Pentagon reopens tanker competition

Well, it turns out the Airforce was indeed incorrect when they initially assigned the $35 billion project to the team of Northrup Grumman and EADS and eliminating Boeing from contention.

Boeing was arguing this for the better part of 2008, they put together a legal team to say that the Airforce initially picked the european based site to design and build the new aerial refueling tankers. Boeing felt it had the better offer, and it was the better "bang for the buck" contract for the government that would lead to the best results long term for the american tax payers as well provide many opportunities for american workers.

The initial contract was awarded to EADS back in January which led to controversy and discussion among the analysts as to the reason for picking the european contractor based in France (Home of Airbus) over an american manufacturer. The claim was that the european contract was more cost effective and cheaper for the airforce. well, I'm glad that is out of the way.

Boeing has already proven that their decision making was faulty, and that they ignored key elements in Boeing's bid for the contract. This would be devestating for The Boeing Company, had the bidding not been re-opened, as this even triggered the beginning of the steady 5 month decline of Boeing's stock price, which was at a 5 year high in October at $105 a share, while now barely surpassing $66 a share earlier today. Not only is this contract going to help the stock price rise, but it will also give workers at the Boeing company a sense of pride (Boeing employs over 20,000 people in its US sites alone) and motivation at their tasks at hand. It will offset any potential bad news regarding further delays on the new Dreamliner 787 plane set to take its first flight in January of 2009. Though, with the current procurement issues one has to wonder if that deadline will be met, especially when Boeing hasn't met several of its milestone deadlines.

Still, the contract is not Boeing's at the moment, in fact, the selection process no longer belongs to the Airforce, it is now in the hands of the Pentagon's chief weapons buyer. Is this a good thing for the boeing company? it all depends on how they structure their new contract, and whether they take into account changes that EADS and NG may make in their contract bid.

The Pentagon is hoping that a decision will be made by the end of the year