* Surprise Russian bid reported to be in works
* Pentagon says considering EADS request
* EADS says it has not decided whether to bid
* Senator Murray criticizes any deadline extension (Recasts with reported Russian bid, Pentagon comment)
By Jim Wolf and Maria Sheahan
The fresh competitor is a joint venture due to be announced by a U.S. defense contractor and United Aircraft Corp of Russia, an aerospace consortium partly owned by the Russian government, said John Kirkland, a Los Angeles-based attorney representing the planned partnership.
Image courtesy of EADS
Russian Foreign Minister Sergei Lavrov discussed the tanker contest with visiting U.S. Secretary of State Hillary Clinton in Moscow Friday and "would very much like to discuss it further before she leaves," Kirkland said, citing a senior Russian aerospace-trade official.
The developments shook up the U.S. Air Force's troubled, nearly decade-long effort to start replacing its fleet of Boeing-built KC-135 tankers, which are close to 50 years old on average.
They raised the prospect of a three-way contest pitting the Russians against EADS, the corporate parent of Airbus, and Chicago-based Boeing Co (BA.N).
The U.S. Defense Department is "right now seriously considering the extension request from EADS," Geoff Morrell, the Pentagon press secretary, said in an emailed statement. The current deadline is May 10.
"We have always made clear that this is a fair and open competition and we welcome all qualified bidders," he added in response to a question about the reported Russian offer.
EADS, which lost its U.S. partner for the job last week, could rejoin the race if it determines "there is a fair chance to win, after evaluating all relevant factors," the company said earlier on Friday.
Northrop Grumman Corp (NOC.N), teamed with EADS, bested Boeing for a 2008 deal to build an initial 179 tankers, only to have that award canceled after U.S. auditors found the Air Force had failed to follow its own judging rules.
Los Angeles-based Northrop, which would have been the prime contractor, withdrew on March 8 from the planned rematch, which is valued at up to $50 billion.
In dropping plans to bid, Northrop Chief Executive Wes Bush said the Pentagon's final tender "clearly favors" Boeing's smaller 767-based plane over the larger Airbus A330 derivative pitched by EADS.
EADS had hoped to use the tanker contract as a beachhead in United States, the world's most lucrative market for military goods.
The Pentagon, battling cries of foul and charges of protectionism from European allies, reiterated on Thursday that it would welcome an EADS bid and would weigh a "reasonable" deadline extension.
Senator Patty Murray, a Democrat from Washington state, where Boeing would do much of its tanker work, said she was disappointed the Defense Department was "even considering giving in to Airbus" and extending the deadline.
"I believe in a fair and open competition, but this is no time to put American service members and workers on hold while a foreign company waffles," she said in a statement.
In the latest twist, Russia's UAC would seek to offer a tanker version of its Ilyushin Il-96 widebody jetliner, dubbed the Il-98, Kirkland said in a telephone interview.
The planes would be largely built in Russia, and assembled in the United States, according to the Wall Street Journal, the first to report the plan.
"They've been planning this for more than a year," Kirkland said, adding he had been involved for more than six months. "If it's a fair competiontion, UAC wins," he said. He declined to name the U.S. joint venture partner, but said it was publicly traded and due to be announced by Monday.
Prime Minister Vladimir Putin told Clinton at a meeting in Russia on Friday that Russian companies needed more help to penetrate the U.S. market.
EADS, in its statement, said the Defense Department had welcomed a possible proposal under which EADS North American unit would be prime contractor, not merely the partner of a U.S.-based firm.
The company declined to comment on how long of an extension it was seeking. Indeed, EADS still has not decided whether it will bid at all, but extending the deadline is a critical first step, said Guy Hicks, a spokesman.
EADS North America became a prime contractor for the Pentagon when it was selected in 2006 to build UH-72A Lakota light utility helicopters for the U.S. Army.
Boeing, the Pentagon's No. 2 contractor by sales after Lockheed Martin Corp (LMT.N). recognized it must earn the deal by meeting or beating all requirements with a tanker that is "cost-effective to buy, own and operate," said spokesman William Barksdale in an email.
This is the third attempt since 2001 to start buying new tankers, which are used to refuel other planes in mid-air.
The first effort, a $21.5 billion plan to lease and buy Boeing 767 tankers, collapsed in an ethics scandal that sent two Boeing employees to prison for conflict of interest, one of them a former top Air Force arms buyer. The second contract award took place in February 2008 before it was canceled.
In line with Northrop, EADS has said the U.S. Air Force's terms for the rematch are skewed in favor of Boeing's smaller 767-based tanker and fail to give enough credit for the added capability of the larger Airbus A330.
EADS shares closed up 1.0 percent at 14.83 euros on the Paris stock exchange on Friday.
Boeing shares closed 15 cents lower in New York. They had been up earlier in the session, lifted by the company's statement that it will accelerate planned production increases of its 777 and 747 aircraft. [ID:nN19126100] (Reporting by Jim Wolf and Adam Entous in Washington, and Maria Sheahan in Frankfurt; Editing by David Gregorio)
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