EADS Loses Multi-Billion Dollar Tanker Contract

The Air Force has awarded a $35 billion contract to build the next generation of air refueling tankers to the Boeing Company dealing a heavy blow to the economic hopes the Gulf Coast. Officials from throughout the area were stunned by the announcement that came at a late afternoon Pentagon news conference.

The decision is welcome news in Washington state and Kansas, where much of the work on the Boeing tanker will be done.

The decision was a blow to the European Aeronautic Defense and Space Co., which offered a strong bid and a proven aircraft for the contract. It was a major disappointment for Alabama, which had been counting on the employment opportunity at a long-shuttered Brookley Field military base.

The Air Force has tried for nearly a decade to replace its aging fleet of Eisenhower-era tankers, the equivalent of a flying gas station.

Air Force Secretary Michael Donley called it a “spirited competition” and described it as a ‘fair open and transparent process”. Donley began the news conference by saying, “Both the Boeing and EADS entries were deemed to meet all requirements and both were awardable.”

But, Deputy Defense Secretary William Lynn told reporters, “Boeing was the clear winner.” Under questioning Lynn was asked if he anticipated a protest from EADS. But, he defended the decision saying he believes the Pentagon’s findings “will not yield ground for a protest”.

In the end the Air Force Secretary said the decision was based on three primary criteria; price, war fighting capability and life cycle issues. It was unclear if Boeings proposal was cheaper than that of EADS.

Alabama Governor Robert Bentley called it a sad day and said he was hoping for a joyous announcement. In a separate interview with News 5’s Jessica Taloney he said word of the loss was, “like a death in the family. Everyone”, he said, “expected to win.” Bentley’s comments came at a celebratory gathering at the Mobile Convention Center. It turned out to be the opposite of what attendees expected. After expressing his disappointment, he then complimented many in attendance for their contributions to the effort. Many at the gathering who were surrounded by reporters and TV cameras were clearly stunned by the Pentagon’s decision. Up until the announcement, most aviation experts were predicting a win for EADS and the Mobile area. This decision means the loss of thousands of jobs throughout the entire gulf coast.

At a Birmingham news conference after the announcement, Alabama Senator Jeff Sessions described the Pentagon’s decision as exceedingly disappointing. Referencing the areas high hopes for landing the contract, he still described the EADS tanker as a superior aircraft. He indicated that the process might not be over yet, since EADS has the option to protest the decision. Sessions has been involved with this project for a decade.

This contract bid was surrounded by charged political pressures. Washington’s two U.S. Senators have been highly vocal in pushing the Obama Administration to award the contract to Boeing. In fact, Boeing far outspent EADS in lobbying members of congress.

In the past year, Boeing has spent $5 million on print advertising to promote its version of the tanker and EADS has shelled out $1.7 million to boost its prototype, according to Evan Tracey, president of the Campaign Media Analysis Group, which typically monitors advertising for political campaigns.

On top of that spending, the two companies put ads on drive-time radio and the Washington subway system.

Replacing the KC-135 planes is critical for the military. The first aircraft - the equivalent of a flying gas station - entered the fleet in 1956, when Dwight Eisenhower occupied the White House, and the last one was delivered in 1965, when Lyndon B. Johnson was president. Today, the Air Force is struggling to keep them in flying shape.

The tankers are the one aircraft the military cannot go to war without. They allow jet fighters, supply planes and other aircraft to cover long distances, crucial with fewer overseas bases and operations far from the United States in places like Iraq and Afghanistan.

The deal calls for the construction 179 tanker planes in the first phase at an estimated cost of $35 billion dollars. It could climb to over $100 billion as the project is expanded in future years.

In 2008, the Government Accountability Office upheld Boeing's protest of the tanker contract to Northrop and EADS, saying it found "a number of significant errors" in the Air Force's decision, including its failure to fairly judge the relative merits of each proposal.

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.