EADS to rival Boeing for tanker contract

EADS North America announced on Tuesday it will compete for the Air Force’s $35 billion contract for new refueling tankers.

Company executives said that EADS will make the bid as a prime contractor, without a specific U.S. subcontractor to install the sensitive technologies.

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Sean O’Keefe, the CEO of EADS North America, said that his company has all the security arrangements to handle the sensitive and classified technologies. O’Keefe said the company already has more than 200 suppliers for the tanker aircraft it would offer to the Air Force.

EADS will compete against Boeing, its longtime rival for the coveted contract that has been mired in controversy.

Ralph Crosby, EADS North America chairman, said the company officially informed the Pentagon on Tuesday that it intended to compete for the contract. Pentagon officials said that once EADS makes the formal notification that it wants to compete, they would grant a 60-day extension to submit the proposal. That means the deadline would move from May 10 to July 9.

Crosby on Tuesday expressed confidence that EADS can win the $35 billion contract and pointed to five international contracts it won over Boeing with its tankers based on the Airbus 330.

“This is a hell of an opportunity” for a company in the “big airplane business,” said Crosby.

EADS, the European conglomerate and parent company of Airbus, faces an uphill political battle. Boeing’s congressional supporters with clout in the Democratic Party outweigh those of EADS, whose biggest champions so far are Republicans from Alabama and Mississippi. Alabama’s two Republican senators, Jeff Sessions and Richard Shelby, applauded EADS’s decision on Tuesday but expressed concern that Boeing’s smaller plane, the 767, would be favored in the competition.

But the Pentagon and the leaders of the congressional defense committees have called for and encouraged competition for Pentagon contracts.

“We have consistently supported competition for the Air Force KC-X tanker replacement program. The department is committed to conducting a fair, open and transparent acquisition process,” said Pentagon press secretary Geoff Morrell.  “The interests of our war fighters and the American taxpayers are best served through an active and broad competitive acquisition process.”

Sen. Patty Murray (D-Wash.), a defense appropriator and strong Boeing supporter, vowed to work with her colleagues to “make clear to the Pentagon and the White House” that allowing EADS to compete  “is the wrong move for our service members and our workers.”

Boeing and its supporters have complained that Airbus has received subsidies from European governments that have resulted in the company gaining an unfair pricing advantage.

Boeing said in a statement that it was “deeply concerned” that the subsidies would distort the competition.

Adding to the gripes of Boeing and its congressional supporters will be EADS’s renewed commitment to build its commercial freight aircraft in Mobile, Ala., where it also plans to build the tankers if it wins the Air Force contract. That move could pose a threat to Boeing’s commercial market.

EADS had been partnered with Northrop Grumman for the contract. The team initially won the contract in 2008, but Boeing successfully protested that award. Consequently, the Pentagon decided to open a new competition.

Northrop Grumman, which played the role of the prime contractor for the tanker, announced in March that it would withdraw from the competition. That left the door open for EADS to consider its solo bid.

EADS officials said the company would build the first three tankers in Spain until the facility in Mobile would be ready for the assembly of the follow-on tankers.