EADS announces bid on US tanker contract

By Mike McCarthy Apr 21, 2010, 11:26 GMT

Washington - The European Aeronautic Defence and Space Company (EADS) plans to bid for the 35-billion-dollar contract to build the next generation of US Air Force refuelling tankers, Ralph Crosby, the chairman of EADS North America, announced Tuesday.

EADS will compete with US aerospace giant Boeing for the lucrative contract to build the first 179 aerial refuellers in what the Pentagon says will mark the beginning of the end of the long-running saga to replace its aging fleet of KC-135s.

Crosby said the planes would be constructed at a planned assembly site in Mobile, Alabama, and expressed confidence his firm can defeat Boeing, which until Tuesday was the only company pledging to bid for the contract.

'It's unambiguous that we have the world's best tanker,' Crosby said at a press conference in downtown Washington.

EADS decided to enter the competition more than a month after its American partner, Northrop Grumman, dropped out of the competition, complaining the Pentagon's criteria unfairly favoured Boeing.

The Pentagon later granted an EADS request to extend the deadline for submitting proposals by 60 days so the Munich- and Paris-based firm and parent of Airbus could have more time to determine whether to enter its own bid.

Both companies are due to file their bids on July 9.

With EADS rejoining the fray the Pentagon avoids the criticism that would have accompanied simply handing the contract to Boeing with a competition to ensure US taxpayer dollars are effectively spent.

The Northrop-EADS partnership had originally won the bid, but Boeing lodged a protest with a congressional agency that determined in June 2008 that errors were made in the process, prompting the Pentagon to cancel the award and reopen the bidding earlier this year.

The contract to replace the ageing fleet of KC-135s has been a sensitive issue internationally and in the United States. Boeing supporters in Congress have said that awarding the contract to a foreign-based form would cost Americans jobs.

But Crosby insisted EADS will create tens of thousands of jobs in the United States if it wins the contract. EADS has also enjoyed the support of numerous southern lawmakers whose constituents could potentially benefit from a plant in Alabama.

The tension over the contract was a topic when French President Nicolas Sarkozy met with President Barack Obama March 30.

Boeing plans to submit a design based on its commercial 767 aircraft, while EADS will use a variance of the Airbus A330.

The 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 KC-135s. The Air Force has been plagued with problems in its long standing effort to procure the next generation of tankers.