Northrop, EADS Beat Boeing for Pentagon Contract The Air Force has awarded a huge defense contract to build midflight refueling tankers to the team of Northrop Grumman and Airbus parent EADS, in a deal that could be worth up to $40 billion over the next 10 years. The initial contract is to build nearly 200 aircraft as the Air Force moves to phase out its aging fleet.
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Northrop, EADS Beat Boeing for Pentagon Contract

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Northrop, EADS Beat Boeing for Pentagon Contract

Northrop, EADS Beat Boeing for Pentagon Contract

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You're listening to ALL THINGS CONSIDERED from NPR News.

Today, a huge defense contract that's good news for Europe, bad news for Boeing.

Secretary MICHAEL WYNNE (Secretary, U.S. Air Force): Ladies and gentlemen, we are pleased to announce that the development of procurement of up to 179 new KC-45A tanker aircraft is awarded to Northrop Grumman Corporation.

BLOCK: That's Air Force Secretary Michael Wynne.

Los Angeles-based Northrop Grumman will partner with EADS, the European company that produces Airbus airplanes to build a new fleet of air-refueling tankers. The contract could be worth up to $150 billion. It's one of the biggest Air Force contracts in history and it makes the first time the Air Force will fly what is largely a non-American plane.

NPR's defense correspondent Guy Raz joins us.

And, Guy, what did the Air Force say about why it chose to fly planes made by Airbus?

GUY RAZ: Most of the Air Force is saying it essentially chose the Airbus Northrop for bid because the plane is better suited for the Air Force's needs. It's a plane based on the Airbus A-330. It's one of the most reliable commercial planes in history. It can carry more fuel, it can fly farther, and it can carry more cargo than the Boeing proposal. And that plane was based on the 767 model.

But you know the fact that this deal went to, basically, a European company, I mean Northrop Grumman is part of it, but it's a very much the junior partner here. This is really an EADS Airbus victory.

The fact that it went to them is amazing because it opens up a whole new market for European defense contractors. And this company, EADS, was essentially shut out of the U.S. market for decades. And the U.S. market is the biggest, most lucrative market in the world for these kinds of wide-body aircraft.

BLOCK: Tell us a little bit more, Guy, about the background to this deal.

RAZ: Well, it's been going on for about for about six years, and it's really a saga, in the last four years, pitted these two giants, Boeing and Airbus against each other. Basically, six years ago, the Air Force cut a deal with Boeing, and that deal would allow Boeing to provide the Air Force with these new air refuelers, these flying gas stations.

But the deal unraveled, basically, when it came to light that the Air Force official who negotiated it was also negotiating a job with Boeing at the same time. Her name was Darlene Druyun and she actually served a nine-month prison sentence at the time Boeing CEO resigned. And it forced the Air Force to open up the bid to outsiders, including this European company, Airbus, which is the only other company in the world that makes these wide-body planes besides Boeing. And that's basically where we are today, of course, with the victory for Airbus EADS.

BLOCK: Mm-hmm. And what can you tell us about the new refueling tanker itself?

RAZ: Well, it's one of the most important planes the Air Force flies. They're regarded as enablers by the U.S. military. Basically, these are planes that provide in-air refueling to fighter jets and to other military aircraft that allow them to stay in the air longer - and they fly 24 hours a day. There is a flying gas station run by the U.S. military somewhere in the skies above the Earth at any given point at any given time.

Now, Airbus's model is already operational. It's been ordered by British and Australian and the Saudi Air Force. It's bigger, as I said, and it basically carries a lot more gas and a lot more supplies.

BLOCK: And, Guy, as we've mentioned, a huge loss for Boeing here.

RAZ: Huge. And Boeing is almost certainly going to challenge this contract, which means it might be delayed for at least another year.

BLOCK: Okay.

NPR's Guy Raz at the Pentagon.

Guy, thanks very much.

RAZ: Thank you.

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