Boeing snubbed on massive air tanker project

Rockwell Collins will receive fewer orders than it had hoped for the next generation of U.S. Air Force refueling tankers.

The Pentagon announced Friday that it had selected Northrop Grumman’s KC-30 tanker bid to replace its aging fleet of aerial refueling tankers, a contract worth about $35 billion.

Rockwell Collins, which produces aviation electronics, is a supplier to Northrop Grumman, but does not have as much content under the Northrop Grumman program as it had under a rival bid by Boeing Aerospace.

“We are disappointed in the decision,” Rockwell Collins spokeswoman Pam Tvrdy said. “We were really proud to be part of the Boeing team, and are grateful for the support of the community, our political leaders and our employees on this program. We will just have to pursue other programs.”

Northrop Grumman was awarded an initial $1.5 billion contract to design and develop four test aircraft and five options valued at $10.6 billion to build 64 aircraft. Northrop Grumman eventually could supply as many as 179 aerial refueling tankers.

The announcement was considered a major upset for Boeing, which had supplied the nation’s military with aerial refueling tankers for more than 50 years.

Boeing seemed to have a deal to lease new tankers to the Air Force in 2003, but the lease arrangement was canceled amid allegations of corruption by a former Pentagon procurement officer who later had joined Boeing.

Tvrdy said Rockwell Collins will supply some radio equipment and components for the avionics of the Northrup Grumman KC-30. Because Rockwell Collins has a large amount of work under contract and many other opportunities to pursue, Tvrdy said, the reduced work under the tanker program is not expected to result in a slowdown for the company.

Iowa political and union leaders had lined up behind the Boeing bid, touting its higher amount of Iowa-produced and American-made content.

Gov. Chet Culver said the Boeing bid would have meant $60 million in economic investment and 1,600 jobs in Iowa. Much of that content would have been produced in Cedar Rapids and other Rockwell Collins locations in the state.

Northrop Grumman challenged Boeing’s economic impact estimates, but the company’s Web site does not include Iowa on a list of states showing economic impact from its own project.

The greatest economic impact of the refueling tanker project is expected to be in Mobile, Ala., where Northrop Grumman will create about 5,000 assembly jobs.

Local community and union leaders scarcely mentioned Northrop Grumman in a news conference last year to support the Boeing bid, referring only to the European supplier of the air frame components of the KC-30.

The Northrop Grumman tanker will be based on the A330 widebody twin-engine passenger jet developed and manufactured by European Aeronautics Defence and Space, one of Northrop Grumman’s partners in the KC-30 program.

David DeWitte Cedar Rapids Gazette (Factiva)- March 01, 2008