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EADS will not protest Boeing tanker contract

US tanker contract timeline
Washington (AFP) March 4, 2011 - Here is a timeline of the nearly decade-long, controversy-marred battle between Boeing and Airbus to capture the US Air Force's multibillion-dollar contract to replace a fleet of aging Boeing aerial refueling tankers.

After two earlier decisions were annulled, the Defense Department on February 24 named Boeing the winner. Airbus parent European Aeronautic Defence and Space Company said Friday it would not protest the decision.

2001: Boeing and the Pentagon discuss a deal for the Air Force to lease tankers. But by 2003 there is serious opposition to the deal due to its high long-term costs.

May 23, 2003: The Pentagon awards Boeing a $20 billion contract for 100 KC-767 refueling tanker planes.

November 24, 2003: Boeing fires chief financial officer Michael Sears, and his colleague, Darleen Druyun. Druyun, a former top Pentagon procurement officer, and Sears are later jailed for conspiring to favor Boeing in its business with the Pentagon, including the tanker leasing deal.

December 1, 2003: Boeing chief executive Phil Condit resigns a day before the Pentagon suspends the tanker deal.

October 10, 2004: Congress annuls the contract with Boeing, denouncing irregularities in the process.

November 22, 2004: The Pentagon says that the tanker contract will be filled through a competition, opening the door for EADS to bid.

September 7, 2005: EADS teams up with US defense contractor Northrop Grumman to bid.

January 30, 2007: The Air Force officially announces the competition to supply up to 179 refueling aerial tankers, for an estimated $35 billion.

January 14, 2008: To sweeten its bid, EADS says Airbus will assemble its tanker plane in Mobile, Alabama, creating US jobs.

February 29, 2008: The EADS/Northrop Grumman team wins the contract. Boeing protests the deal, claiming unfair treatment.

July 9, 2008: Defense Secretary Robert Gates says the Pentagon will request new bids, three weeks after the Government Accountability Office upholds Boeing's challenge.

September 10, 2008: The Pentagon cancels the competition ahead of November presidential elections.

September 24, 2009: Under the administration of President Barack Obama, the tanker competition is reopened.

March 8, 2010: Northrop Grumman drops out two days before proposals are due, accusing the Pentagon of unfairly favoring Boeing.

March 31, 2010: The Pentagon extends the bidding process by 60 days to allow EADS to adjust its bid.

July 9, 2010: Boeing and EADS submit their offers. A third company, US Aerospace, which said its partner was Ukraine's Antonov, is excluded after delivering a bid five minutes past the deadline.

November 19, 2010: Defense News magazine reveals the Pentagon mistakenly released confidential information to both contestants on the other's bid. EADS acknowledges it looked at the material; Boeing says it did not.

February 11, 2011: Deadline for Boeing and EADS to submit revised final bids.

February 24, 2011: Boeing wins the $30-plus billion contract to supply the first 18 aircraft by 2017. EADS has 10 days to protest the decision.

March 4, 2011: EADS North America announces it will not protest the Air Force tanker decision.

by Staff Writers
Washington (AFP) March 4, 2011
A near-decade battle between two aerospace titans ended Friday as Europe's EADS said it would not contest rival Boeing's win of a $30 billion US Air Force tanker contract.

But in a parting shot after the controversy-marred fight for the huge aerial refuelers, EADS -- parent of Airbus -- said its competition had saved US taxpayers $16 billion, and questioned whether Boeing would make any money with its cut-price bid.

"EADS North America has decided not to protest," Ralph Crosby, chairman of the regional unit, said at a news conference in Washington.

"We determined that, one, the outcome was determined by the rules; two, there was no basis for protest," Crosby said.

After a lengthy contest that saw results scrubbed and the deal rebid twice, on February 24 the US Air Force awarded the $30-plus billion contract for up to 179 aerial refueling tankers to Boeing, calling the US bidder "a clear winner."

According to EADS, Boeing's bid was priced at $31.5 billion, while the EADS bid was 11 percent higher at $35 billion.

Under the terms of the process, a differential of more than one percent meant that price, and not other non-mandatory details in the two companies' proposals, would decide the contest.

EADS had the right to protest the decision with the Government Accountability Office within 10 days of the contract's award.

Crosby noted that the Defense Department had altered the requirements in the final request for proposal to focus on "mere replacement" of the aging Boeing tankers it currently runs rather than on "modernization."

"In the end, the tanker with the greatest capability wasn't selected," he said.

Allowing mid-air refueling of fights and bombers, the tankers are crucial in projecting the US military's power around the world.

Crosby said EADS had offered an "aggressive" price to win the contract, but that "this outcome was ordained by a very, very aggressive price from our competition."

The Air Force originally began discussing the deal with Boeing alone on a pricey leasing basis in 2001, a deal that sparked political controversy and eventually saw two key people involved jailed for corruption.

It was then turned into a competitive bid process which pitted home-grown Boeing against the European giant -- which argued it would build its jets inside the United States, adding American jobs rather than European ones.

That was not enough in the final deal, but EADS said it had saved US taxpayers $16 billion by competing against Boeing.

Asked whether Boeing chose to not make money in order to keep a competitor out of North America, Crosby said: "It is certainly a logical conclusion to draw from the decrease of the price. You have to ask Boeing what their strategy was."

Bill Barksdale, Boeing's tanker program spokesman, said that the company would deliver a "best value" aircraft.

"We are proud to have been selected to produce the most advanced, capable, and efficient next-generation aerial refueling tanker for the Air Force at the best value for the taxpayers," Barksdale said in an email interview.

"We understand the importance of this effort to our customer and the country and stand ready, along with our nationwide team of suppliers, to go to work on the new KC-46A program."

Commenting on Boeing's plan to test-fly its tanker in 2015, with delivery of the first 18 by 2017, Crosby highlighted that the EADS-Airbus tanker was already flying.

"We stand ready with a fully operative system if they fail" to deliver their tanker in time, he said.

Crosby said the Pentagon debriefing on the decision Monday was "very short."

"I think what the department decided ... was to give us what was sufficient to decide whether or not to protest," he said.

"We were given inadequate data, but that's a new paradigm."

EADS NA chief executive Sean O'Keefe said that the Defense Department determined the company was "a fully qualified prime contractor" and the competition had boosted its abilities to vie for US military contracts.

Boeing shares were down 1.34 percent at $70.75 in afternoon New York trade.

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US "air capital" savors Boeing tanker victory
Wichita, Kansas (AFP) Feb 24, 2011
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