Europe misses out on Pentagon deal

Capping a decade of delays and embarrassing missteps, the US Air Force awarded to Boeing one of the biggest defence contracts ever, a $35bn deal to build nearly 200 giant airborne refuelling tankers.

The decision was a major blow to Europe’s aviation giant EADS, the European Aeronautic Defence and Space Co.

The contract will mean tens of thousands of jobs for a recession-weary United States, with huge numbers going specifically to Washington state on the West Coast and Kansas in the US heartland. getting the bulk of the work building a replacement for the 1950s-era tanker fleet.

The decision was a blow to the Gulf Coast and Alabama, which had been counting on EADS to assemble the aircraft at a long-shuttered military base in Mobile

Air Force Secretary Michael Donley said the contract “represents a long overdue start to a much-needed programme” as somewhat relieved Pentagon officials announced the decision, a clear surprise as defence analysts, politicians and even company executives had expected EADS to prevail.

“What we can tell you was that Boeing was a clear winner,” said Deputy Defence Secretary William Lynn.

Replacing the KC-135 planes, the equivalent of a flying petrol station, is crucial for the US military.

Pilots who were not even born when the last aircraft was delivered in 1965 are operating air tankers that the Pentagon is struggling to keep in flying shape.

The refuelling tankers allow jet fighters, supply planes and other aircraft to cover long distances, critical with fewer overseas bases and operations far from the United States in places like Iraq and Afghanistan.

Pentagon leaders said both bidders met all 372 mandatory requirements for the contract.

They said because the difference in price between the two bids was greater than 1% of the total, the cost was essentially the deciding factor and other non-mandatory requirements were not used to make the decision.

The award gives Boeing the initial $3.5bn for engineering, manufacturing and development of the first four aircraft. Under the contract, 18 tankers will be delivered to the Air Force by 2017.

The $35bn contract calls for producing 179 tankers. Boeing would base the tanker on its model 767 aircraft.

The amount could end up being a first installment on a $100bn deal if the Air Force should decide to buy 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 Defence 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 and EADS, but in 2008 the Government Accountability Office upheld Boeing’s protest of the contract.

EADS has 11 of its tankers in production and 28 more on order for countries including Australia and the United Kingdom. Boeing built a handful of its tankers based on its 767 passenger jet for Japan and Italy.