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Russian firm, EADS may give Boeing competition for Air Force tanker

By Dana Hedgpeth
Saturday, March 20, 2010; A12

A Russian company said Friday it plans to enter a bid to build a new aerial refueling tanker for the U.S. Air Force, adding yet another twist to the long-running saga of the Pentagon's attempts to award one its biggest and most controversial weapons contracts.

United Aircraft, a holding company for several Russian aerospace firms, is expected to announce Monday a joint venture with an American defense contractor, according to John Kirkland, a Los Angeles-based lawyer representing the group. Kirkland would not name the U.S. contractor, saying only that it is "not one of the three or four major defense companies." United Aircraft's biggest shareholder is the Russian government, Kirkland said.

The announcement of the Russians' entry into the contest comes 11 days after Northrop Grumman dropped out of bidding for the $40 billion contract. Northrop had partnered with Airbus parent European Aeronautic Defence and Space (EADS) to compete against Chicago-based Boeing. But Northrop said it felt that the competition favored Boeing's smaller 767 aircraft.

The United Aircraft announcement was reported on the Wall Street Journal's Web site Friday.

The Russians' joint venture, which is to be called UAC America, will offer the Ilyushin Il-96 wide-body jetliner, Kirkland said, adding that most of the planes would be fabricated in Russia and assembled in the United States. Kirkland said the partners would probably approach officials in Mobile, Ala., where the Northrop and EADS partnership had planned to build a manufacturing facility for its tanker.

On Friday, EADS said it was requesting a three-month extension of the May 10 bidding deadline because it was considering submitting a bid on its own.

The tanker deal has a long, complicated history.

In 2004, Boeing lost the deal to build the tanker after an ethics scandal. In 2008, EADS won the contract, but Boeing fought back and had the award nullified. The Pentagon restarted the bidding process last year.

An offer from a Russian firm is likely to face more criticism from congressional leaders, defense industry officials said, much as the joint bid by EADS -- a European company -- did.

"Nobody in the Western Hemisphere uses their equipment," said Loren Thompson, a defense industry consultant, referring to United Aircraft. He said it would be "very difficult" for the Pentagon to buy the Russians' tanker because "there's no training manuals, no spare parts supplies and no maintenance personnel or pilot experience."

"If you buy a Boeing plane, there are people all over the world who have spare parts and know how to fix it," Thompson said.

Bryan G. Whitman, a Pentagon spokesman, said the Defense Department "remains committed to a fair and open competition and welcomes proposals from all qualified offerers."

He said the Pentagon is considering the request from EADS to extend the due date for proposals.

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