WASHINGTON—Three years after it was rocked by a procurement scandal, the Air Force set the stage Monday for a showdown between Boeing and its European competitor, Airbus, over a contract for new aerial refueling tankers that ultimately could be worth $100 billion.
The Air Force released a draft request for proposals on a tanker contract that initially would involve replacing roughly a third of the nation's more than 500 aging tankers with modern jets.
For Boeing, it offers an opportunity to keep producing 767s at a time when commercial orders are drying up. For the European Aeronautic Defense and Space Co., Airbus' parent company, it's an opportunity to crack the lucrative U.S. defense market.
The aerial tankers, most of which are more than 40 years old, are considered critical to U.S. war efforts overseas as the flying gas stations refuel fighters, transports and other military aircraft.
Boeing would build its tankers at its plant in Everett, Wash., while the Northrop Grumman-EADS teams would use Airbus A330s built in France and converted to tankers at a new facility planned in Alabama.
In a step that already has drawn sharp criticism from some on Capitol Hill, the Air Force again indicated international trade complaints filed with the World Trade Organization could be a factor as it sorts through the bids. The United States alleges that Airbus has received billions of dollars in research and development funding from European governments to launch its new airplanes. The European Union alleges Boeing has received tax breaks from states such as Washington and defense contracts from the Pentagon that amount to subsidies.
The Air Force, in the draft, asked potential bidders on the tanker contract to indicate whether they thought the international trade dispute should be considered when their bids are evaluated.
Following the terrorist attacks on Sept. 11, 2001, the Air Force agreed to lease 100 767 tankers from Boeing at a cost of more than $23 billion. But under pressure from Sen. John McCain, R-Ariz., the deal collapsed amid allegations that Boeing had improperly recruited the Air Force procurement official, Darleen Druyun, who was overseeing the lease.
Druyun and Boeing's former chief financial officer, Michael Sears, were sentenced to prison, while Boeing's chairman, Philip Condit, resigned in the wake of the scandal.
More recently, Boeing reached a $615 million settlement with the Pentagon over allegations that it had improperly acquired documents involving a rocket program from another of its competitors, Lockheed Martin.
The initial contract for new tankers is expected to be about $20 billion, with 179 tankers being replaced over the next 15 to 20 years starting in 2010.
After a third of the fleet is replaced, the Air Force said it might re-evaluate the tanker program and perhaps select a new airplane. Boeing could offer its 777 or its new 787, according to some observers.
Under the current schedule, the Air Force hopes to issue a final request for bids in early December, and the contract could be awarded sometime next year.
Boeing, in a statement, offered no indication whether it would use the 767 or the 777 in its bid on the initial contract.
"The U.S. Air Force and the Department of Defense will determine the rules of the competition and Boeing is committed to following those rules and winning this competition with the best platform," the company said.
Northrop Grumman-EADS, in a statement, said it was looking forward to competing, but only if the competition was "fair and open." The team said it had received assurances from the Pentagon and Capitol Hill that such topics as the international trade dispute or the 5 percent interest in EADS controlled by a Russian state-owned bank wouldn't be taken into account in determining who wins the contract.
"The injection of any issue into this competition that favors one of the bidders over the others is inconsistent with these assurances and does not represent fair open competition," the statement said.
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(c) 2006, McClatchy-Tribune Information Services.
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