By Andrea Shalal-Esa
WASHINGTON (Reuters) - The U.S. Air Force will announce on Thursday the winner of an epic $35 billion procurement battle between Boeing
Analysts increasingly expect Airbus parent EADS
Deputy Defense Secretary William Lynn, Pentagon acquisition chief Ashton Carter, Air Force Secretary Michael Donley and Air Force Chief of Staff General Norton Schwartz are due to name the victor at a short news conference.
Officials will explain the decision to the losing bidder next week, starting a 10-day clock for that company to file a formal protest. But congressional backers of the losing side could also seek to reverse the move legislatively.
The Air Force has failed with two previous attempts to begin replacing its 50-year-old KC-135 Stratotankers, which provide fuel to fighter planes and other aircraft in mid-flight, extending the range of military operations.
The decade-long saga has sparked transatlantic tensions and clashes in Congress among lawmakers eager to bring high-paying aerospace jobs to their states.
Just before the announcement, top Pentagon and Air Force officials plan to call the companies and key lawmakers, who are in their home districts during the current recess.
EADS and Boeing, arch rivals in the market for passenger jets, have fought bitterly in public over the contest with expensive advertisements while their respective supporters have battled it out at dueling news conferences.
Both Boeing and EADS, through its North American subsidiary, are offering variants of existing twin-engined wide-body passenger jets: the Boeing 767 and the Airbus A330.
Defense consultant Loren Thompson is predicting that EADS will win the bidding because Airbus generally underbids Boeing in commercial deals and was likely to have done so again, especially given its desire to build big planes on U.S. soil.
"I expect Airbus to prevail by offering a concessionary price that Boeing cannot match, since that is the European company's typical approach in commercial-transport competitions and has been the core of their tanker strategy since 2006," Thompson wrote in a blog on the Lexington Institute website.
European defense expert Howard Wheeldon, senior strategist with London brokers BGC Partners, said EADS was the most likely winner, although he said he "would not completely rule out the possibility that the award for 179 aircraft might still be split between EADS and Boeing."
Analysts widely expect the losing side to file a protest against the decision with the Government Accountability Office, the arm of Congress which rules on federal contract disputes, which would then have 100 days to rule on the case.
The Air Force has been trying since 2001 to begin replacing its Boeing-built KC-135 tankers.
An initial $23.5 billion plan to lease and then buy 100 modified Boeing 767s as tankers, fell apart in 2004.
EADS, partnered with Northrop Grumman Corp
Northrop subsequently pulled out, leaving the European aerospace and defense company to bid alone.
Top Pentagon officials have been walking on eggshells ahead of the announcement, keen to avoid any comments that could be used in a possible future protest.
(Reporting by Andrea Shalal-Esa and Tim Hepher; Editing by Tim Dobbyn, Dave Zimmerman)
