Northrup - EADS wins US Air Force Tanker Deal

[fors43]

Northrop Wins Tanker Contract,
Beating Out Rival Boeing
By AUGUST COLE
February 29, 2008 4:50 p.m.

Northrop Grumman Corp. and European Aeronautic Defence & Space Co. broke Boeing Co.'s lock on the market for aerial refueling tankers, winning a $40-billion contract to turn Airbus jets into flying gas stations for U.S. military aircraft, according to a person familiar with the situation.

The unexpected win will likely bolster Los Angeles-based Northrop's standing as a major contender for large programs, while also expanding EADS's foothold in the U.S. defense market.

The Air Force's decision to choose the Northrop-led team is a major setback for Boeing, particularly after Boeing lost out on a $23-billion chance to be the sole supplier of tankers in 2001 after the discovery that a top Boeing official and a former Air Force acquisition official had conducted illegal job negotiations.

Under the contract, the Northrop-led team will build up to 179 tankers based on the Airbus A330 jetliner. The first planes are expected to enter service in 2013, replacing the Air Force's aging fleet of KC-135 tankers, many of which have been in service for more than 40 years. Eventually, the government expects to spend billions more dollars to replace more than 500 tankers.

Given the huge financial stakes and the politics at stake, few in the defense industry expect the decision will stand without protest. Over the last couple of years, protests on high-dollar contracts have been filed with increasing regularity, leading to delays as government officials review every aspect of the deals.

Lockheed Martin Corp. and United Technologies Corp.'s Sikorsky helicopter twice protested the Air Force's November 2006 decision to award Boeing a more than $10-billion contract to build search-and-rescue helicopters. After the Government Accountability Office sustained the protests, the Air Force in October 2007 asked for new bids and a winner is expected this summer.

Air Force officials said they have tried to minimize the chances of a successful protest by conducting the tanker competition as openly as possible and meeting on a regular basis with both competitors to eliminate surprises. These measures, in part, are the reason the award has taken more than a year since the contract's request for proposal was posted in January 2007.

"There is a price to pay for openness and transparency, and that is time," said Air Force acquisitions chief Sue Payton in November 2007.

[Verbal]

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[The Notorious STG]

Moved to relevant thread.

[B77W-QOTS]

Boeing loses USAF tanker contract
1st March 2008, 9:31 WST

Northrop Grumman and the maker of Airbus planes have beaten Boeing to win a $US35 billion ($A37 billion) government contract to build military refuelling planes, the US Air Force says.

The selection of Los Angeles-based Northrop Grumman and its Paris-based partner, European Aeronautic Defence and Space Co, came as a surprise to Wall Street.

It was a big blow to Chicago-based Boeing, which has been supplying refuelling tankers to the Air Force for nearly 50 years and had been widely expected to win the deal.

The contract positions EADS to break into the US military market in a big way. And it opens up a huge new business opportunity for Northrop Grumman.

In after-hours trading, shares of Northrop climbed $US3.74 ($A3.94) to $US82.37 ($A86.8, while Boeing's stock price fell $US2.59 ($A2.73) to $US80.10 ($A84.4.

The Air Force has estimated the tanker contract will be worth between $US30 billion ($A31.64 billion) and $US40 billion ($A42.19 billion) over 10 to 15 years. It is the first of three deals that could eventually be worth as much as $US100 billion ($A105.47 billion) over 30 years to replace the entire Air Force fleet of nearly 600 refuelling tankers.

As the winners of the first award, EADS and Northrop will be in a strong position to win the two follow-on deals, analysts believe.

Military officials say the Air Force is long overdue to replace its air-to-air refuelling tankers, which allow fighter jets and other aircraft to refuel without landing. The service currently flies 531 Eisenhower-era tankers and another 59 tankers built in the 1980s by McDonnell Douglas, now part of Boeing.

But the new contract has emerged as a major test for the Air Force, which is trying to rebuild a tattered reputation after a procurement scandal in 2003 sent a top Air Force acquisition official to prison for conflict of interest and led to the collapse of an earlier tanker contract with Boeing.

The tanker deal is also certain to become a flashpoint in a heated debate over the military's use of foreign contractors since Boeing painted the competition as a fight between an American company and its European rival. The Chicago-based company is expected to protest the decision.

The EADS/Northrop Grumman team plans to perform its final assembly work in Mobile, Alabama, although the underlying plane would mostly be built in Europe. It would use General Electric engines built in North Carolina and Ohio.

Northrop Grumman, based in Los Angeles, estimates a Northrop/EADS win would produce 2,000 new jobs in Mobile and support 25,000 jobs at US suppliers.
AP


I feel the A380 will now replace the aging B742 for use by the US President ohh the irony