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Bids in, but tanker tangle not over

Boeing and EADS traded barbs again as they submitted so-called final bids for the Air Force's aerial refueling tanker.

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By Michelle Dunlop
Herald Writer
The supposedly final bids for a $35 billion Air Force tanker contest are in.
But the end is nowhere in sight in the Pentagon's decade-long effort to update its fleet of KC-135 tankers, which have been in use between 45 and 55 years.
On Thursday, the Boeing Co. and rival EADS submitted their final offers for the contract to replace 179 KC-135 tankers. Although the Air Force could announce the winner as early as next month, the award is likely to be sidetracked by politics and protests. And then there's the pesky problem of the 2011 defense spending budget, which hasn't been approved by Congress.
None of that deterred Boeing and EADS from exchanging shots at one another on Thursday.
“We have an aggressive but responsible bid,” said Jim McNerney, Boeing's chief executive, at a conference Thursday. McNerney noted that Boeing is up against a “subsidized competitor” — a reference to a lengthy trade dispute between the Chicago-based company and Airbus. EADS is Airbus' parent company.
Boeing's bid is based on the company's 767 commercial jet. A Boeing win would mean keep the 767 assembly line here in Everett going for years to come.
EADS would assemble its Airbus A330-based tanker in Mobile, Ala., but has yet to build a factory there. The company is flight testing a tanker similar to the one it is offering the U.S. Air Force. Other than saying its tanker is based on the 767, Boeing has not announced specific details about it, leading EADS to call Boeing's offering a “concept tanker.”
“We're offering a real aircraft that has proven what it can do for our men and women in uniform, not asking the Air Force and U.S. taxpayers to take a huge gamble on an airplane that only exists on paper,” Ralph Crosby Jr., chairman of EADS North America, said in a statement.
The exchanges between Boeing and EADS have been echoed in the halls of Congress as politicians have lined up to support the company that would bring the most jobs to his or her state.
Regardless of which company the Air Force picks, “Congress will get its hands on things and mess it up,” said Richard Aboulafia, an analyst with the Teal Group, earlier this week.
In November, the Air Force itself gave tanker competitors a possible reason for a time-sucking protest when it mixed up confidential information about each other's bid. In 2008, Boeing successfully protested the Air Force's decision to award the contract to EADS, eventually leading the Pentagon to start the contest over.
Sen. Maria Cantwell, D-Wash., asked the inspector general for the Department of Defense to look into the Air Force's mix-up. The senator received a confirmation letter from the inspector general's office in late January but hasn't heard anything further, a Cantwell spokesman said Thursday.
Even if neither company protested the next Air Force decision, the tanker contract has another obstacle to clear: the defense budget. The U.S. is operating under a budget extension that funds the government at the 2010 level. And Republicans, who control the House and gained ground in the Senate in the 2010 election, have said they intend to use this opportunity to end dozens of programs and slash spending on many more.
Overall, the Army, Navy and Air Force say they would lose at least $26 billion if the spending level stays largely the same as 2010, compared with the larger 2011 budget request made by the Obama administration.
It's unclear where the budget cuts would leave the Air Force's tanker contract.
In statements about their final bids, both EADS and Boeing claimed their respective tankers would save the U.S. taxpayer the most money. In its statement, EADS said Boeing's “tanker will cost 15 percent to 44 percent more, measured on the basis of cost per gallon of fuel delivered.”
For its part, Boeing said its 767-based tanker will save the taxpayers $36 billion to operate over its lifetime — “a difference that could pay for an additional fleet of 179 tankers.”

The Associated Press contributed to this report.
Story tags » 767EmployeesAirbusAir Force



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