Companies Compete for Air Force Tanker Job

Boeing and Airbus are competing for a major Air Force contract to build air refueling tankers. The competition has been public, political and nasty. And the stakes are high — a contract worth up to $150 billion.

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This next story takes us back down into the atmosphere. The Air Force will shortly announce the winner of a contract that could be worth up to $150 billion. It's for a new fleet of refueling tankers, essentially flying gas stations. The competition to win the contract pits two giants of commercial aviation against each other: Boeing and the European company EADS, with its Airbus planes.

As NPR's defense correspondent Guy Raz reports, it is a high stakes competition.

(Soundbite of subway station)

GUY RAZ: On Washington, D.C.'s blue and yellow line Metro trains, you're bound to find some curious ads for something called the KC Supertanker. And if you tune into WTOP news radio, a local commercial outlet, you'd hear the announcers say...

(Soundbite of ad)

Unidentified Man #1: This hour of news is brought to you by Boeing, ready to deliver the best tanker for America's war fighters and the most jobs and value for America's taxpayers.

RAZ: Now, these ads are meant mainly for the handful of people who work at the Pentagon and ride the Metro, the people who will decide who gets the contract. But they're also, in some ways, meant for you too, the American public. But before we get to why, a little background. Here's a newsreel from 1956.

(Soundbite of ad)

Unidentified Man #2: The KC 135, the Air Force's first jet tanker, makes its maiden flight at the Boeing Airplane Company plant in Seattle.

RAZ: Right after World War II, the Defense Department commissioned Boeing to build air refuelers, their flying gas stations. And they allow war planes to stay in the air for longer. But today about a third of America's tanker planes are more than 40 years old. And so a few years ago the Air Force decided to replace these old planes. They offered a deal to Boeing which quickly unraveled after a corruption investigation revealed that Boeing inflated its price.

So the decision to replace the tankers was delayed - until now. And the Air Force had to open the contract for competition. The problem was the only other company besides Boeing that makes these planes is the European defense giant EADS and its subsidiary Airbus. With the supertanker contract open for competition, EADS saw an opening into the lucrative U.S. market. Here's defense analyst Richard Aboulafia.

Mr. RICHARD ABOULAFIA (Defense Analyst): U.S. defense spending is the largest single aerospace market in the world, and of course it naturally favors U.S. defense companies. So EADS Airbus, their highest priority is to break into that revenue.

RAZ: EADS partnered up with Northrop Grumman in a bid to put an American face on a European product. So Boeing has launched an aggressive if not quite explicit campaign to imply that it would be obscene for the U.S. Air Force to fly a European airplane. Here's Richard McGraw, a vice president at Boeing.

Mr. RICHARD MCGRAW (Boeing): You know, I talk to people I know and I'll tell them what I do and talk about the tanker competition and they'll kind of wonder, well, who are you competing against? And I'll tell them who we're competing against and they're just a little shocked. You know, they go, wow, we would really think about buying an international product? And they're just not aware that that's going on.

RAZ: But Paul Meyer from Northrop Grumman, the company partnering with EADS in its bid for the tanker, says there is no such thing as a purely American airplane. In fact, large parts of some Boeing aircraft, he points out, are made abroad.

Mr. PAUL MEYER (Northrop Grumman): Is it indeed by America when indeed in our Airbus A330, 30% is built by U.S. suppliers in the United States today?

RAZ: If they win the contract, EADS and Northrop promise to build the bulk of the plane in Mobile, Alabama. But Boeing's advertising team still insists an EADS win would favor Europeans, not Americans. And they're using allies in Congress to make the case on their behalf, including Washington State Democrat Norm Dicks, a man sometimes jokingly referred to as the Congressman from Boeing. A few months ago Dicks spoke at a rally at Boeing's factory in Everett, Washington. He warmed up the crowd with a few French jokes and then described Boeing's bid as...

Congressman NORM DICKS (Democrat, Washington.): The 767 American tanker, that's what we want. That's what we're gonna get.

RAZ: Now, Northrop EADS is publicly confident in its bid, but privately some executives have complained that the deck's been stacked against them, that there's an institutional preference within the Air Force to go with an American company. Air Force Brigadier General Stephen Mueller, now the deputy commander of the Air Force in the Middle East, was intimately involved in considering the contract until last year.

Brigadier General STEPHEN MUELLER (U.S. Air Force): American jobs are important to us. My personal belief is that American jobs - you know, our defense industry has thrived because it has used American products predominantly.

RAZ: For both companies the stakes couldn't be higher. A win would mean a steady stream of revenue for the next several decades. But no matter who wins the deal, the loser will almost certainly challenge the decision, delaying the process for at least several more years.

Guy Raz, NPR News, Washington.

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