National Security

Air Force Picks Boeing For Major Military Contract

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The Pentagon announced Thursday afternoon that Boeing had won the $35 billion contract to build a new generation of refueling tankers for the Air Force. Boeing beat out European conglomerate European Aeronautics Defence and Space Company, or EADS. It's the latest twist in a decade-long effort to build a new tanker to replace the Eisenhower-era KC-135. The effort has been fraught with scandal, protests and mishaps. Boeing is expected to build the plane in Washington state and Kansas. If EADS had won the contract, it would have built the plane in Alabama. Host Robert Siegel speaks with NPR's Tom Bowman.

ROBERT SIEGEL, host:

The third time is the charm, maybe. We're talking about the Pentagon's many attempts to award a big contract for a big airplane, a really big contract worth $35 billion at least.

For more than a decade, the Air Force has wanted to acquire a new fleet of aerial refueling tankers. Two major defense contractors have competed for the prize. They are Boeing and the European Aeronautic Defense and Space Company. And finally today, the winner was announced.

Mr. MICHAEL DONLEY (Secretary, U.S. Air Force): We announce that the Air Force has selected the KC-X proposal provided by The Boeing Company.

SIEGEL: That was Air Force Secretary Michael Donley speaking today at the Pentagon.

NPR's Tom Bowman was at that briefing, and he joins us now.

Tom, why did Boeing win?

TOM BOWMAN: Well, Robert, we didn't get a lot of detail about why Boeing won. Pentagon officials say there's some proprietary information involved here. They did say both bids were good ones. It was a spirited competition, but Deputy Defense Secretary Bill Lynn said Boeing was a clear winner here.

SIEGEL: How old are the planes that are being replaced?

BOWMAN: Well, most of them were built in the 1950s by Boeing, so they're Eisenhower-era aircraft. The last one was delivered in 1965, and that, of course, is before most of today's pilots were even born.

And, of course, as these planes get older, they obviously have more costs. They're more costly to maintain, as anyone with an old car can tell you. So the Air Force has been pressing for a new tanker for quite sometime, for about a decade now, because the maintenance cost for these refueling tankers has gone up quite a bit.

SIEGEL: So given that pretty obvious need for a replacement, why has it been so hard to get these new planes started?

BOWMAN: Because this has been basically a nightmare. The whole contracting process for this tanker has been plagued by, really, scandals, mishaps and errors.

In 2003, the Air Force thought about leasing tankers, rather than just buying them, but there was a scandal. An Air Force official was implicated in a corruption case essentially helping Boeing with its effort. She went to jail, and the leasing plan just fell apart.

So the Air Force decides to buy its tankers. The Air Force awarded EADS, who was a loser today, the European defense giant, the contract in 2008. Boeing protested that contract decision, saying the process was flawed and the Air Force was unfair to its bid.

U.S. government auditors looked into it. They sided with Boeing, and the contract was scrapped. So that was round two.

And last year, the contract went to bid once again. That led to the current competition and today's decision.

SIEGEL: Announcement today. This contract is said to come with a lot of jobs. How many jobs to people, do you think?

BOWMAN: Huge number of jobs. For the winner, tens of thousands of manufacturing jobs. Boeing plans on building its tankers in Washington State - Everett, Washington - and also Wichita, Kansas. So big winners there.

EADS said it would build its planes in Mobile, Alabama. So that state, of course, here is a big loser.

And the other thing is these jobs will go on for years. It's a $35 billion contract, but that's just the first installment. This contract over time could total about $100 billion.

SIEGEL: But, Tom, I ask this in light of what's happened over the years. Does this mean that it's actually over?

BOWMAN: With this contract, Robert, I would never say it's over. There have been a lot of protests in the past. Pentagon officials say they hope there won't be a protest this time, but EADS has several weeks to file a formal protest. They don't have a lot of support on Capitol Hill. That's the route Boeing could go, but it's not over.

SIEGEL: OK. Thanks, Tom.

NPR Pentagon correspondent Tom Bowman.

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