EADS to announce whether it will bid on $35B tanker contract

EADS North America is expected to announce next week whether it is going to bid for the Air Force’s multibillion-dollar tanker contract.

The European aerospace and defense conglomerate has been publicly silent over the last week about its plans to challenge rival Boeing for the $35 billion contract after the Pentagon officials announced they would be willing to give EADS a 60-day extension to submit its bid pending its official notification that it wants to compete. EADS had requested an extension of at least 90 days.

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Behind the scenes, company officials have been hard at work trying to understand the requirements set forth in the Air Forces request for proposals, including the work that needs to be done by a U.S. supplier to install the sensitive technologies needed on the new tanker aircraft.

If EADS makes a go for the contract, the decision will spark intense rhetoric from Boeing’s congressional supporters, who have already criticized the Pentagon for its willingness to extend the deadline for the submission of the bids.

Sens. Patty Murray (D-Wash.), Pat Roberts (R-Kan.), Sam Brownback (R-Kan.), Kit Bond (R-Mo.) and Debbie Stabenow (D-Mich.) on April 7 sent a letter to Defense Secretary Robert Gates expressing concern about the extension of the deadline.

EADS for nearly five years has been vying for the lucrative contract, which would solidify its standing on the U.S. defense market. EADS had been partnered with Northrop Grumman, but the U.S. defense giant decided to withdraw from the competition, leaving EADS to make the decision on whether to make a solo bid.

Meanwhile, Boeing said it was reviewing all its options after the Pentagon announced that it would extend the deadline if EADS makes a formal notification of its intent to compete. Boeing was viewed as the sole contractor for the tanker after Northrop withdrew for the competition.

The $35 billion contract could also be significant for Boeing which has suffered setbacks on several major programs: Boeing’s portion of the Army’s former Future Combat Systems has been scaled down; the Pentagon does not want to buy more C-17 cargo planes and Boeing also is taking a hit on some of its missile defense programs. Boeing also had a large stake in the F-22 fighter jet program, which the Pentagon capped at 187 planes in a high-profile congressional battle last year.