EADS won't appeal Air Force tanker deal

WASHINGTON - Boeing's victory in the decade-long aerial tanker saga will stand.

The company’s European competitor for the $35 billion aerial refueling tanker contract said Friday that it won’t appeal last week’s decision by the Air Force to accept Boeing’s bid.

The contract is one of the largest ever awarded by the U.S. military.

Officials with the European Aeronautic Defense and Space Co., the parent of France-based Airbus, made the announcement at the National Press Club in Washington.

“Let me cut to the chase. After meeting with the Air Force and the Department of Defense and evaluating the information that they provided to us in their debriefing, EADS North America has decided not to protest the KC-X contract,” said Ralph Crosby Jr., the chairman of EADS North America.

He said the company’s reasoning was simple: “The outcome was decided by price. Boeing’s offer was at a lower price than ours.”

Sean O’Keefe, the chief executive of EADS North America and a former NASA administrator, added, “We put our best effort into this.”

The contract calls for producing 179 new tankers. But the deal eventually could be valued at more than $100 billion as the Air Force replaces its fleet of 600 or so Eisenhower-era tankers.

The Boeing tanker will be based on a 767 airframe built at its factory in Everett and converted to military use in Wichita, Kan. Boeing expects the first 18 aircraft will be delivered by 2017.

Officials with Chicago-based Boeing said the company is prepared to create 11,000 jobs in Washington state and 7,500 jobs in Kansas. Overall, the project will support 50,000 jobs with more than 800 suppliers in more than 40 states, Boeing officials said.

EADS officials congratulated Boeing and said its rival had submitted a very aggressive bid to win the contract.

“In the end, we don’t believe the interest of the war fighter, the taxpayer or our company would be served by protesting the award,” Crosby said. “We’re certainly disappointed as you might imagine, not just because we weren’t selected. We’re, frankly, of the view that in the end the tanker with the greatest capability wasn’t selected.”

The announcement drew immediate praise from Boeing’s supporters on Capitol Hill.

“Today’s announcement makes official what Washingtonians know in our bones: We build the best airplanes in the world,” said Sen. Maria Cantwell.

EADS had been considered the favorite in the competition. And before the Air Force awarded the contract, Boeing backers had complained that EADS had the upper hand because it received foreign subsidies that would make it possible to submit a lower bid.

That turned out not to be the case.

Sen. Patty Murray said she’s thankful that the competition had produced “a clear winner.”

“While this is a tremendous win for jobs and the economy of our state, it’s also a huge step forward toward meeting the needs of our men and women in uniform,” she said.

Gov. Chris Gregoire, said the decision by EADS “is more proof that Boeing submitted the best proposal.”

Sen. Jerry Moran, R-Kan., expressed relief and said “the decade of delay is over.”

“Replacing the aging tanker fleet with the next-generation Boeing tanker is essential to the security of our country and safety of our troops and is a much-needed economic boost to our state,” he said. “Let’s get to work.”

The announcement by EADS appears to be the end of an almost decade-long saga over the refueling tankers.

The tanker competition has been marked by a major Pentagon procurement scandal and political maneuverings on Capitol Hill. At first, the Air Force planned to lease the tankers from Boeing, but that would have cost more than buying the planes outright. When the contract was put up for bidding, EADS teamed with U.S.-based Northrop Grumman to win the contract. But the Government Accountability Office upheld a protest filed by Boeing and overturned the contract.

That led to last year’s rebidding.