Northrop, EADS win Air Force tanker deal in upset

In an upset victory over domestic aerospace giant Boeing Co., the team of Northrop Grumman Corp. and EADS, the European consortium behind Airbus, claimed victory Friday afternoon on a contract worth as much as $40 billion to build the Air Force's next fleet of aerial refueling tankers.

The Air Force waited until after the markets closed Friday to announce it has selected the modified Airbus 330 over Boeing's KC-767 tanker offering, ending a years-long saga over which aircraft manufacturer would replace the venerable fleet of Boeing KC-135 tankers, first deployed in 1956.

The contract is a major win for the Alabama congressional delegation, which has publicly and steadfastly promoted the Airbus offering. Northrop Grumman has said the tanker contract will lead to the creation of 25,000 U.S. jobs, including about 1,500 at an assembly plant in Mobile, Ala.

At a briefing for reporters late Friday, Sue Payton, assistant secretary of the Air Force for acquisition, said, "Northrop Grumman clearly provided the best value to the government when you take a look at, in accordance with the [request for proposal], the five factors that were important to this decision: in mission capability, in proposal risk, in the area of past performance, in cost price, and in something we call an integrated fleet aerial refueling rating. So I would tell you that overall, Northrop Grumman did have strong areas in aerial refueling and in airlift, as well as their past performance was excellent and they offered great advantage to the government in cost price, and they had an excellent integrated fleet aerial refueling rating."

Payton said Air Force officials would debrief both offerors in early March. "Those debriefings will be very thorough. They will explain in great detail the advantages and the weaknesses that were in proposals. And I can't stress enough what an incredibly open and transparent and rigorous first selection we have gone through. For months and months, we have been telling each offeror where their weaknesses were, where their strengths were, and so they've had a lot of opportunity to communicate with us and to make sure we were not talking past each other."

While Boeing may protest the decision, Air Force officials declined to speculate as to whether the company would do so. Air Mobility Commander Gen. Arthur Lichte said it was critical that the Air Force "get on with this."

"Anything that would slow down the process has an impact on the warfighter. If everything goes smoothly and everything progresses, we will still have KC-135s flying late until the 2040s, which makes that airplane well over 80 years old and in some cases close to 90. And from the warfighter's point of view, we need to get on with this. And so I have looked at everything. I think we got a very fair and open process. I know all the communications that went back and forth to the companies, and I just hope we can go forward with this as quickly as possible."

Payton declined to elaborate on the factors that led to Boeing's failed bid, saying it would be unfair to do so before the company itself had been debriefed.