Friday, July 9, 2010

Boeing submits bid for U.S. Air Force tankers

Defense News: WASHINGTON (Reuters) - Boeing Co submitted its formal proposal to begin building a new U.S. Air Force aerial tanker fleet in a contest worth up to $50 billion that pits it once more against archrival Airbus.

Boeing said on Friday it offered an American-made, 767-based multi-mission tanker that will satisfy all 372 mandatory Air Force requirements at the lowest cost to the taxpayer.

Its 8,000-page proposal was hand-delivered to the tanker program office at Wright-Patterson Air Force Base in Ohio.

Airbus's corporate parent, EADS, put in its bid on Thursday, a day before the latest deadline in a nearly decade-long Air Force effort to replace 179 Boeing tankers that average about 50 years old.

Chicago-based Boeing's modified 767 is competing against an Airbus tanker built around its A330-200 commercial airliner. The Air Force is due to award a contract no later than November 12, the first stage of a new fleet that could ultimately be worth more than $100 billion.

Boeing said its plane would be more cost-effective to own and operate than the A330 tanker, which is larger. It would save U.S. taxpayers more than $10 billion in fuel costs alone over its 40-year service life because it burns 24 percent less fuel. Boeing said.

Ralph Crosby, chairman of EADS North American arm, told reporters on Thursday that the Boeing plane was "inferior" which was why, he said, Boeing's political backers in the U.S. Congress were seeking to inject a long-running U.S.-European subsidies dispute into the process.

Boeing supporters have urged the Pentagon to add to the Airbus price the estimated value of subsidies that a World Trade Organization panel said helped develop the A330.

This round of bidding marks the third time the Air Force has tried to get new tankers, which are used to refuel other planes in mid-air.

The first would have been a $22.5 billion lease-purchase deal with Boeing for 100 modified 767s as tankers. It collapsed amid a corruption scandal that sent Boeing's chief financial officer and the Air Force's former No. 2 arms buyer to prison for breach of conflict-of-interest laws.

An EADS partnership with Northrop Grumman Corp won a 179-plane deal in February 2008, only to have it overturned on appeal from Boeing. The U.S. Government Accountability Office found that the Air Force had made enough errors in judging the contest to have changed its outcome.

EADS, headquartered in Paris and Munich, suffered a setback within minutes of its bid Thursday when the WTO announced a delay to a trade ruling on alleged improper U.S. federal, state and local subsidies to Boeing

The Geneva-based body said it was postponing a panel decision on a European Union countersuit to a U.S. complaint over subsidies to Airbus.

EADS had hoped the coming report, though meant to be confidential for now, would take the sting out of Boeing supporters' charges that the price of the A330 should be weighted to reflect what they say were illegal subsidies totaling about $5 billion.

(Reporting by Jim Wolf; Editing by Tim Dobbyn)

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