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Sun, Apr 19, 2009

EADS Willing To Share KC-X Contract With Boeing

But Boeing Is Still Mum On The Idea

In response to US lawmakers' suggestion that the controversial bidding process on a replacement fleet of aerial refueling tankers be resolved by splitting production between contractors, the European Aeronautic Defense and Space Company CEO indicated he would likely go along with the idea.

Speaking on behalf of EADS and partner Northrop Grumman, Louis Gallois said Thursday that as long as they were contracted to build a minimum of 12 tankers a year to insure support of a proposed new factory in Mobile, AL, he would be willing to consider sharing the contract with rival Boeing, the New York Times reported.

As ANN reported, House defense appropriations subcommittee chairman Rep. John Murtha (D-PA) has proposed including a provision in a defense bill that would split production of the new tankers between top bidders Boeing and Northrop Grumman-EADS as a solution to the ongoing controversy about replacing the US' aging aerial tanker fleet.

The Air Force selected Northrop Grumman/EADS for the tanker project last year, but rival bidder Boeing protested the decision, saying the process was flawed. Bidding was reopened after a Government Accountability Office agreed with Boeing... but the selection of a contractor remains in limbo.

Defense Secretary Robert Gates has said the split contract idea is a mistake that would end up costing taxpayers billions. "I think it's bad public policy, and I think it's bad acquisition policy," Gates said, preferring to opt for reopened bidding this summer and selection of a single contractor early in 2010.

Hanging in the balance is the economic future of both plane manufacturers. Boeing has proposed modifying its 767 model if awarded the tanker contract. Northrop Grumman-EADS plans to use the Airbus A330 airframe. Boeing stands to lose 10,000 jobs between its Everett, WA and Wichita, KS plants if it loses the contract - which would at the same time represent a major victory in the defense market for Northrop-EADS.

Boeing spokesman William A. Barksdale said his company has not yet taken an official stance "on which direction our customer should take" in the proposed contract split.

FMI: www.dod.mil, www.boeing.com/ids, www.northropgrumman.com, www.eads.com

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