European Firm May Compete for US Tanker Contract

(March 19) -- In yet another twist in the Pentagon's nearly decade-long effort to replace its fleet of Eisenhower-era flying refueling tankers, the European maker of the Airbus aircraft now says it may re-enter a competition that was presumed to be a shoo-in for Boeing.

In a statement this morning, EADS said the Pentagon indicated on Thursday that it would accept a proposal from the company to compete for the Defense Department's multibillion-dollar contract to replace the Air Force's aerial-refueling tankers.

"This is a significant development," the company said. "EADS is assessing this new situation to determine if the company can feasibly submit a responsive proposal to the department's request for proposal (RFP)."

The Air Force's tankers are essentially flying gas stations that are used to refuel other military aircraft, such as fighters, so they can fly long distances without the need to land. The Pentagon is expected to spend around $35 billion to buy 179 new tankers.

EADS, teamed with U.S. defense company Northrop Grumman, had won an earlier competition to produce the tankers for the Air Force, but the contract was canceled after rival Boeing successfully protested the award. The Pentagon then decided to redo the competition, but Northrop, after reviewing the requirements, decided not to bid, claiming that the Airbus-based tanker did not have a fair chance of winning.

That left Boeing as the expected sole competitor -- and presumed winner -- of the deal. But EADS' announcement today may change all that.

It would be unprecedented for the Pentagon to award such a large contract to a European-based company not teamed with an American company, and EADS says it is still concerned that the request for proposals favors Boeing's smaller aircraft. The company also says the Pentagon will need to extend the bidding deadline in order for it to compete.

The tanker imbroglio started in 2001 as a controversial plan to lease tankers from Boeing. That deal was eventually derailed after attracting attention from Sen. John McCain, R-Ariz., who raised concerns about the price the government would pay for the aircraft and about possible conflicts of interest.

The Pentagon's plan to acquire new tankers has since become one of the most drawn-out and, arguably, disastrous competitions in Defense Department history. Along the way, it has claimed a growing hit list of casualties: One former Air Force official went to prison for conflict of interest, as did Boeing's one-time chief financial officer; another Air Force official committed suicide after being accused in a newspaper article of having a conflict of interest; and two senior Air Force officials were fired.