WASHINGTON — The European plane-building company that lost out on a $35 billion refueling tanker deal said Friday it won't appeal the Air Force's decision to go with Chicago-based Boeing Co. in one of the biggest defense contracts ever.
"It's time to put the interest of the warfighter first and we're stepping aside," said Ralph Crosby Jr., chairman of EADS North America.
The Air Force last week picked Boeing to build nearly 200 giant airborne refueling tankers to replace the Eisenhower-era tanker fleet. The contract, which could be worth as much as $100 billion, will mean tens of thousands of U.S. jobs, with Washington state and Kansas getting the bulk of the work.
The European Aeronautic Defence and Space Co. had planned to assemble the aircraft at a closed military base in Mobile, Ala.
Crosby did little to dispel the notion that Boeing came in with a low bid to prevent its foreign competitor from gaining a foothold in U.S.
Boeing's bid, Crosby said, was "an extremely low-ball offer in order to achieve their strategic objective."
Sean O'Keefe, chief executive of EADS North America, said the company's focus now is on "future opportunities and our continued growth."
The tankers allow jet fighters, supply planes and other aircraft to cover long distances. That's critical today with fewer overseas bases and with operations under way far from the U.S.
Pentagon officials said at their announcement that because the price difference between the two bids was greater than 1 percent of the total, cost essentially was the deciding factor.
Dennis Muilenburg, president and chief executive of Boeing's defense business, said after winning the contract that Boeing was able to make the plane more cheaply because it will be made on the same production line as the civilian version.
The $35 billion contract calls for producing 179 new tankers. It could end up being a first installment on a $100 billion deal if the Air Force decides to purchase more aircraft.
Through the years, the Air Force's efforts to award the contract have been undone by Pentagon bungling and the criminal conviction of a top Defense Department official.
Initially, the Air Force planned to lease and buy Boeing planes to serve as tankers, but that fell through. The Air Force later awarded a contract to Northrop Grumman Corp. and EADS, but in 2008 the Government Accountability Office upheld Boeing's protest of the contract.
The Air Force reopened the bidding in 2010, only to be embarrassed again as it mistakenly gave Boeing and EADS sensitive information that contained each other's confidential bids.
Online:
Boeing: http://www.boeing.com/
EADS North America: http://www.eadsnorthamerica.com
Pentagon video of announcement: http://tinyurl.com/4rjpllv