Firms gearing up final pitches for Air Force tanker contract

It's getting down to the wire on the Air Force's high-stakes contest to replace its fleet of Eisenhower-era refueling tankers-and the two firms who have been vying for the contract for much of a decade are sharpening their tactics to secure the lucrative award.

The contract for 179 wide-body planes has been valued as high as $40 billion, making it a significant prize for rivals Boeing and EADS North America. For Boeing, the maker of the KC-135 tankers the Air Force now flies, it's an opportunity to secure its grasp on the market. For EADS, a European aerospace consortium, the contract would undoubtedly boost its reputation as a major player in the U.S. defense market.

The stakes are not lost on the two companies. Behind the scenes, both firms are working on their "best and final offer," which the Air Force will request before it makes a final decision on the tanker.

And more publicly, EADS has taken out new print and radio ads in the D.C. market in the last several days, touting both the number of U.S. jobs the firm believes their tanker would create (48,000) and boasting their sales of versions of their tanker-based on the Airbus A330-to other countries.

But earlier this week, an A330 tanker being developed for Australia had an in-flight incident with a Portuguese F-16 fighter, during which part of the refueling boom fell into the Atlantic. Both aircraft suffered some damage but returned safely to their home airfields.

The incident couldn't have come at a worse time for EADS, but the firm stressed that the boom designed for the A330 has passed more than 1 million pounds of fuel to more than 1,500 aircraft.

"This is the boom that we're proposing," said EADS North America spokesman Guy Hicks, who would not speculate on the cause of the incident. "This is the only boom that meets U.S. requirements that's flying and is fully tested."

Boeing, meanwhile, is continuing its own advertising campaign (including in this publication), which has argued for the last year that awarding the contract to EADS would be tantamount to shipping jobs overseas, which EADS disputes. Boeing officials also have seized on Defense Secretary Robert Gates's goal to trim $500 million in fuel costs from Air Mobility Command, taking to their tanker blog to argue that the 767 is more fuel efficient and would help trim those costs.

Considering the tanker decision will be made by a handful of contracting officers rather than by lawmakers or the public at large, the effectiveness of these advertising campaigns on securing the award is unclear. Indeed, House Armed Services Seapower and Projections Forces Subcommittee Chairman Todd Akin, R-Mo., whose panel will oversee the tanker program, acknowledged on Thursday that the actual decision is "something so sterilized and so far away from us."

"There is not very much we can do about it," said Akin, whose St. Louis district is in the backyard of the headquarters for Boeing's defense business.

But advertising and lobbying campaigns help generate buzz about the program both on Capitol Hill and in the public. And, perhaps most importantly, the ads allow companies to air their own arguments for themselves and against their competitor, helping them line up supporters-particularly in the event the contract remains in dispute.

"Let's not lose sight of the fact that the reason we're having a tanker competition is to select a tanker that provides the greatest capability to the United States Air Force," Hicks said this week. "Much of our advertising is to explain that fact."

Bill Barksdale, Boeing's spokesman for the tanker program, called the firm's current advertising campaign "pretty aggressive" and is an opportunity to "correct the record" where they believe there has been misinformation. "We have to finish this strongly, which means we have to prepare to win and tell the story clearly all the way to the end," Barksdale added.

If past is prologue, the Air Force's announcement may not be the final word on the contract. In 2008, service officials chose EADS's A330 offering over the Boeing 767, only to have Boeing successfully protest the award and get the decision overturned.

While neither firm will rule out the possibility of another protest, both appear eager to see one of the longest-running sagas in defense procurement history come to an end-albeit with the ending that benefits their own production lines.

"Hey look, I've been waiting for that decision for 10 years," Jim Albaugh, president of Boeing's Commercial Airplanes who previously led the firm's defense business, recently told reporters.

On Capitol Hill and within industry, the Air Force is expected to stick to the rules of the game-i.e., the evaluation of 372 requirements for the refueling jets-to ward off any future contract protests, or at least make it more difficult to uphold.

"I think that we're looking for is they have set a series of parameters and they're gong to make their decisions based on certain criteria," Akin said. "Our interest is that they stick strictly to that criteria in terms of making that decision."

After all, that's where they got off track last time, Akin added.