$100 billion USAF tanker contract may be split

03 April 2009

The Pentagon's richest contract, an initial $35 billion order for 100-odd air-to-air refueling tankers for the US Air Force, may be split between the two contenders, Boeing and Northrop Grumman-backed EADS, should a proposal by Congressman John P. Murtha pass muster with the powers that be.

The tanker contract, one of the most controversial and, certainly, time consuming, has been twice cancelled, and re-tendered, over the last eight years.

According to Representative John Murtha, a Democrat, who is also chairman of the House defense appropriations subcommittee, and Representative Neil Abercrombie, another Democrat, who heads another panel that oversees Air Force programmes, a split may be the only practical way to break the logjam.

The contract could run over decades and may eventually be worth over $100 billion for a fleet of 400 tankers.

Defence secretary Robert M. Gates has opposed the notion saying it would be ''an absolutely terrible idea'' to set up two production lines. Officials suggest that such a move may well add $14 billion to the cost over the next five years.

Murtha and Abercrombie argue that the advantage with a contract split is that over time the Air Force will have the facility to shift a greater share of the contract to whichever company offers the best service. They also point out that even though the plan may cost more in the short run, the ability to increase production rates and replace the aging tanker fleet more quickly could well be huge cost-saving factors, which could save billions, in purchase and maintenance costs.