* Nine governors back Boeing bid
* Separate coalition urges buying both airplanes
* Terms expected on Wednesday
(Adds details on governors' event)
WASHINGTON, Feb 22 The U.S. Air Force is due to
issue final terms for a $35 billion aerial tanker competition
this week, probably Wednesday, in a third attempt in nine years
to replace its current 50-year-old planes.
U.S. Defense Secretary Robert Gates said on Monday he
expected the Air Force to release a final request for proposals
soon, and reiterated his hope that both Boeing Co (BA.N) and
Northrop Grumman Corp (NOC.N) would bid for the work.
"We are very hopeful that we will have two competitors and
we think that it is a very fair RFP (request for proposals),"
Gates said. "I expect it to be released pretty soon."
The Air Force said last week it expected to issue final
terms before the end of the month and was bracing for the
possibility that only Boeing may submit a bid.
Northrop and Airbus parent EADS EAD.PA won the Air Force
contract in the last competition, but the Pentagon canceled the
deal after government auditors upheld a Boeing protest.
Northrop has said the team will not bid this time around
unless the Air Force makes significant changes to a draft
request for proposals released in September.
Congressional sources said they expected Pentagon officials
to brief lawmakers about the final terms on Wednesday, after
releasing details to the companies.
Last September, when the Air Force released draft rules for
the competition, Deputy Defense Secretary William Lynn and the
Pentagon's chief weapons buyer, Ashton Carter, met with key
lawmakers to explain the process. Then they held a joint news
conference, together with Air Force Secretary Michael Donley.
Defense officials say they expect the Pentagon to handle
the release of the final terms in a similar fashion.
Meanwhile, nine governors joined in a coalition to support
Boeing's bid, which is based on its 767 commercial airliner.
"Awarding the refueling tanker contract to Boeing will
provide work for 40,000 to 50,000 people all across the country
at a time when the national economy is still struggling
mightily," Washington Governor Chris Gregoire said in a
statement ahead of a Washington, D.C. news conference.
The coalition also includes the governors of Kansas, Iowa,
Connecticut, Illinois, Maine, Missouri, Oregon and Utah, other
elected officials, labor unions and business organizations.
"With a lagging economy, we can't afford to send thousands
of jobs and billions of dollars overseas," said Governor Jay
Nixon of Missouri, where Boeing has a large facility.
Northrop's bid would create over 48,000 jobs across the
country, including Alabama, where it had planned to assemble
its tankers. Lawmakers from Alabama and neighboring states have
been strong advocates of the Northrop bid, arguing that the Air
Force's draft rules give an unfair advantage to Boeing.
A separate nonprofit group called American Jobs Now issued
a statement urging the Pentagon and Congress to fund orders for
both the Boeing and Northrop planes, saying such a plan would
create twice as many jobs at a time of economic crisis.
The group, which says it has not received any funding from
Northrop, Boeing or EADS, argues that buying both planes would
help replace the current KC-135 tankers more quickly, while
hedging against "the risk of cost-inflation that is always
present when you are dealing with a single supplier."
Aerospace analyst Richard Aboulafia with the Virginia-based
Teal Group, said the Pentagon had clearly shifted its approach
from the "best value" competition it staged in 2008 to what
Northrop officials have called a "price shootout."
He said the chances of Congress directing the Pentagon to
buy both planes had dimmed with the death of Representative
John Murtha, the Pennsylvania Democrat who headed the defense
subcommittee of the House Appropriations Committee.
Industry officials said they would need to review the final
terms closely before issuing any substantive statements.
"The devil really is going to be in the details," said one
industry official who was not authorized to speak publicly. "I
don't think it's predetermined."
The official said it was apparent that Northrop was ready
to walk away from the competition if it did not see changes
that would allow the company to submit a competitive bid.
(Reporting by Tabassum Zakaria and Andrea Shalal-Esa; Editing
by Leslie Gevirtz, Gerald E. McCormick, Bernard Orr and Steve