Final tanker bids land; budget questions loom

By @ibtimes on

Boeing Co submitted a final proposal in its politically sensitive rematch against Europe's EADS to build a potential $50 billion fleet of U.S. Air Force refueling aircraft.

Even as final bids rolled in, questions arose about whether a contract could be awarded under the temporary measure being used to fund the U.S. government through March 4 or a possible follow-on of a similar stop-gap budget bill.

Boeing, based in Chicago, declined to discuss any changes in its offer, which is based on a 767 jetliner, compared with the 8,000-page proposal it sent the Air Force on July 9, 2010.

The North American arm of EADS said it was submitting a final proposal Thursday, ahead of an 8 a.m. EST Friday deadline. It also withheld details.

The tankers are used to extend U.S. military power by refueling other planes in flight.

EADS, then partnered with Northrop Grumman Corp, won a 179-plane deal in February 2008, only to have it canceled after a successful protest by Boeing.

EADS' tanker is based on an A330-200 wide-body jet built by its Toulouse, France-based Airbus subsidiary.

If EADS wins, its tanker would be assembled along with commercial freighter aircraft at a new plant to be built in Mobile, Alabama. EADS say its plane would support 48,000 U.S. jobs.

The Air Force has said it plans to award a contract for 179 tankers early this year, valued at $25 billion to $50 billion. It has called the tanker its No. 1 purchase priority for years.

As the award has neared, jockeying in Congress has picked up, largely because of the jobs at stake in Washington state and Kansas, where Boeing would build and finish its tanker, versus in and around Alabama.

The White House Office of Management and Budget, the Defense Department and the Air Force each failed to respond to questions Thursday about whether a tanker contract could be awarded under the current continuing resolution, as the stop-gap government funding measure is known.

Stanley Collender, a former House of Representatives and Senate budget committee staff member who is now managing director at Qorvis Communications, a Washington public relations agency, said the prospects for a contract award were very uncertain under the current measure.

A congressional aide involved in crafting a proposed funding bill for the seven months remaining in fiscal 2011 said a modified continuing resolution would provide adequately for defense.

But the aide said uncertainty likely would remain about whether a multibillion program start such as the tanker could be funded under another short-term stop-gap if needed to prevent a government shutdown after the current one expires on March 4.

One possibility is that the Air Force could announce a winner without immediately awarding a contract if the Republicans and Democrats stay deadlocked over fiscal 2011 spending, said Todd Harrison of the Center for Strategic and Budgetary Assessments.

The Air Force has been seeking since 2001 to start replacing its Boeing-built KC-135 tankers that now average more than 50 years old.

An initial $23.5 billion plan to lease and then buy 100 modified Boeing 767s as tankers, fell apart in 2004 amid a conflict-of-interest scandal that sent Boeing's chief financial officer and the Air Force's former No. 2 arms buyer to prison.

(Reporting by Jim Wolf; Editing by Tim Dobbyn)

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