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Friday, February 25, 2011

Boeing wins tanker contract

State leaders say plane assembly will bring jobs to state

Jim Camden
The Boeing Co. will build the next generation of air refueling tankers for the U.S. Air Force, winning a hotly contested bid to replace about a third of the KC-135s that have served as the military’s flying gas stations for nearly half a century.

The Air Force announced Thursday it was choosing a military version of the Boeing 767 over the Airbus A330 in the competition for a contract worth more than $30 billion.

Both aerospace giants get their parts from all over the world, but Boeing will build the planes in Everett and in Wichita, Kan. European Aerospace Defence and Space Inc., which builds Airbus, would have constructed its tanker in Alabama at a closed military base.

Gov. Chris Gregoire said Thursday the contract will mean about 11,000 aerospace jobs to Washington, and will urge the Legislature to make sure the training is available at community colleges so state residents can take advantage of that expansion. “If they don’t find the skilled work force in the state, they’ll bring them in from out of state.”

A Boeing spokeswoman said 11,000 is the estimated number of new and existing aerospace jobs tied to the tanker contract in some capacity. The contract is projected by congressional leaders to create 50,000 direct and indirect jobs nationally.

Both planes met the Air Force’s 372 mandatory requirements and “were awardable,” Air Force Secretary Michael Donley said in announcing the contract after the stock market’s close. The Boeing proposal offered “substantial savings” which he didn’t quantify, but the Airbus tanker was a larger plane projected to have higher costs to the military for extended runways and larger hangars.

The new plane, which Boeing has been marketing as the KC-X, will be designated the KC-46A. The Air Force will receive the first 18 planes in 2017, but won’t decide for several years which bases will get them.

The KC-135 is the plane flown by units at Fairchild Air Force Base. At one point, Fairchild was scheduled to be the first base to get replacement tankers, but that was when the Air Force had a different plan for retiring the Eisenhower-era planes.

The Washington and Kansas congressional delegations hailed the Pentagon’s decision. Sen. Patty Murray, D-Wash., has championed Boeing tanker replacement plans since the first one was proposed in 2001, and called the contract a “major victory” for America’s workers, its aerospace industry and military.

“It is consistent with the president’s own call to ‘out-innovate’ and ‘out-build’ the rest of the world,” Murray said in a prepared statement released just minutes after the announcement.

Members of the Washington delegation were bracing for bad news, as industry insiders had speculated in recent days that Airbus would win the contract. Sen. Maria Cantwell, D-Wash., said they were concerned EADS been given every advantage to submit a bid and that unfair trade subsidy rulings by the World Trade Organization weren’t being considered by the Pentagon. Boeing still won, apparently decisively, she said.

Even though bases for the KC-46A won’t be chosen for years, Rep. Cathy McMorris Rodgers, R-Wash., said building a new tanker is a victory for Fairchild.

“Right now the men and women at Fairchild are flying air refueling tankers that are more than 50 years old,” she said. “Today’s decision allows us to move forward, and not a moment too soon.”

Spokane officials also said the contract could boost local jobs. Spokane Mayor Mary Verner said the Inland Northwest Aerospace Consortium, which employs 8,100 people, believes more than 20 local companies could supply parts for the new plane.

But in Alabama, where the Airbus tankers would have been assembled, reactions ranged from disappointed to bitter.

“The U.S. Department of Defense, in not awarding the aerial refueling tanker contract to EADS North America today, has made a egregious error and America’s military men and women are ultimately the biggest losers,” the Mobile Area Chamber of Commerce said in a prepared statement.

The Air Force has tried to upgrade the tanker fleet for nearly a decade, with a series of missteps. Shortly after Sept. 11, 2001, it began discussing a plan to lease some 100 tanker versions of Boeing’s 767 to allow it to retire some of the oldest KC-135s in the fleet. That idea had strong support in Washington and Kansas, where the company has assembly lines, but drew criticism from some budget hawks who noted that leasing didn’t save money in the long run, and the Air Force had to give the planes back when the lease was up.

Then Boeing got into trouble for offering a job to the Air Force official in charge of procurement, who was negotiating the tanker contract. The official, Darleen Druyun, and Boeing CFO Michael Sears were both fired, convicted of federal crimes and jailed.

When Congress eventually gave up on leasing and told the Air Force to buy tankers, EADS joined the competition. The Europe-based manufacturer was awarded a contract in 2008, but the Air Force later had to rescind the deal after government studies showed it was awarded on different specifications than the military said it wanted when the competition started.

Recently, the Pentagon had another snafu, admitting that it sent each manufacturer the competition’s proprietary information by mistake.

EADS will have five days after it gets an in-depth briefing on the contract decision to challenge the award, just as Boeing did when it lost the competition in 2008. Air Force officials tried to downplay the possibility that such a challenge would be successful, saying competition was open and transparent and “favored no one except the taxpayer,” Deputy Defense Secretary William Lynn said.

After praising both companies for waging a “splendid competition,” Donley suggested that both remember they have “a long-standing relationship with the Air Force that we expect would continue.”

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