The Economy

And the Winner Is ... Boeing

Feb. 24, 2011

Defense Department selects Boeing to build 179 aerial-refueling tankers.

In a decision that may have come as a surprise to some observers, Defense Department officials today announced that the agency has selected Boeing Co. for its coveted KC-X tanker contract.

Boeing will be tasked with building 179 aircraft to replace the Air Force's aging fleet of aerial-refueling tankers, which date back to the 1950s and 1960s.

Chicago-based Boeing triumphed over its transatlantic rival, Netherlands-based EADS, in what had become a fierce competition for the contract, which is worth more than $30 billion.

In today's announcement, the Air Force awarded a $3.5 billion "engineering and manufacturing development contract" to Boeing for the first 18 aircraft, which are due by 2017.

In the days leading up to the announcement, some analysts had said they expected the contract award to go to EADS, the parent company of Airbus SAS, which was believed to have undercut Boeing on price. Secretary of the Air Force Michael Donley, however, noted that "many factors were evaluated during the tanker-selection process."

Selection "took into account mission effectiveness in wartime and lifecycle costs as embodied in fuel efficiency and military construction costs," Donley said.

Donley emphasized that the selection process, which had dragged on for a decade, this time around was "thorough and transparent" and "was marked by continual dialogue with offerors to ensure the Air Force had a clear understanding of their proposals and the companies clearly understood the service's analysis of their offers."

"To the men and women of our Air Force, today's announcement represents a long-overdue start to a much-needed program," Donley said. "Your Air Force leadership, supported by others throughout the Department of Defense, is determined to see this through, and we will stand behind this work."

See Also

Merkel 'Regrets' U.S. Tanker Decision

Boeing: Tanker Decision Will Support 50,000 U.S. Jobs

Tanker Verdict Surprised Analysts

About the Author

Josh Cable | Former Senior Editor

Former Senior Editor Josh Cable covered innovation issues -- including trends and best practices in R&D, process improvement and product development. He also reported on the best practices of the most successful companies and executives in the world of transportation manufacturing, which encompasses the aerospace, automotive, rail and shipbuilding sectors.

Josh also led the IndustryWeek Manufacturing Hall of Fame, IW’s annual tribute to the most influential executives and thought leaders in U.S. manufacturing history.

Before joining IndustryWeek, Josh was the editor-in-chief of Penton Media’s Government Product News and Government Procurement. He also was an award-winning beat reporter for several small newspapers in Northeast Ohio.

Josh received his BFA in creative writing from Bowling Green University, and continued his professional development through course-work at Ohio University and Cuyahoga Community College.

A lifelong resident of the Buckeye State, Josh currently lives in the Tremont neighborhood of Cleveland. When the weather cooperates, you’ll find him riding his bike to work, exercising his green thumb in the backyard or playing ultimate Frisbee.