Pentagon set to announce winner of lucrative tanker contract

Feb 25, 2011, 8:55 GMT

Washington - The Pentagon is set to announce Thursday the winner of the competition between Boeing Co and Europe's EADS for a 35-billion-dollar contract to build the next generation of Air Force tankers.

The Pentagon scheduled a 5:10 pm (2210 GMT) announcement to declare the winner of the lucrative deal to build 179 of the KC-X aerial refuellers, which will replace the Air Force's ageing fleet of KC-135s.

Boeing and European Aeronautic Defence and Space Co have been in a fierce competition for years to win the contract, sparing publicly and in recent advertising in the Washington area.

The Pentagon hopes the much-delayed announcement will bring an end to years of effort to award the contract that has been plagued with problems and controversy and been complicated by domestic political wrangling.

The Pentagon in 2008 awarded the contract to an EADS-Northrop Grumman partnership. But a congressional oversight agency sided with a protest lodged by Boeing, ruling that errors had occurred in evaluating the proposals, effectively requiring the Pentagon to hold a new competition. Northrop has since dropped out. A previous leasing plan with Boeing collapsed amid scandal in 2004.

EADS, the parent company of Airbus, is basing its plane on the A330, while Boeing is using its 767 and will build the planes at plants in Everett, Washington and Wichita, Kansas.

The competition has evolved along political lines, with Democrats with strongholds in Washington saying an award to EADS would ship badly needed US jobs overseas. EADS, with the support of southern Republicans, said it will assemble the planes in Mobile, Alabama and create more than 40,000 jobs.

A final decision, however, might not end the long running saga. The losing company could file a protest with the congressional agency, known as the Government Accountability Office, seeking to overturn the award.