Boeing Co. may face new Western European and Russian competition for a $35 billion contract to provide the U.S. Air Force with refueling tankers.It had appeared that Chicago-based Boeing would have the race to itself when California-based Northrop Grumman Corp. withdrew March 8, concluding it stood little chance of winning with a tanker based on the Airbus A330 jetliner. But the parent of France-based Airbus SAS, European Aeronautic Defense and Space Co., said Friday that it was considering bidding on its own after receiving assurances the Defense Department "would welcome" a tanker bid from the company's North American subsidiary.
The Pentagon indicated it was willing to extend the May deadline for proposals in order to attract other bids, EADS said. That may allow a third party to enter the fray, a plane-maker owned by the Russian government that is poised to bid, the Wall Street Journal reported Friday.
That report is behind a subscription wall but suggests the Russians would put forward a modified version of the Ilyushin-96. I don't see the USAF buying a Russian tanker.
Defense officials prefer to competitively bid large, high-profile contracts to drive prices lower and reduce the likelihood of improprieties. Both are concerns with the deal to replace the Air Force's fleet of aerial gas stations, which has dragged on for nearly a decade.
Adding overseas entries to the contest may ease strained trade relations with the European Union, whose officials accused the Pentagon of protectionism. They claim the latest round of the contest was rigged to favor Boeing's smaller, American-made 767 aircraft over the Airbus A330.
While EADS hasn't decided to bid, it may be willing to pursue the deal despite the odds of success that Northrop CEO Wes Bush considered unacceptably low.
"Northrop has a different yardstick to measure this program than EADS," Allan McArtor, chairman of Airbus Americas, told the Tribune. "Their strategic interests are different."
Highly charged politics surrounding the bids have made it impossible for the government to select a plane without creating a furor. Military planners likely concluded in devising rules for the current contest that a Boeing tanker, made in Seattle and supported by Democrats, stood a greater chance of quickly gaining funding from a Democrat-controlled Congress than EADS' Republican-backed tanker, said aerospace analyst Richard Aboulafia.
There are two ways that EADS or another overseas player still could succeed, Aboulafia added: "One is to use all the political leverage possible and try to change the [request for proposal]. The other is to discount your way into the market."