It is official: Boeing Company has been awarded the $35 billion U.S. Air Force contract to build a new generation of military aerial refueling tankers. The KC-46A tankers will replace 179 of the current fleet of 400 KC-135 tankers, which have been serving the U.S. Air Force since 1957. The contract calls for Boeing to design, develop, manufacture and deliver the first 18 tankers by 2017.
The much anticipated announcement, made February 24, 2011, signaled the completion of a decade-long attempt to procure new tankers for the U.S. Air Force. The first proposals and awards were marred with controversy, questionable business ethics and political intrigue. The final two bidders were Boeing Company, based in Chicago, Illinois, and European Aeronautical Defense and Space Company (EADS), with corporate headquarters in Leiden Netherlands. EADS bid through its EADS North American division, located in Arlington, Virginia. Both Boeing and EADS are international corporate giants in the aerospace industry.
At the news conference that streamed live on the Pentagon Channel Website, Deputy Defense Secretary Bill Lynn said, “Boeing was the clear winner.”
American Workers: Winners and Losers
In their press release, February 25, 2011, the Boeing Defense, Space & Security division, based in St. Louis, MO, said the company is prepared to create 11,000 jobs in Washington State and 7,500 jobs in Kansas. Overall, the project will support 50,000 jobs with more than 800 suppliers in more than 40 states. An added strategical benefit for Boeing is that the KC-46A tanker production line will replace their 767 production line, which is nearing closure.
Jim McNerney, Boeing chairman, president and CEO is quoted: “We’re honored to be given the opportunity to build the Air Force’s next tanker and provide a vital capability to the men and women of our armed forces, Our team is ready now to apply our 60 years of tanker experience to develop and build an airplane that will serve the nation for decades to come.”
A celebration was held the day after the announcement at the Everett, Washington, Boeing facility. Workers, management and public officials were on hand for glad handing and high-fives for a successful bidding process. The company used a sharp pencil to write up a competitive bid that, according to the Air Force announcement, was more than one percent less than EADS’ bid. Boeing hopes that once on track with this contract; they will be in a good position for future Air Force contracts that are anticipated to reach $100 billion.
On the other hand, folks in Mobile, Alabama, are more than disappointed. Had EADS won the contract, the parent company of France-based Airbus would have built the first three tankers in Europe using the A330 airframe. Following that, EADS had said it would build a new facility in Mobile, Ala, to assemble the remaining tankers. For the Alabama region, still suffering from an economic tailspin since the devastation of Katrina, they had looked to EADS as an economic savior.
It’s Not Over until it’s Over
Within three days of the announcement, Pentagon officials are required to disclose details about their contract decision. EADS has five days after that to contest the award. Even though the Air Force took particular care in the official announcement to outline their careful and diligent choice for the award, there still is the possibility that EADS will appeal, and Congress could get into the mix. In addition to Alabama officials, EADS also has been looking at contracting with satellite supply companies from other states, including Ohio. Lawmakers from those states also may question the decision.
Endgame in Sight?
Will this be the culmination of the ten-year marathon to award a contract for a new generation of military aerial refueling tankers? After all, those KC-135 tankers first built in 1957 are not getting any younger. Only time will tell if there will be more roadblocks or if Boeing will be able to start working on the research and development phase of the contract.
Sources:
Boeing Company
European Aeronautical Defense and Space Company (EADS)
Pentagon Website Channel
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