Northrop Grumman, EADS Secure $35B Pentagon Contract Over Rival Boeing

The U.S. Air Force announced today that Northrop Grumman and a European company have been awarded a $35 billion contract to produce the next-generation fleet of Air Force refueling tankers.

The new contract, which came as a surprise to many in the aviation community, is one of the military's three largest aviation investments ever.

The KC-30, a modified version of the Airbus A330 commuter plane, will replace the military's current model, Boeing's KC-135, which first began flying in the Eisenhower era.

Air Force Secretary Michael Wynne, in announcing the deal, downplayed the fact that Northrop Grumman is partnering with a European company. The 179 Airbus KC-30s the Air Force has requested will largely be produced by Boeing's main rival, the European aviation giant EADS (European Aeronautic Defense and Space Company). EADS is partnering with the United States-based Northrop Grumman.

Boeing claimed it would produce 40,000 American jobs if it received the contract, compared to half that number promised by EADS, but jobs didn't play any role in this decision making process, said Sue Payton, Assistant Secretary for Air Force Acquisitions.

Payton, speaking to reporters Friday afternoon, she said this contract "had to do with requirements that the war fighter needed, and we balanced requirements of the war fighter with the best value for the taxpayer."

Not everyone is buying that. U.S. Rep. Duncan Hunter of California released a statement today saying, “The hardworking aerospace men and women, and U.S. taxpayers, are the losers in this decision that benefited the treasuries of European governments."

"More" is the word Gen. Arthur J. Litchte, commander of the Air Mobility Command, used to sum up the reasons the KC-30 was chosen.

"More passengers, more cargo, more fuel to off-load, more availability, more flexibility, more dependability, and it can also carry more medical patients," Litchte said.

One criticism of the massive KC-30, however, is that it will be harder to land on the short, narrow runways in Iraq and Afghanistan.

But even some of the biggest critics of the EADS says Boeing was far from the lead in this race.

"It's a cost issue," retired Air Force Lt. Gen. Tom McInerney, a FOX military analyst, said. "The cost savings of the Northrop airplane is $55 billion." The Air Force can retire more KC-135s faster because the new KC-30 has double the hauling capacity.

Friday's announcement also came after a highly scrutinized decision process, amid lingering memories of a 2002 scandal. In that case, Darlene Druyun, the previous Air Force acquisition chief, went to jail for 9 months for cutting a costly back-room deal with Boeing. The scandal set back plans to replace the aging tankers several years.

This time, when the Air Force made its decision, John Young, head of the Pentagon's Defense Acquisition Board, spent four days carefully reviewing the decision-making process to ensure its integrity.

The first test aircraft is expected to be delivered in 2010, and the first operational flight will take place in 2013, Gen. Litchte said. As for the old KC-135s — a war tested, dependable plane that for so long has been considered the life-blood of the Air Force — retirement awaits, and perhaps a place in the Air and Space Museum.

The oldest models have mechanical problems, and the Air Force would like to start retiring them as soon as possible. The ones they keep will be sent to Davis-Monthan Air Force Base to assist with fuel supply for the next generation.