Boeing and archrival European Aeronautic Defence and Space both formally entered the competition to build the next generation of aerial refueling tankers for the Air Force by Friday, with each submitting thousands of pages in highly technical proposals.But at least part of the epic $35 billion contest between the U.S. manufacturer and its European competitor will unfold over the summer and fall as the debate turns into a multifaceted political tug of war.
Domestically, the case pits Washington state and Kansas, where Boeing has plants, against Alabama, where EADS promises to build its tanker. Internationally, the contest figures prominently in a long-running trade dispute between the United States and the European Union over government subsidies to aerospace companies, one that has drawn the attention of President Obama and French President Nicolas Sarkozy.
Last month, the World Trade Organization ruled that European governments gave EADS's Airbus illegal subsidies in its efforts to overtake Boeing as the world's largest planemaker. The E.U. has meanwhile brought a complaint claiming that Boeing has improperly benefited from billions in subsidies from its military business and tax breaks.
The House voted in May to require defense officials to consider any "unfair competitive advantage" that companies might have in pursuing the refueling contract.
"At a time when our national unemployment rate is nearing 10 percent, it is outrageous to even consider outsourcing thousands of jobs to a foreign company," Rep. Todd Tiahrt (R-Kan.) said after the vote. "We asked the Pentagon to consider the illegal subsidies, they refused, and so today we made sure they will consider the illegal subsidies and give American workers the fair chance to compete that they rightfully deserve.
A third company, U.S. Aerospace Inc., a U.S. aerospace and defense contractor, Friday announced that it has submitted a bid as well, though some analysts consider it a long shot.
All of the companies are vying for the first phase of the Air Force's multi-decade effort to replace 415 refueling tankers, at least some of which are 50 years old. Their replacement is the Air Force's most urgent acquisition priority, a spokesman said.
Boeing is proposing to alter its 767 to become a tanker; EADS is proposing to convert its A330, which the company says will be built in Mobile, Ala. EADS says its development is farther along than Boeing's.