Boeing wins 35-billion dollar tanker contract

Boeing wins 35-billion dollar tanker contract

Boeing Co has won the 35-billion dollar tanker contract, defeating rival European Aeronautic Defence and Space Co for the lucrative deal to supply the next generation of Air Force refuellers, the Pentagon announced Thursday.

The contract to build 179 of the KC-46As is one of the largest in the Pentagon's history. Boeing has won the first phase of a three- phase contract that could reach a value of 100 billion dollars. Boeing is scheduled to deliver the first 18 aircraft by 2017, dpa reported.

The Pentagon hopes the award will bring an end to the long and problematic saga to begin replacing its fleet of 1950s era KC-135 tankers, which provide fuel to aircraft in mid-flight to extend the range of military operations.

Boeing and EADS have been in a fierce competition for years to win the contract, sparring publicly and with expensive advertising. Both companies touted their planes as superior and the best deal for the military.

Deputy Defence Secretary William Lynn said both companies met the minimum requirements and were eligible to win the contract, but an evaluation of cost effectiveness and capability over the life of the programme gave the edge to Boeing.

"Boeing was the clear winner," Lynn said.

Guy Hicks, a Washington-based spokesman for EADS, said prior to the announcement even if EADS lost, having competed against Boeing for such a high value contract has raised the stature of the firm in the US defence establishment.

"EADS has competed head-to-head with one of America's iconic aerospace companies for the department's second largest programme in its history, and that is a significant accomplishment," Hicks said.

But Thursday's award might not be the end of the long-running battle. Defence procurement analysts have predicted the losing company will file a protest and prolong the dispute.

Lynn said the process was fair and transparent and he did not believe there were grounds for a protest. An aerospace industry source said EADS would not protest solely on the basis of losing the contract, but would consider such a move if the company felt the Air Force violated its own process for selecting the winner.

The Pentagon has twice failed in its 10-year effort to award the contract for the KC-X. A leasing programme with Boeing collapsed amid scandal in 2004.

The Pentagon awarded the contract to an EADS-Northrop Grumman partnership in 2008. But the Government Accountability Office, the investigative arm of Congress, partially upheld a Boeing protest, ruling that errors had occurred in the evaluation process, effectively requiring the Pentagon to hold a new competition.

EADS, the parent company of France-headquartered Airbus, based its proposal on the A330, while Boeing used its 767 and will build the planes at plants in Everett, Washington and Wichita, Kansas.

The competition had shaped up along political lines as well, with Democrats mostly supporting Boeing, arguing an award to EADS would ship badly needed US jobs overseas.

EADS, with the support of southern Republicans, said it would assemble the planes in Mobile, Alabama and create 48,000 jobs in the United States.

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