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Report: Air Force shuts Boeing out of $40 billion tanker deal

Expected to win the contract, Boeing instead loses out to consortium of Northrop Grumman and parent company of Airbus.

Northrop Grumman won a $40 billion Air Force contract to build refueling tankers Friday, a deal Boeing was expected to win. Northrop Grumman

Boeing officials must be feeling a little bit like the New England Patriots after the aerospace giant on Friday lost out on a $40 billion Air Force deal.

According to The Wall Street Journal (subscription required to view full article), Boeing was considered the favorite to win a $40 billion deal to build midair refueling tankers for the Air Force, but lost out in the end to a consortium made up of Los Angeles-based Northrop Grumman and the European Aeronautic Defence & Space, parent company of jet maker Airbus.

"Boeing was heavily favored to win the contract," the Journal reported. "It had been on the verge of sewing up a similar tanker deal in 2001, only to see it unravel after the revelation that a top Boeing official had conducted illegal job negotiations with an Air Force acquisition official who later joined the company. That thrust Boeing into a years-long ethics scandal, and the U.S. put the contract up for rebidding."

Still, heading into the Air Force's final decision on the deal, Boeing was seen as the front-runner for the contract, and even those at Northrop Grumman were expecting to be shut out.

But the Air Force thought otherwise.

"Northrop Grumman clearly provided the best value to the government," the Journal quoted Air Force acquisitions official Sue Payton as saying.

According to the Air Force, the contract was for the right to build up to 179 tanker aircraft, to be called the KC-45A, for the Air Force.

"The tanker is our No. 1 procurement priority right now," said Air Force Gen. Duncan McNabb in a press release about the deal. "Buying the new KC-45A is a major step forward and another demonstration of our commitment to recapitalizing our Eisenhower-era inventory of these critical national assets."

The KC-45A is expected to be able to provide refueling to both Air Force and Navy planes, while its predecessor, the KC-135, must be configured for one or the other before takeoff.