Q&A on the Air Force tanker decision

Published 11:15 pm Friday, February 29, 2008

What happened?

The U.S. Air Force chose the joint team of Northrop Grumman Corp. and EADS, the parent of Airbus, to build 179 aerial refueling tankers at a cost of about $35 billion. The Boeing Co. lost with its bid to build tankers based on the Everett-built 767 jetliner.

Why did Boeing lose?

The Air Force didn’t go into detail Friday, but said one of the key factors was the bigger size and capabilities of the Northrop-EADS KC-30 tanker. “More passengers, more cargo, more fuel to offload,” said Air Force Gen. Arthur Lichte.

Who won?

In addition to Northrop-EADS, Mobile, Ala. is a big winner. The community will perform final assembly work, though the plane will mostly be built in Europe. The deal could help the community become a bigger competitor for other aerospace work.

Was cost important?

Air Force officials downplayed cost as a deciding factor. They said they did consider both bidders’ past performance with military contracts. Boeing had offered a cost savings of an estimated $35 million per plane. Analysts said the Boeing tankers would have cost about $125 million apiece.

What does Boeing’s loss mean?

It means the shutdown of the 767 production line, which is running low on orders, at the Everett factory, probably in the next four years. That could eventually mean layoffs. Overall, it’s a big competitive blow to Boeing, which has supplied tankers to the Air Force for half a century and had secured a contract to build new tankers more than six years ago. That slipped away in the wake of an ethics scandal between Boeing and the military, however.

What’s the next step?

The decision probably will be officially protested by Boeing. The Air Force plans to discuss its decision with Boeing by March 12. Then Boeing has 10 days to file a protest, and the Government Accountability Office has 100 days to protest the decision.

— Herald staff