EADS drops bid for US air force tanker contract

Aerospace company gives up fight to build refuelling aircraft that would have secured thousands of jobs

After a two-year struggle against American protectionism, the European aerospace company EADS has given up fighting for a $35bn (£23.3bn) contract to build refuelling aircraft for the US air force that would have guaranteed thousands of manufacturing jobs in Britain, France, Germany and Spain.

EADS and its US partner, Northrop Grumman, announced late yesterday that they would not submit a fresh bid for a contract to make 179 tankers to replace the ageing American military fleet of mid-air refuelling planes, leaving the field clear for the all-American Boeing team to pick up the work.

The decision ended a bitter political furore over the deal, which is among the biggest US defence procurement projects on record.

EADS and Northrop won the contract in 2008, prompting an outcry at the height of the US presidential election campaign about sensitive military work going overseas.

After a formal protest from Boeing and a long delay, the Pentagon restarted the tender contest last month.

Withdrawing from the fray, EADS accused the US government of redrawing its criteria for the refuelling tankers to "heavily weigh the competition" in favour of Boeing's "smaller, less capable" proposed aircraft.

Northrop Grumman said although it had good legal grounds to challenge the redrawn criteria, it did not feel it would be responsible to delay the process further: "America's servicemen and women have been forced to wait too long for new tankers."

The decision represents a blow to 13,000 British workers employed at EADS's Airbus factories in north Wales and Bristol.

Under the trans-European proposal, the wings for the planes would have been made in Britain, fuselages in France and Germany, tails in Spain and the aircraft would have been equipped by Northrop in the US. During the US election campaign in 2008, Barack Obama and his rival Democratic contender, Hillary Clinton, both condemned the contract's award to an international consortium, criticising the "outsourcing" of jobs and critical national security to overseas suppliers.

Bob Riley, governor of Alabama where Northrop would have fitted out the EADS aircraft, last night criticised the Pentagon for "disgraceful" handling of the deal: "When the air force is compelled by politics to select the slower, smaller and older plane, no one can say with a straight face that this is what's best for America or America's warfighters," he said.

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