EADS concedes tanker contract to Boeing


by KING 5 News and Associated Press


Posted on March 4, 2011 at 11:37 AM

Updated Friday, Mar 4 at 2:16 PM

The European Aeronautic Defence and Space Co., the parent company of Airbus, said Friday it won't ask the Pentagon to review the decision to have Boeing build nearly 200 giant airborne refueling tankers.

The Air Force tanker contract is worth about $35 billion.

Boeing was awarded the contract to build 179 new refueling planes last week. Boeing's tanker will be based on the 767. EADS' would be based on the larger Airbus 330.

On Monday, EADS was briefed by the Department of Defense as to why the contract was awarded to Boeing.

"After meeting with the Air Force and the Department of Defense and evaluating the information they provided to us in their debriefing, EADS North America has decided not to protest the KC-X contract award," said Ralph Crosby, EADS North America Chairman.  "Our reasoning is simple. The acquisition architecture for this procurement...was quite mechanistic and mathematical. The outcome was decided by price. The Boeing price was lower than ours."

Boeing's bid, Crosby said, was "an extremely low-ball offer in order to achieve their strategic objective."

Sean O'Keefe, chief executive of EADS's North American subsidiary said the final rules for awarding the contract were not "optimum" for EADS. It offered a larger plane than Boeing. O'Keefe said the Air Force handled the bidding process "exactly by the rules."

"It's time to put the interest of the warfighter first and we're stepping aside," said Crosby.

The contract, which eventually could be worth as much as $100 billion, will mean tens of thousands of U.S. jobs. Boeing would build the aircraft in Everett, Washington, with modifications made in Kansas.

EADS had planned to assemble the aircraft at a closed military base in Mobile, Ala.

"It means 11,000 jobs in Everett, 50,000 jobs across the country," said Rep. Norm Dicks, D-Wash.
"The best thing is we're building this airplane in Washington state, in the United States. Not building the first 12 in Toulous, France."

"It's going to have an immediate impact on Washington state. Not just in the city of Everett and not just in Snohomish County, where this is located. The largest employer in Island County and Skagit county is Boeing, and Boeing doesn't have facilities there. It's because a lot of people commute to the facility in Everett," said Rep. Rick Larsen, D-Wash. "This has a regional impact on jobs."

The effort to award the Air Force contract has been an arduous 10 year process.

Initially, the Air Force planned to lease and buy Boeing planes to serve as tankers, but that fell through. The Air Force later awarded a contract to Northrop Grumman Corp. and EADS, but in 2008 the Government Accountability Office upheld Boeing's protest of the contract.

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.

 "We're so glad that this 10 year period of time, of competition is finally over and that Washington state can celebrate with jobs and job creations" said Senator Maria Cantwell, D-Wash. "We believe that we have a competitive edge because of the hard work and expertise that has been developed here and keeping jobs in the United States will help us continue to build upon that expertise."

"There is no doubt about it, the tanker will be built in Washington state by Washington workers," said Sen. Patty Murray, D-Wash.

Crosby suggested that if Boeing falters, EADS would be ready.

"Should they fail to deliver, we stand ready to step in with a proven and operating tanker," he said, citing the company's tanker that is in production for other countries.

Said Sen. Jeff Sessions, R-Ala.: "Now, the winner must deliver on their promises."