EADS expands North American ranks in effort to bolster tanker contract bid

O’Keefe’s hiring will free up the company’s current CEO, Ralph Crosby, to focus on winning the high-stakes competition for the approximately $35 billion Air Force tanker contract. Crosby will remain the chairman of the EADS North America board, while O’Keefe will begin as CEO on Nov. 1.

Crosby intimated on Tuesday that the move would be a step toward his eventual retirement.

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Crosby, who has been the company’s CEO and chairman for seven years, has been credited with expanding EADS in the United States and winning some key Pentagon contracts, including one to provide utility helicopters to the Army.

The addition of O’Keefe is intended to bolster the company’s efforts to increase its market share in the U.S. O’Keefe will be charged with expanding the company’s business with the Pentagon and Homeland Security Department, as well as guiding the company into the space business area.

Instead of overseeing an entire company and its continued interests in the U.S. military market, Crosby will focus on “the capture” of the tanker contract. EADS, the parent company of Airbus, is a partner to U.S. defense giant Northrop Grumman, which is the prime contractor.

The Northrop Grumman-EADS team is in a heated competition against Boeing for a coveted contract that could be worth more than $35 billion. The companies and their supporters in Congress have been engaged in a politically charged, intense lobbying campaign for the contract.
Crosby’s “task is to go win this” competition, O’Keefe said during a press conference announcing the leadership changes.

“I am going to dedicate the lion’s share of my time to the tanker competition,” Crosby said.

O’Keefe described his role as not only ensuring that Northrop Grumman-EADS wins that contract, but also “understanding how we will perform and deliver on that activity.”

O’Keefe comes to EADS from General Electric, where he headed GE Aviation’s Washington operations. GE builds the engine for the Airbus 330, which the Northrop-EADS team is planning to offer to the Air Force.

Louis Gallois, the EADS CEO, said that the addition of O’Keefe is a “reinforcement” for the company’s North American arm.

“We have big ambitions in the United States,” Gallois said at Tuesday’s press conference. “We want to be considered as American citizen … and for that we have to have the best team,” he added.

Boeing supporters have argued that any contract given to EADS would bring jobs to Europe rather than the United States, particularly when it comes to the tanker contract.

Northrop Grumman and EADS are planning to assemble the Air Force’s tankers in Mobile, Ala. Gallois said that if the team wins, the contract would support 48,000 U.S. jobs.

In a third attempt to replace its Eisenhower-era tankers, the Pentagon last month restarted the tanker competition by releasing a new draft request for proposals. The industry teams are reviewing that draft and will weigh into the process, after which the Pentagon will request the actual bids from the companies.

The Northrop Grumman-EADS team won the tanker contract last February, but Boeing successfully protested the award with the Government

Accountability Office (GAO). The Air Force had opened the competition for the coveted contract after a 2002 leasing deal between Boeing and the Air Force was thwarted as a result of an ethics scandal that landed two Boeing officials in prison and forced the resignation of the Air Force secretary.

Pentagon and Air Force officials have promised lawmakers that the latest attempt to award the contract will be transparent.

Ashton Carter, the Pentagon’s acquisitions chief, said the selection process will be “crystal-clear” and “transparent.”

Crosby said that “it is fairly clear that there are major differences” in the draft request for bids compared to the requests for the previous competition.

“From our perspective, the protest did not take away from the strength of our value proposition,” Crosby said at the press conference.

O’Keefe has extensive Pentagon and congressional experience. He served as comptroller and chief financial officer of the Department of Defense for about three years and was appointed as secretary of the Navy by President George H.W. Bush. He worked as a staff member for the Senate Appropriations Committee for eight years, including as staff director of the Defense subcommittee.

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O’Keefe is also no stranger to Alabama and its governor, Bob Riley (R). In 2002, almost a year after being appointed as NASA administrator by President George W. Bush, he made an unprecedented decision to campaign on behalf of Republicans.

In the final days before the election, he visited Huntsville, Ala., home of NASA’s Marshall Space Flight Center, to endorse then-Rep. Riley for governor. His move was criticized, but O’Keefe defended his actions by saying that he campaigned as a private citizen.

Northrop Grumman also recently announced a change in its leadership team. Wesley Bush will succeed retiring Northrop Grumman CEO Ron Sugar on Jan. 1, 2010.