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Boeing and EADS await €25 billion Pentagon contract decision

Text by News Wires

Latest update : 2011-02-24

The Pentagon is to announce whether Chicago-based Boeing or the European aerospace giant EADS will be handed a €25 billion($35 billion) US Air Force aerial refuelling tanker contract Thursday after a decade of competitions for the deal.

AP - Even by Pentagon standards, it’s an eye-popping prize: a $35 billion contract to build nearly 200 giant airborne refueling tankers. And the decade-long brawl by two defense industry titans to win it has been just as epic.

In a matter of weeks - if not days - the Pentagon will announce whether Chicago-based Boeing Co. or European Aeronautic Defence and Space Company (EADS) will build 179 new tankers to replace the Air Force’s Eisenhower-era KC-135 planes.

 
The competition is far more complex than a case of the U.S. against Europe. If Boeing wins, the air tanker would be built in Everett, Washington; Wichita, Kansas; and several other states. If EADS wins, the tanker would be assembled in Mobile, Alabama, at the former Brookley military base that was shuttered in the 1960s.
 
Either way, about 50,000 jobs would be created in the U.S.
 
And $35 billion could amount to a mere first installment on a $100 billion deal if the Air Force pushes ahead and buys more tankers.
 
The contract has touched off some of the fiercest and costliest lobbying that Washington has ever seen. The companies have spent millions on advertising and hired dozens of lobbyists to do their bidding. Lawmakers are relentlessly pressing Defense Department officials.
 
Replacing the KC-135 planes is critical for the military. The first aircraft - the equivalent of a flying fueling station - entered the fleet in 1956, when Dwight Eisenhower occupied the White House, and the last one was delivered in 1965, when Lyndon B. Johnson was president. Today, the Air Force is struggling to keep them in flying shape.
 
The tankers are the one aircraft the military cannot go to war without. They allow jet fighters, supply planes and other aircraft to cover long distances, crucial with fewer overseas bases and operations far from the United States in places like Iraq and Afghanistan.
 
With so much at stake, the companies and their backers are pursuing every edge and taking the struggle to places that military contractors don’t normally go: radio and subway ads in Washington, D.C., among them.
 
“Our warfighters deserve a proven tanker - the KC-45 - that’s already flying and refueling today,” screams the full-page ad from EADS in one of the dozen inside-the-Beltway publications that cater to the government and Congress.
 
The company has delivered a version of the tanker to Australia and bases its design on the commercial Airbus aircraft built in Europe.
 
In the past year, Boeing has spent $5 million on print advertising to promote its version of the tanker and 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.
 
On top of that spending, the two companies have put ads on local radio and the Washington subway system.
 
“A decision to award this contract to Boeing would strengthen America’s manufacturing base and maintain America’s competitive advantage globally,” Republican Rep. Mike Pompeo of Kansas, in office just a few weeks, wrote to Defense Secretary Robert Gates.
 
Said Democratic Sen. Patty Murray of Washington state: “We need an aerospace support base in this country.”
 
Countering the cries of “buy American,” EADS says its contract would be carried out by its North American division and notes the company would create about as many American jobs building the tanker as Boeing would.
 
“The last time I checked, Alabama was still part of the United States,” said EADS spokesman James Darcy.
 
Republican Sen. Jeff Sessions of Alabama argues that the EADS tanker would be a better value for the taxpayer.
 
“The EADS plane is by 15 years newer. It’s larger. It has more capacity,” he said. “Every single capability that’s measured, they exceed the Boeing aircraft. So it’s a better aircraft. No one can dispute that.”
 
Republican Sen. Pat Roberts of Kansas counters that the Boeing version, based on its 767 airliner, is a smaller target for the enemy, with cheaper fuel costs than the EADS prototype.
 
“I think it fits the mission better,” Roberts said.
 
Among the dozens of lobbyists for the two companies are former lawmakers, one-time senior Defense Department officials and former congressional staffers who labored behind the scenes for the committees that oversaw the military and its budgets.
 
Boeing, which also builds commercial aircraft as well as other defense components, spent $17.9 million on lobbying in 2010 and $16.9 million in 2009. EADS spent $3 million in 2010 and $2.98 million in 2009. While the numbers, compiled by the Center for Responsive Politics, reflect the companies’ overall spending on lobbying, the tanker was a top priority during that time.
 
“The lobbying aspect is just one component of a massive and sustained influence effort by both of these companies,” said Dave Levinthal, communications director for the center.
 
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.
 
In 2008, the Government Accountability Office upheld Boeing’s protest of the tanker contract to Northrop and EADS, saying 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.
 
Gates said last week that an announcement on the contract winner was likely in the next two to three weeks. Lawmakers expect the Pentagon to wait until the financial markets close and lawmakers are on recess to reveal its decision, perhaps by Friday.
 

 

Date created : 2011-02-24

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