The USAF tanker contract was finally awarded on February 24 to Boeing. The company will design, develop, manufacture and deliver initial 18 combat ready aircraft to the USAF by 2017. The initial contract will replace 179 of the more than 400 KC-135s in service.

On February 24, the US Department of Defense issued a press release stating, “The Boeing Company of Seattle Washington was awarded a fixed price incentive firm contract valued at over $3.5 billion ( Rs. 15,750 crore) for the KC-X Engineering and Manufacturing Development which will deliver 18 aircraft by 2017. Aeronautics Systems Center Wright Patterson Ohio is the contracting activity.” This innocuous announcement is the culmination of an acrimonious bidding war for one of the most lucrative defence acquisitions in the recent past. Boeing will deliver to the United States Air Force (USAF) 179 aerial tankers based on the Boeing 767 platform called the KC-46A which banged the EADS bid for the KC-45 tanker based on the Airbus 330 design. The US Air Force Secretary Michael Donley made the formal announcement that Boeing had won the contract to replace the USAF KC-135 tanker which is a veteran of the Eisenhower era.

The USAF Chief of Staff, General Norton Schwartz stated that the Air Force’s acquisition had been based on the premise that there could be objections against the final decision. Keeping this aspect in view, the USAF took steps to keep Boeing and EADS informed to avoid any ambiguity. Every step was documented and except for one inadvertent disclosure of the computer disks containing evaluation data to both bidders, the process was well managed. The contest between Boeing and EADS was originally intended to be for ‘off-the-shelf’ aircraft platforms namely the Boeing 767 and the Airbus 330, but the final choice has been for the Boeing New Generation Tanker which has not even flown till now. General Schwartz said that both aircraft qualified but the final decision was based on “other factors including mission capability and lifecycle costs.”

The USAF went through a seven-month evaluation process and found that both contenders met the 372 mandatory requirements of the KC-X tankers specifications and that the contract could be awarded to either Boeing or EADS North America. But the evaluation team found that the Boeing price was lower by over one per cent than the EADS North American price.

The USAF had made an earlier attempt in 2002 to procure a replacement for the ageing Boeing 707 based KC-135, but this resulted in the USAF and Boeing getting egg on their faces. A Congressional investigation led by Senator John Mc-Cain found criminal collusion between the USAF procurement agency and Boeing in a $23.5 billion ( Rs. 1,05,750 crore) deal to lease tankers based on the 767 platform. The USAF was accused of designing its requirements around the Boeing 767 which would have helped Boeing keep the 767 production line open. The investigation resulted in the conviction of Air Force official, Darleen Druyun and Boeing Executive Michael Sears for violating US Federal conflict of interest laws and the deal was formally cancelled in January 2006.

Boeing and Airbus Industrie have aircraft which could provide the USAF viable options for the tanker programme. Boeing claims that the Boeing 767 based tanker can operate from shorter runways, use less fuel than its competitor and costs $14 billion ( Rs. 63,000 crore) less over a 40-year cycle. The Northrop-EADS team had rejected these claims and said that the Airbus 330 based model could stay airborne longer and dispense fuel faster while carrying more passengers. They also planned to build a manufacturing facility in Mobile, Alabama, which would also build freighters from the same assembly line. Local US political pressure for competing bids made it difficult for Boeing to play the patriotic card. The tanker acquisition has the potential for generating nearly 50,000 jobs in the US and pumping billions of dollars into a flagging economy. Political support for both Boeing and Airbus has come from those states in the US, contemplating economic benefit for the state depending on where these jobs are generated.

Patty Murray, Senator from Washington where Boeing builds its aircraft, went on record stating that American taxpayers should not reward a company that has hurt American workers for decades. This is in context to the long-standing competition between Boeing and Airbus for the worldwide commercial aircraft market. She also said that America should not turn over a crucial military contract to a foreign company. A few days before the contract was awarded to Boeing, the Governors of Alabama, Louisiana and Mississippi sent a letter to President Obama supporting the EADS bid which proposed building a manufacturing facility in Mobile, Alabama, with potential for changing the economy of these poor states.

The selection process for the tanker for the USAF has been plagued by political pressure. Boeing won the initial contract in 2002 but then lost it when a Congressional investigation found collusion between procurement agencies and the aircraft company. In January 2007, the USAF launched the KC-X tanker competition again and got bids from Boeing and EADS in partnership with Northrop Grumman. In 2008, Northrop Grumman and EADS pulled off a coup when the USAF decided that the more expensive KC-45 based on the Airbus 330 was more cost effective than the Boeing KC-46 offering based on the 767 model. The USAF stood by its decision to award the contract to EADS in the face of political pressure. It was claimed that the Air Force was showering jobs and money on a foreign company. Boeing protested the selection and laid out 110 complaints about the bidding process and the central theme was that the USAF had used subjective criteria to arrive at the decision to select the KC-45 thereby rejecting the Boeing 767 based design. The protest by Boeing was upheld by the Government Accountability Office and the programme was cancelled.