EADS bid racks up $75K in printing costs

EADS bid racks up $75K in printing costs

EADS North America paid $75,000 alone to print out about 50,000 pages of materials on its bid to win a $35 billion Pentagon contract to build refueling tankers.

EADS prepared six copies of the proposal — more than 8,000 pages per set. Each copy in the requisite binder is 3 feet, 6 inches tall and weighs around 100 pounds.

The printing costs are just one small piece of the expenses companies have in competing for the tanker, the largest Pentagon contract to be awarded for the next several years.

Industry sources said total costs for the companies involved could reach $100 million.

Bid materials from EADS and Boeing, the company’s main competition for the contract, are now under review by various Air Force and Pentagon officials tasked with selecting a victor. A third, dark-horse competitor — U.S. Aerospace partnered with Ukrainian company Antonov — also submitted a proposal for the contract.

It’s not uncommon for bid material costs for any substantial Pentagon contract to reach $100,000, according to defense industry sources. Boeing had to submit similar materials for its bid, but officials at the company refused to disclose any costs related to their tanker bid.

Not just anyone can do the specialty printing needed for the bids.

Defense companies usually outsource the printing work to specialty contractors who use high-quality paper stock in accordance with all the Pentagon’s requirements and make sure that the pages are properly collated. Protecting sensitive information also comes into the mix.

To put just the printing costs in context, about $70,000 is the average salary of an aerospace production worker, according to data gathered by the Aerospace Industries Association. The median household income in the United States is about $50,000, according to the most recent U.S. Census Bureau data.

Both EADS and Boeing have said that if they win the contract, it would spark the creation of thousands of jobs.

Defense experts say the costs of printing the bidding materials are small potatoes compared to the millions of dollars spent on preparing the technical and engineering details for a proposal, as well as the lobbying and advertising costs the companies have incurred.

Printing costs look like a “tiny drop in the bucket,” said Richard Aboulafia, vice president for analysis at the Teal Group.

The printed materials could also save taxpayers some money, since the Air Force and Pentagon don’t have to pay for printing costs. Government contracts require the bidding companies to pay these expenses.

Defense industry sources say that the Pentagon has made an effort to require fewer paper copies of bid materials for major defense contracts. Instead, it has requested that proposals be made on DVDs, which can hold plenty of data and display complicated graphics and which are secure.

The Air Force said that, for most solicitations, an original signed hard copy of the bid proposal is required for the official contract file. The number of additional paper copies required depends on the complexity of the procurement and on the accessible means to receive or review electronic documents. Overall, the service encourages the maximum use of electronic media for submissions, the Air Force said in a statement to The Hill.

The Air Force is expected to select a winner of the tanker contract by mid-November. This would be the service’s third try to replace its Eisenhower-era tankers.

After a lease deal with Boeing fell through amid corruption charges in 2004, Boeing competed against a team of Northrop Grumman and EADS North America.

After the Northrop-EADS team was awarded the contract in February 2008, Boeing successfully protested the award with the Government Accountability Office. The Pentagon then decided to start a whole new competition.

Northrop Grumman dropped out of the competition in March, leaving EADS to face Boeing in a solo bid for the contract.