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EADS to bid alone for tanker contract: sources

PARIS/WASHINGTON (Reuters) - Airbus parent EADS EAD.PA is poised to bid alone for a U.S. refueling plane deal valued at up to $50 billion after failing to recruit L-3 Communications Holdings LLL.N or another major company as a key supplier, sources familiar with the matter said.

People walk past an Airbus A310 Multi Role Transport Tanker (MRTT) with air-to-air refuling capabilities before a ceremony to handover the first two aircrafts to the Canadian and German Air Forces at the EADS Elbe Flugzeugwerke in the eastern German city of Dresden September 29, 2004. REUTERS/Arnd Wiegmann

EADS will still be backed by a big team of suppliers in its challenge to Boeing Co BA.N, including engine maker General Electric Co GE.N, Honeywell International Inc HON.N and Rockwell Collins Inc COL.N to name a few, said the sources, who were not authorized to speak on the record.

But the team will not include -- at least for the time being -- a U.S. company that would have done some classified work on the A330-based tanker and helped to manage the huge program, the sources said.

"EADS will be on its own for now," one source familiar with the matter said, following weeks of debate triggered by the loss of its original partner Northrop Grumman Corp NOC.N

An announcement was expected this week, possibly as early as Tuesday, said the sources.

Guy Hicks, spokesman for EADS’ U.S. arm, said the company continued to examine its options and declined further comment.

EADS, spurred by Pentagon officials to consider a solo bid, had talked with L-3 and other companies after Northrop withdrew from the politically-charged competition last month, arguing that revamped rules favored Boeing’s smaller 767-based tanker.

EADS and Northrop, which had been the prime contractor, won the last tanker contract in February 2008, but the Pentagon canceled that deal after government auditors upheld a Boeing protest and faulted the Air Force’s handling of the contest.

EADS has a separate U.S. unit that can do classified work on the program, but had hoped to find a large U.S. partner with security clearances and certifications for some of the detailed work involved, especially given the tight deadline for submitting its bid, the sources said.

But EADS was forced to rethink its plans when L-3 cooled on the deal, with at least one source suggesting that L-3 had come under political pressure to skip the deal.

Republican Senator Jeff Sessions on Monday accused Norm Dicks, a Democratic congressman from the big Boeing state of Washington, of trying to intimidate EADS’ would-be partners.

“I am deeply disappointed that the Chairman of the House Defense Appropriations Subcommittee, Norm Dicks, would publicly engage in political intimidation to restrict competition on any contract,” said Sessions, who comes from Alabama, the state where EADS would assemble the tankers if it wins the latest contract.

Dicks last week was reported as saying that he hoped U.S. firms would not team with EADS, although his spokesman said Dicks was merely questioning why other companies would see the business case differently than Northrop had.

Dicks and other Boeing supporters argue that the Pentagon should not extend the bid deadline for tankers given a recent World Trade Organization ruling that Airbus received unfair civil subsidies for its airplanes, including the A330.

Several sources said EADS remains in contact with all potential parties pending a bid.

“I would not rule out that they will get a partner at a later date, but at this point, they really needed to give the Pentagon and the world an indication of what their intentions are,” said Scott Hamilton, aerospace analyst with Leeham Co.

The Pentagon has said it will extend the current May 10 deadline until July 9 if EADS agrees to enter the competition.

That gives EADS executives limited time to prepare its proposal, a document that could wind up being 20,000 to 30,000 pages, although Boeing has argued that even a 60-day extension is unnecessary.

Defense consultant Jim McAleese said EADS had little choice but to bid for the work. “The reality is that that there will not be another opportunity of this importance in the lifetimes of that management team,” he said. “This is the biggest opportunity they will have.”

Reporting by Tim Hepher and Andrea Shalal-Esa; Editing by Tim Dobbyn

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