Boeing gets second chance to fight for tanker deal

The US government has decided to reopen bidding for a $40 billion contract to supply the US Air Force with refueling tankers, after Boeing complained about the original award of the contract to Northrop Grumman and its European partner.   ┬á The contract to build 179 refueling tankers over 15 years was awarded on February 29 to Los Angeles-based Northrop Grumman and its partner, EADS North America, a subsidiary of European Aeronautic Defence and Space Co., the parent of Airbus.┬á┬á The decision has proved extremely controversial, however. Several US lawmakers were upset that US jobs could be lost to Europe, particularly with the economy so fragile. Northrop's tankers would be assembled in the US, but would use components largely made in Europe. ┬á┬á Boeing and a number of US senators campaigned to get the tender process reopened, culminating in an appeal by Boeing to the Government Accountability Office (GAO) which upheld BoeingÔÇÖs claim that ÔÇ£significant errorsÔÇØ had been made in the process.┬á┬á The Northrop/EADS tanker that won the initial bid (the KC-30) is based on the Airbus A330, while Boeing's offering is the KC-767, based on the Boeing 767. ┬á┬á The Air Force initially assessed the cost of operating the tankers over their lifespan at $108.01 billion for the Northrop plane, and $108.04 billion for the Boeing tanker. Boeing claims the Air Force miscalculated those costs, although it has not released revised figures.┬á┬á When announcing the award in February, the Air Force said the larger size of the Northrop/EADS plane helped tip the balance in its favor since that tanker would be able to haul more fuel, cargo and troops. Boeing contends the larger Northrop tanker will cost more to operate since it will be less fuel efficient and will require the Air Force to strengthen runways and expand hangars.┬á┬á In a statement, Northrop said minor errors resulted in a "slight adjustment" in the operating costs of the two planes, but maintained that its the tanker still provides "the most capability at the best overall value."┬á┬á The tanker contract is the first of three, worth up to $100 billion in all, to supply up to 600 new refueling tankers to the US Air Force, to replace its whole tanker fleet over thirty years.  ┬á┬á┬á*┬á┬á┬á┬á┬á┬á┬á┬á┬á *┬á┬á┬á┬á┬á┬á┬á┬á┬á *