Boeing, EADS turn in tanker proposals

Boeing and EADS submitted their final proposals for the U.S. Air Force's aerial refueling competition Thursday.

Proposals were due by 8 a.m. this morning.

The winner of the $35 billion deal for 179 tankers will be selected early this year.

"This decision is critical to America's national security and its manufacturing base," Boeing chairman and CEO Jim McNerney said in a statement.

Boeing is offering a tanker based on the company's 767 commercial aircraft to replace the Air Force's fleet of Cold War-era mid-air refuelers.

European Aeronautic Defence and Space Co., parent company of Airbus, is offering a tanker based on its A330 wide-body commercial airliner.

"Our fighting men and women deserve the most modern, capable and proven tanker in the world, and American workers deserve the jobs that the KC-45 will create here at home," EADS North America chairman Ralph Crosby said in a statement.

Both sides argue that their tankers will provide substantial savings to taxpayers when compared with the other's offering and that winning the contract will create thousands of U.S. jobs.

If Boeing wins the contract, Boeing Wichita would become a finishing center for the tanker. Spirit AeroSystems also would gain work because it builds the forward section of the Boeing 767.

The proposals must meet 372 mandatory requirements. Once those are satisfied, the Air Force will consider the total price of the bid.

The prices then will be adjusted by the Air Force based on military construction, fuel burn and an integrated aerial refueling assessment.

If the adjusted prices are within 1 percent of each other, the tie-breaker will be the proposal with the highest score on an additional 93 nonmandatory requirements.

Otherwise, the contract will go to the lowest bidder.

This month, Airbus said it was raising production rates of its A330 aircraft from eight a month to nine in 2012 and to 10 in 2013.

Boeing said it was raising 767 production from 1.5 a month to two by June.

Both offerings will require major modifications to meet the Air Force's 372 requirements.

"They're all performance requirements that mandate all sorts of revision to the basic commercial designs," said Lexington Institute defense analyst Loren Thompson.

Neither company has earned high honors in the tankers they've built for foreign countries, Thompson said.

Boeing's tanker for the Italian air force was five years late. And last month, a refueling boom broke off an Airbus tanker in midair.

Boeing has been tight-lipped on the changes required for the tanker and its development costs.

But the company has changed the design from the last round of bidding to the latest round.

It's the Air Force's third attempt to secure a tanker contract, which has involved scandal, intense lobbying and high tensions.

Boeing first won the contract in 2003, but the deal was scuttled amid an ethics scandal.

A second contract was awarded to EADS and Northrop Grumman in 2008, but was overturned after the Government Accountability Office said the rules had been changed to favor the EADS/Northrop Grumman team.