Boeing's $35 Billion Tanker Contract

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The Air Force has reportedly awarded Boeing with a contract to replace its fleet of air refueling tankers in a $35 billion deal that Boeing says will create 50,000 jobs in 40 states. Senator Pat Roberts was one of the first to break the news, Thursday, ahead of the Pentagon's official announcement. Airbus and Boeing both met the 372 mandatory performance requirements set forth by the military, the Pentagon said, and Boeing's price undercut that of Airbus by a margin large enough to preempt further consideration. According to Deputy Secretary of Defense William Lynn, "Boeing was a clear winner." Back in 2008, when the contract was first awarded, the government had a different opinion. But since then some things have changed.

In 2008, after an open competition, the Pentagon awarded the contract to a joint bid from Northrop Grumman and Airbus' parent EADS. Boeing challenged the procedural methods involved in the procedures and the contract was canceled. This time, Northrop withdrew, setting Boeing's 767-based tanker against EADS' A330-based tanker. Leaked documents recently suggested that the EADS offering had outperformed the 767 in certain areas. But having met mandatory requirements, Boeing's low bid placed the 767-based tanker on top. According to The Seattle Times, Boeing spent more than $17.8 million in lobbying efforts in 2010; EADS spent $3.2 million. A win by either company would have brought jobs to states in the U.S. Boeing must now deliver its first 18 combat-ready tankers by 2017.