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Boeing, EADS to bid on refueling tankers for Air Force

A KC-135 Stratotanker tanker lowers its boom to a B-52 bomber. Boeing and EADS plan to bid on building aerial refueling tankers.
A KC-135 Stratotanker tanker lowers its boom to a B-52 bomber. Boeing and EADS plan to bid on building aerial refueling tankers. (Paul J. Richards/agence France-pressep/getty Images)

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By Peter Whoriskey and Marjorie Censer
Saturday, July 10, 2010

Boeing and archrival European Aeronautic Defence and Space both formally entered the competition to build the next generation of aerial refueling tankers for the Air Force by Friday, with each submitting thousands of pages in highly technical proposals.

But at least part of the epic $35 billion contest between the U.S. manufacturer and its European competitor will unfold over the summer and fall as the debate turns into a multifaceted political tug of war.

Domestically, the case pits Washington state and Kansas, where Boeing has plants, against Alabama, where EADS promises to build its tanker.

Sen. Patty Murray (D-Wash.) attended a Boeing rally in Everett, Wash., on Friday; Sen. Jeff Sessions (R-Ala.) is scheduled, along with Alabama Gov. Bob Riley (R), to attend a rally on Monday in Mobile, Ala., company officials said.

Internationally, the contest figures prominently in a long-running trade dispute between the United States and the European Union over government subsidies to aerospace companies, one that has drawn the attention of President Obama and French President Nicolas Sarkozy.

Last month, the World Trade Organization ruled that European governments gave EADS's Airbus illegal subsidies in its efforts to overtake Boeing as the world's largest planemaker. The E.U. has meanwhile brought a complaint claiming that Boeing has improperly benefited from billions in subsidies from its military business and tax breaks.

The House voted in May to require defense officials to consider any "unfair competitive advantage" that companies might have in pursuing the refueling contract.

"At a time when our national unemployment rate is nearing 10 percent, it is outrageous to even consider outsourcing thousands of jobs to a foreign company," Rep. Todd Tiahrt (R-Kan.) said after the vote. "We asked the Pentagon to consider the illegal subsidies, they refused, and so today we made sure they will consider the illegal subsidies and give American workers the fair chance to compete that they rightfully deserve.

A third company, U.S. Aerospace Inc., a U.S. aerospace and defense contractor, Friday announced that it has submitted a bid as well, though some analysts consider it a long shot.

All of the companies are vying for the first phase of the Air Force's multi-decade effort to replace 415 refueling tankers, at least some of which are 50 years old.

Their replacement is the Air Force's most urgent acquisition priority, a spokesman said.

"Living with 50-plus year old tankers introduces the engineering risks of unseen corrosion, metal fatigue, cracking, de-lamination and fuselage stresses and strains on materials fabricated in the 1950s and 1960s," Maj. Heather Brennan said.

The military will weigh the various proposals based on their compliance with 372 measures.

Boeing is proposing to alter its 767 to become a tanker; EADS is proposing to convert its A330, which the company says will be built in Mobile, Ala. EADS says its development is farther along than Boeing's.

"What the competition boils down to is this: Who can take a commercial airplane and make it into a combat-ready tanker?" said William Barksdale, a Boeing spokesman.

Both companies say their efforts will involve about 50,000 American jobs.

Though the EADS version is larger and more capable, it's also more expensive to operate, said Richard Aboulafia, a defense analyst with the Teal Group.

"The practical reality is that you can make a strong case for either approach," he said. "And the deciding factor has been partisan politics."

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