US in discussions with EADS on re-entering tanker competition

Mar 23, 2010, 20:14 GMT

Washington - The US Defence Department has been in talks with the European Aeronautic Defence and Space Co (EADS) about re- entering the competition for the lucrative contract to build the next fleet of Air Force tanker planes, a spokesman confirmed Tuesday.

EADS fell out of the competition when its US partner, Northrop Grumman, withdrew earlier this month, alleging that the Pentagon request was unfairly tailored to rival Boeing's proposal. But EADS has since expressed interest in rejoining the competition and has asked the Pentagon to extend the May 10 deadline for submitting bids.

'We are right now engaged in active discussions with the company to better understand the reasons why they would need an extension,' Pentagon spokesman Geoff Morrell said.

'Those conversations are going very well thus far,' he added, 'and we have not come to a conclusion and therefore have not made a decision yet about whether to extend the bidding period any further.'

EADS chief Louis Gallois has said his company remains interested in the 35-billion-dollar contract to 179 aerial refuelling planes, but said the May cut-off is too short to formulate its own bid.

Boeing at the moment is the only company that has announced plans to bid, exposing the Pentagon to possible critics of awarding such a massive contract without a competing bid.

The Northrop-EADS partnership had originally won the contract, but Boeing successfully protested the decision with the Government Accountability Office, the investigative arm of Congress, and the Pentagon formally reopened the competition last month.

Northrop and some outside analysts believed the Pentagon's new request favoured Boeing's bid based on its 767 commercial airliner. The Northrop-EADS bid was based on the Airbus 330. EADS is the parent company of Airbus.

The dispute was a sensitive political issue, with Boeing supporters in Congress coming out strongly against Northrop-EADS, arguing it would export jobs overseas at a time of high unemployment in the United States.

Northrop-EADS countered that most of the planes would be built in the United States, centred around plans to build an assembly plant in Mobile, Alabama, earning the partnership the support of southern lawmakers.

The total tanker programme, known as the KC-X, could reach more than 100 billion dollars in contracts in later stages of the programme to replace the aging fleet of KC-135s. The Air Force has been trying to replace the KC-135s for 10 years.