1 more round, perhaps, for Boeing and EADS

[July 10, 2010]  WASHINGTON (AP) -- For the companies vying over the last decade for the Air Force's troubled $35 billion refueling plane contract, it is try, try and try again.

Rival planemakers Boeing and the European defense contractor EADS submitted bids this week, Boeing on Friday, for the chance to build the new refueling plane.

It is the latest round in a tussle that has yet to produce a winner and has forced the Air Force to keep up its fleet of planes, some of which are more than 50 years old. And while the Pentagon has said it plans to award a contract in November, the history behind the tanker project shows there are no guarantees.

Earlier bids that have pitted the world's foremost jet makers against each other have been sidelined by contractor disputes, Air Force errors, and criminal cases that have ensnared the Pentagon and Boeing.

It has all led to rancorous fights between defense contractors and political wrangling by opposing sides in Congress.

Boeing officials insist that the potential payoff makes the untold hours and millions spent to land the contract well worth the fight. The contract to build 179 new jets to replace the Air Force's geriatric KC-135s is expected to be the first slice of a project worth up to $100 billion for a new fleet of refueling planes.

"It is important not only for Boeing, but for the United States," said Jean Chamberlin, Boeing's tanker program general manager. "It is definitely worthwhile."

EADS North America, a unit of European Aeronautic Defence and Space Co., submitted a solo bid Thursday after its long-time partner, Northrop Grumman, backed out this year. Northrop said the Air Force's wish list for the contract was focused heavily on price, which favored the smaller plane that Boeing has offered. But EADS says its larger jet, a variant of the A330 made by EADS subsidiary Airbus that can carry more fuel, is the better plane.

Chamberlin said Boeing has lowered the cost of its bid from the proposals it made in the past. It is a military variant of the Boeing 767 passenger jet, and Chamberlin said the savings come from greater coordination between the commercial jet assembly line and the work that would be done to outfit it for military use.

Boeing's supporters in Congress from Washington state and Kansas, where the company has large manufacturing facilities, are pressuring the Pentagon to consider a recent World Trade Organization ruling against Airbus.

The trade body concluded that European governments had given illegal subsidies to Airbus to help it develop commercial jets. Boeing's backers claim that type of aid gives Airbus an unfair edge in the tanker competition, a claim that Chamberlin echoed.

EADS has contested those claims, and said it will create tens of thousands of jobs in the Gulf of Mexico, a region that it points out desperately needs money and jobs right now.

Boeing shares dropped 7 cents to close Friday at $64.66.

[Associated Press; By STEPHEN MANNING]

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