boeing can’t even produce the planes they have under contract now.
Have no fear, Underdog wins the battle. About time America woke up and keep the work in the USA.
Jobs are numer 1!
Congrats to Boeing! It was the right decision for these reasons, Boeing makes better planes and the 767 KC46A gives the USAF way more flexibility than EADS. Plus it keeps most of our tax dollars in house while keeping Americans working.