Airbus "contract of the century" deal with US Air Force under threat

The tussle between Airbus parent company EADS (European Aeronautic Defence and Space Company) and its American rival Boeing over a billion dollar contract with the US Air Force, took another twist on Wednesday.

In a move which could signal a blow to EADS's chances of delivering on a contract it won back in March, the US government accountability office recommended that its arch-rival, Boeing, be allowed another chance to tender a bid.

At stake is a deal worth a whopping $35 billion to supply the US Air Force with 179 new aircraft - one of the largest military acquisition programmes in US history.

In March the Air Force awarded the contract to the US manufacturer Northrop Grumman and its European partner EADS. It chose the KC-45 - based on the Airbus A330 - ahead of Boeing's slightly smaller KC-767.

In upholding Boeing's protest, the accountability office said a number of errors had been made in the process of awarding the contract to Northrop and EADS and they could have effected the outcome of the competition to the detriment of Boeing.

Up until Wednesday's ruling EADS had publicly said that it was confident of the deal being finalised and indeed its chief executive, Louis Gallois, even though admitting he was disappointed by the latest development, tried to remain upbeat.

"We support our partner Northrop Grumman and remain convinced that the KC-45 best fits the demands of the US Air Force, " he said in a statement.

"It's important to recognise that the announcement is an evaluation of the selection process, not the merits of the aircraft."

Although the accountability office's decision isn't binding on the Air Force, it'll certainly increase the pressure for new bids to be made, thereby re-opening the door to Boeing and putting at risk the original deal.

The Pentagon itself recently recognised that errors had been made in evaluating the offer.

And of course the case over possible job losses on the other side of the Atlantic will be reopened at just the same time as the presidential election campaign swings into full gear.