Northrop Grumman, EADS beat out Boeing for Air Force contract

WASHINGTON -- In a stunning upset, Boeing Co. lost out to Northrop Grumman Corp. and the maker of Airbus planes on Friday in the battle to win a $35 billion dollar contract to build military refueling planes for the Air Force.

The decision is a major disappointment for Wichita, Kan., where Boeing Integrated Defense Systems would have been the finishing center for the militarization of the tanker.

The selection of Los Angeles-based Northrop Grumman and its Paris-based partner, European Aeronautic Defence and Space Co., came as a surprise to Wall Street, defense analysts and lawmakers on Capitol Hill.

It is considered a huge blow to Chicago-based Boeing, which had been supplying refueling tankers to the Air Force for nearly 50 years and had been expected to win the deal.

The Air Force contract will be worth between $30 billion and $40 billion over 10 to 15 years. It is the first of three awards worth up to $100 billion over 30 years to replace the entire Air Force fleet of nearly 600 tankers.

Sen. Pat Roberts, R-Kan., said he was "extremely disappointed" in the Air Force's decision and vowed to insist on a briefing by the Air Force "to see the numbers that justify a contract for American planes going to a foreign entity, when the merits clearly reside with Boeing."

"If this decision holds, it will be at the cost of American jobs and American dollars, if not our national security," Roberts said.

The Northrop-EADS refueling tanker, the KC-45A, "will revolutionize our ability to employ tankers and will ensure the Air Force's future ability to provide our nation with truly global vigilance, reach, and power," Air Force Gen. Duncan J. McNab said in a statement.

Boeing spokesman Jim Condelles said the company is disappointed but has not yet made a decision about whether to appeal the award. Boeing will phase out its 767 line at a factory in Everett, Wash., Condelles said.

The contract was expected to bring 300 to 500 direct jobs to Boeing's plant in Wichita, said Jarrod Bartlett, plant spokesman. But the total job effect could have been as high as 3,800 jobs, when suppliers such as Spirit Aerosystems and others were considered. The economic effect of the contract for the city was estimated at $145 million, Bartlett said.

Northrop Grumman has estimated that a Northrop/EADS win would produce 2,000 new jobs in Mobile, Ala., and support 25,000 jobs at suppliers nationwide. While the Northrop/EADS team would perform final assembly work in Mobile, Ala., the underlying plane would mostly be built in Europe. And it would use General Electric engines built in North Carolina and Ohio.