EADS says final tanker bid is ‘just enough to win’

EADS North America on Tuesday struck a confident tone about its final bid for a $35 billion Air Force tanker contract, revealing it has lowered its price and sees evidence its larger plane has a “substantial advantage.”

The company in recent weeks determined it could propose a
lower bid, and submitted a final bid with “improved and updated pricing, which
is what the Air Force wanted,” Ralph Crosby, EADS North America’s chairman,
told reporters Wednesday morning.

Asked by The Hill how much lower its final bid was, Crosby
quipped: “Just enough to win.”

{mosads}The service’s selection process features over 300 mandatory
specs. EADS North America and Boeing, the other company fighting for the
tanker, are expected to easily meet those.

If the bids are within one percentage point of one another,
the selection process moves to a second set of non-mandatory specs and the Air
Force will base its final decision on how many each plane meets — and on the price
of the companies’ bids.

Crosby said EADS North America “can’t imagine” that it would
lose that second round of the evaluation.

During his prepared remarks, Crosby said bluntly that after
nearly a decade of trying, the Air Force needs to finally start buying new
tanker planes as the state of its existing KC-135 tankers continues to decline.

“Whether we win or Boeing wins, we need to get on with this
program,” he said.

EADS officials say because the A330 aircraft on which its
KC-X concept is based is in “full-rate production,” that will help bring down
its per-plane price tag.

During a competition that ended in February 2008, EADS —
then teamed with Northrop Grumman — offered a lower price than Boeing, he
noted. It has been able to drop its asking price since then, partly due to “a
more mature operation” and the fact that it does not have a “prime contractor
over us,” Crosby noted.

Boeing and its congressional allies say another reason EADS
can drop its bid is the billions it gets in startup subsidies from European
governments. Crosby on Wednesday downplayed the subsidies, and said Boeing also
gets government cash from Washington and states where it operates.

Crosby stopped short of vowing a protest if Boeing wins, but
he did say it would not do so unless it sees evidence of “some egregious error
in the process.”

EADS and Boeing have each submitted final bids in the
hotly contested competition. The winner will build 179 flying gas stations for
the U.S. Air Force — and will score a major victory over its top foe.

Industry insiders and congressional aides are unanimous in
expecting the losing firm will again protest with the Government Accountability
Office (GAO). The Pentagon has tried a handful of times over the last decade to
award a contract, but faulty lease deals and flawed competitions have voided
those deals and triggered the start of new selection processes.

In recent weeks, several pro-Boeing lawmakers have pressed
for a Pentagon investigation of a mix-up in November that sent packets of
information about tanker bids being prepared by each firm to one another. They
also have floated the notion of throwing out the complex computer model that
was the basis of the data that was mixed up.

Pentagon officials so far have been mum on the requested
inspector general probe, as well as nixing the computer model. The Air Force
contends an investigation showed all parties involved acted properly, and the
competition’s integrity is sound.

Crosby slammed Boeing and its allies for attempting to
“change the rules in the ninth inning,” adding the computer model in question
was “clearly defined” up front by the Air Force.

Finally, EADS North America has commissioned “an independent
study on jobs,” and Crosby said the firm should unveil that next week.

EADS would erect a production facility in Mobile, Ala., if
it wins. The company contends that would boost the local economy and be good
for the U.S. economy as well.

“Having two independent manufacturers of large airplanes
inside the United States” will bring “economic benefit” to a new part of the
nation, Crosby said.