WASHINGTON (AFP) — The US Defense Department on Monday weighed rival bids for a huge military aircraft contract that pits US aerospace giant Boeing against Europe's EADS and its US partner Northrop Grumman.
The Chicago-based Boeing Company is considered the heavy favorite to win a 40-billion-dollar contract over the next 10 to 15 years to replace 179 aging refueling tankers for the US Air Force.
Competing against the aerospace giant is a team led by Boeing's arch-rival, the European Aeronautic Defence and Space Company, parent of Airbus, and US peer Northrop Grumman Corporation.
A Pentagon panel met Monday to consider the bids but no winner was announced.
"The Defense Acquisition Board meeting is over. It lasted around two hours," said a Pentagon official who did not want to be identified.
According to people close to the situation, a Pentagon announcement of the winner was extremely unlikely Monday due to the procurement process.
Before such an announcement is made, John Young, defense under secretary for acquisition, technology and logistics, must sign an acquisition decision memorandum and present it to the top brass for approval.
The competition is being closely watched not just because of the enormous size of the contract, but also because of the geopolitical implications of the Air Force's choice between a domestic or foreign contractor for its future refueling tanker fleet.
Boeing and EADS-Northrop have been battling for more than a year to snare the strategically important contract.
Boeing, defending its position as the leading aircraft supplier for the US military, is proposing a version of its long-haul cargo plane the 767-200.
EADS is promoting a modified version of the Airbus 330 to gain entry into the US defense sector, the world's biggest arms market, particularly crucial at a time when European defense budgets are stagnating.
The winner of the contract will get a cushion that would protect it for decades in case of a downturn in the highly cyclical market for commercial aircraft.
Both proposals involve retooling jetliners late in their commercial life-cycles, either the Boeing 767 or Airbus A330, into rugged freighters built to haul cargo and fuel around the globe.
That means the US Air Force is poised to become the largest airplane customer for either Boeing or Airbus, keeping a production line running at full capacity into the foreseeable future that would otherwise be shuttered.
The winner also could be in pole position for future contracts: the current refueling tankers contract is the first segment of a market valued at 200 billion dollars over 30 years.
A Boeing victory would offset the string of negative headlines that it has garnered, from the recent arrest of a former engineer on spying charges to the delay of its vaunted 787 Dreamliner.
Still, Boeing's shares were not expected to soar on the news, analysts said. It is such an overwhelming favorite that the contract win is already factored into its stock price.
Others were not counting out EADS, known for aggressive pricing, which has run a spirited campaign with Northrup Grumman.
The European defense contractor says it will assemble the tanker as well as the A330 freighter at a plant it will build in Mobile, Alabama, if it wins.
The European plane maker has even shown off an A330, fresh off its assembly line in Toulouse, France, that it plans to convert into the first tanker once it gets the go-ahead.
The US Air Force's decision will likely come down to determining whether the A330's larger capacity or the 767's greater versatility and efficiency best meet its needs, analysts say.
Boeing won an earlier version of the program that was scrapped amid an ethics scandal.
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