updated 1/30/2007 6:54:32 PM ET 2007-01-30T23:54:32

The Air Force on Tuesday requested bids for the first phase of a more than $100 billion contract to replace hundreds of aging refueling planes.

It was not immediately clear whether Northrop Grumman Corp., which fought for contract modifications that would favor its larger aircraft, would bow out of the competition and leave rival Boeing Co. as the only bidder.

The Air Force said it did not change key contract details, but rather that it made minor adjustments in an attempt to address concerns raised by various companies.

The first phase of the contract, valued at $40 billion, calls for 179 refueling planes; each of the next two phases calls for 180 additional refueling planes.

“We are clarifying exactly what we want and how we are going to compare potentially very different platforms,” Air Force spokesman Don Manuszweski said.

The tanker program has been on hold for three years, after Boeing lost the contract amid an ethics scandal that resulted in prison terms for a former senior Boeing official and a former high-ranking Air Force official.

Los Angeles-based Northrop Grumman has repeatedly hinted it would not compete against Boeing in the first phase of the contract if it deemed the details of the bid to favor the Chicago-based company.

If Northrop decides to compete, it will team up with European Aeronautic Defense and Space Co. The Air Force cleared a path for EADS to compete last year by removing a clause that would have linked the bid to a legal dispute between the United States and the European Union currently before the World Trade Organization.

Northrop spokesman Randy Belote said the company needed time to review the slightly modified bid before deciding whether to compete.

Northrop has been seeking a bid that would include an ambitious cargo-carrying ability that would justify the higher price of its aircraft, as compared with Chicago-based Boeing’s 767 offering.

Analysts were skeptical that the changes made by the Air Force would be sufficient in Northrop’s eyes.

“When you strip away all those additions what you discover is the same basic selection criteria is still there,” said Loren Thompson, a defense analyst for the Virginia-based Lexington Institute. “It hasn’t changed.”

For its part, Boeing said it will offer to build the appropriate tanker depending on requirements laid out by the Air Force, which will replace a portion of the military’s older fleet of KC-135 refueling planes. The planes, made by Boeing, are critical to military operations in Iraq and elsewhere.

“Whether it ends up being a tanker close in size to the KC-135 or a larger tanker more focused on transport, Boeing will offer a tanker that delivers the best technology to the war-fighter,” said Boeing spokesman Bill Barksdale.

Both companies have 60 days to notify the Air Force of its intent to bid.

While Boeing’s chances of winning the contract certainly improve if Northrop does not make a bid, the company is not guaranteed to win the deal. Members of Congress have criticized the Air Force’s handling of the multibillion-dollar refueling tanker contract, and could attempt to delay the deal.

Shares of Northrop gained 23 cents to finish at $70.97 in afternoon trading on the New York Stock Exchange, while shares of Boeing dropped 2 cents to $85.98, after gaining 50 cents to finish at $86.00. EADS shares rose 1 percent to close at $32.73 in Paris.

© 2013 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.


Discussion comments


Most active discussions

  1. votes comments
  2. votes comments
  3. votes comments
  4. votes comments

Data: Latest rates in the US

Home equity rates View rates in your area
Home equity type Today +/- Chart
$30K HELOC FICO 3.79%
$30K home equity loan FICO 4.99%
$75K home equity loan FICO 4.69%
Credit card rates View more rates
Card type Today +/- Last Week
Low Interest Cards 13.83%
Cash Back Cards 17.80%
Rewards Cards 17.18%
Source: Bankrate.com