Controversial tanker contract awarded to Boeing

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Published: February 25,2011

Tags: defense, manufacturing, military

CHICAGO — The Air Force said yesterday it has awarded a $35-billion contract to build the next generation of air refueling planes to Chicago-based Boeing Co., delivering a major economic boost to Washington state and Kansas and likely ending nearly a decade-long struggle to replace its fleet of Eisenhower-era tanker aircraft.

The decision was a surprise as defense analysts and even some lawmakers had expected European Aeronautic Defence and Space Co. to capture the contract. It was a blow to Alabama, which had been counting on EADS to assemble the aircraft at a long-shuttered military base in Mobile.

Production will occur in Everett, Wash., Wichita, Kan., and dozens of other states. Boeing has said the contract will mean some 50,000 jobs.

The $35 billion contract calls for producing 179 new tankers. Boeing would base the tanker on its 767 aircraft.

The $35 billion could end up being a first installment on a $100-billion deal if the Air Force decides to purchase more aircraft.

Initially, the Air Force planned to lease and buy Boeing planes to serve as tankers, but that fell through. The Air Force later awarded a contract to Northrop Grumman Corp. and EADS, but in 2008 the Government Accountability Office upheld Boeing’s protest of the contract.

The GAO said it found “a number of significant errors” in the Air Force’s decision, including its failure to fairly judge the relative merits of each proposal.

The Air Force reopened the bidding in 2010 only to be embarrassed again as it mistakenly gave Boeing and EADS sensitive information that contained each other’s confidential bids.

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