WASHINGTON -- The Air Force said Thursday 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 while disappointing the competing bid from Alabama and the Gulf Coast. "What we can tell you was that Boeing was a clear...
WASHINGTON -- The Air Force said Thursday 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 while disappointing the competing bid from Alabama and the Gulf Coast.
This artist's rendering provided by Boeing Co. shows Boeing's NewGen Tanker that the Chicago-based company has proposed to the U.S. Air Force. Boeing is competing with European Aeronautic Defense and Space Company (EADS) to win a $35 billion Pentagon contract to build nearly 200 giant airborne refueling tankers, to replace the Air Force's Eisenhower-era KC-135's. The Boeing aircraft is based on the companyâs 767 commercial airplane, and would will be built at existing company facilities, Boeing says. "What we can tell you was that Boeing was a clear winner," Deputy Defense Secretary William Lynn said in announcing the decision at the Pentagon.
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.
Lawmakers who had lobbied for the contract were gleeful over the news.
"I'm in the middle of a blizzard but it's all blue skies," Sen. Pat Roberts, R-Kan., said.
Replacing the 1950s-era KC-135 planes -- the equivalent of a flying gas station -- is crucial for the military. Pilots who weren't even born when the last KC-135 was delivered in 1965 are operating air tankers that the Pentagon is struggling to keep in flying shape.
The refueling tankers allow jet fighters, supply planes and other aircraft to cover long distances, critical today with fewer overseas bases and with operations under way far from the United States in places like Iraq and Afghanistan.
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.
Through the years, the Air Force's efforts to award the contract have been undone by Pentagon bungling and the criminal conviction of a top Defense Department official.
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.
The contract has generated some of the fiercest and costliest lobbying in Washington. The two companies have spent millions on advertising, including radio and subway ads in the nation's capital, and hired dozens of lobbyists.
In the past year, Boeing has spent $5 million on print advertising to promote its version of the tanker while EADS has shelled out $1.7 million to boost its prototype, according to Evan Tracey, president of the Campaign Media Analysis Group, which typically monitors advertising for political campaigns.