Kansas political leaders celebrated Boeing's win — which Gov. Sam Brownback called the "largest military contract in world history" — Friday at Boeing Wichita headquarters.
"Game over folks; the good guys won," said Sen. Pat Roberts.
Boeing was the winner of a $35 billion contract to replace the U.S. Air Force's Cold War-era fleet of mid-air refuelers. The contract is for 179 tankers and requires Boeing to have 18 combat-ready airplanes by 2017.
The win is good for Wichita, Kansas, Boeing, McConnell Air Force Base and the nation, the leaders said.
"I've been waiting a decade to be able to say this: We won it. We're going to build it," Brownback said.
The award secures at least 5,000 jobs for Kansas, said Rep. Mike Pompeo, who planned Friday's news conference.
"This has ramifications throughout our entire economy," he said.
Boeing has already hired engineers for the program, Brownback said.
Roberts said he was traveling in the snow from Junction City to Topeka on Thursday when the Secretary of the Air Force called him to announce the news.
"We have been fighting this fight... for 10 long years," Roberts said. "This really shouldn't have taken this long, and that's probably the understatement of the year.
"It's good to win one."
Former Rep. Todd Tiahrt was greeted at the news conference by chants of "Tanker Todd, Tanker Todd, Tanker Todd," referring to the nickname he earned while working on the issue.
The tanker "is the linchpin of our defense system," said Tiahrt, a former Boeing employee who left office in January after an unsuccessful run at Senate. "You can't move men and materials without it."
The Machinists union also lobbied for a Boeing win.
Boeing workers build a good product, said Machinists District 70 president Steve Rooney.
"We're the right group to do it," Rooney said.
Tiahrt said after the news conference that he didn't expect Boeing's competitor, Airbus parent company EADS, to protest the award.
After EADS and Northrop Grumman won the tanker contract in 2008, the Government Accountability Office upheld Boeing's protest that the process unfairly favored Airbus.
This time, the requirements were tighter and made much clearer, Tiahrt said.
"I think there's no room to protest," he said.
The tanker, which will be based on a 767 commercial airliner, was a hot topic at Spirit AeroSystems, said Spirit spokesman Ken Evans.
Spirit builds the forward fuselage section, pylon and major sections of the nacelle in Wichita and the wing fixed leading edge in Oklahoma.
Spirit will ship the parts to Everett, Wash., for final assembly on the airplane. The plane will then be flown to Wichita for final modifications at Boeing.
It's too soon to say how many jobs it will mean for Spirit, the company said.
"This will definitely have a positive impact for Spirit, but since rate and schedule requirements are really up to our customer, there are too many unknowns to quantify a jobs number," Evans said. "Obviously, it will have a positive impact in that area."
Spirit stock traded at a 52-week high of $26.49 Friday before closing at $26.06, a 3 percent increase from Thursday's close and 53 percent higher than its 52-week low of $17.07 in June.
Boeing closed at $72.30, up $1.54, a 2.2 percent gain.
Reasons for winning
Boeing won for a number of reasons, analysts say.
For one, the 767 has more carrying capacity than the Air Force's fleet of 707-type tankers, but not so much more that it would be overly expensive to operate, Lexington Institute defense analyst Loren Thompson said.
The EADS plan called for it to use an Airbus A330, which is substantially bigger than the 767, can carry more fuel and fly farther.
But the penalty is that it burns more fuel, Thompson said.
Both planes had to meet 372 mandatory performance requirements. After that, the competition was mainly about price. That included the cost of operating the tankers over a 40-year service life.
Tiahrt said he and Rep. Norm Dicks of Washington worked to push through a change to the lifecycle costs from 25 years to 40 years, Tiahrt said.
"Once the competitive landscape was arranged in that manner, the excessive fuel burn of the larger A330 became a definite drag on EADS' proposal," Thompson said.
EADS could have used European subsidies to defray its production costs, but "the Air Force would still be stuck with billions of dollars in unnecessary fuel expenditures to operate such a sizable airframe," he said.
And there were other costs in operating a bigger plane, such as the need to rebuild hangars and runways to accommodate the larger dimensions of the Airbus airplane, Thompson said.
Boeing will have challenges ahead of it on the program, a report Friday by Moody's Investors Service said.
It still needs to make investments to deliver the airplane under a fixed-price development contract, Moody's said.
Boeing will assume the risks of potential delays, cost overruns, performance shortfalls and supply chain challenges, the report said.
"Such events could delay profits on the program, or even cause Boeing to incur a loss," Moody's said.
Work on the tanker could also divert resources and engineering talent from ongoing commercial programs, such as Boeing's 787 Dreamliner, the 747-8 and the potential single-aisle replacement of the 737, Moody's said.
However, using the 767 commercial airliner as a platform for the tanker reduces risks for Boeing.
A Boeing win limits EADS from making significant advances into the U.S. defense market and becoming a formidable competitor, Moody's said.
Still, EADs was invited by the Air Force to submit a bid, "an effort which should be viewed favorably by the Defense Department in future EADS bids," it said.
Whether EADS will protest the award is not yet known.
The German government told Reuters news service Friday that it did not see a need to intervene against the decision.
"There is no need to act," said a spokesman for Chancellor Angela Merkel.
Earlier, Deputy Economy Minister Peter Hintze told Reuters that he questions whether the decision had been fair.
"The decision leaves a bitter aftertaste because it is not entirely clear whether there was a fair procedure at the third tender," Hintze said.
Both companies may request briefings from the Air Force on how the selection was decided. EADS would have several days after that to file a protest, should it decide to do so.