The US Defense Department said Friday it has selected EADS/Northrop Grumman over U.S. rival Boeing as the winner of a government contract to build military refueling airplanes. The selection of European Aeronautic Defense and Space Company (EADS) and its U.S.-based partner Northrop Grumman surprised Wall Street, which widely expected U.S. aviation giant Boeing to the win the contract to provide to the U.S. Air Force 179 twin-engine military airplanes used to refuel in-flight warplanes and troop transporters. “The tanker is the number-one procurement priority for us right now. It is the first step in our critical commitment to recapitalize our aging fleet to move, supply, and position assets anywhere,” said Air Force General Duncan McNab. “In this global air force business, the critical element for air bridge, global intelligence, surveillance and reconnaissance, and global strike is the tanker.” “The KC-45A will provide significantly greater air refueling capabilities than the current fleet of Eisenhower-era KC-135s it will begin replacing,” the Air Force said. The initial contract for the newly named tanker, the KC-45, is for the system design and development of four test aircraft for $1.5 billion, the Air Force said. The contract also includes five production options targeted for 64 airplanes at $10.6 billion. The Air Force has estimated the tanker contract will be worth between $30 billion and $40 billion over 10 to 15 years. It is the first of three deals that could eventually be worth as much as $100 billion over 30 years to replace the entire Air Force fleet of nearly 600 refueling tankers. The contract positions EADS to make a big entrance into the U.S. military market and opens up huge new business opportunities for Northrop. The tanker deal is certain to ignite heated debate over the military's use of foreign contractors since Boeing described the competition as a fight between an American company and its European rival.
