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. Last Updated: 07/27/2016

UAC Expected to Bid for U.S. Aerial-Refueling Tanker

WASHINGTON — A surprise Russian bid was reported in the works Friday for a multibillion-dollar U.S. aerial-refueling fleet, even as Europe's EADS sought three more months for a possible bid of its own.

The fresh competitor is a joint venture due to be announced by a U.S. defense contractor and United Aircraft Corporation, an aerospace consortium partly owned by the Russian government, said John Kirkland, a Los Angeles-based lawyer representing the planned partnership.

Foreign Minister Sergei Lavrov discussed the tanker contest with visiting U.S. Secretary of State Hillary Clinton on Friday and "would very much like to discuss it further before she leaves," Kirkland said, citing a senior Russian aerospace-trade official.

The developments shook up the U.S. Air Force's troubled, nearly decade-long effort to start replacing its fleet of Boeing-built KC-135 tankers, which on average were built nearly 50 years ago.

They raised the prospect of a three-way contest pitting the Russians against EADS, the corporate parent of Airbus, and Chicago-based Boeing.

The U.S. Defense Department is "right now seriously considering the extension request from EADS," Geoff Morrell, the Pentagon press secretary, said in an e-mailed statement. The current deadline is May 10.

"We have always made clear that this is a fair and open competition, and we welcome all qualified bidders," he said in response to a question about the reported Russian offer.

EADS, which lost its U.S. partner for the job last week, could rejoin the race if it determines that "there is a fair chance to win, after evaluating all relevant factors," the company said earlier Friday.

Northrop Grumman, teamed with EADS, bested Boeing for a 2008 deal to build an initial 179 tankers, only to have that award canceled after U.S. auditors found that the Air Force had failed to follow its own judging rules.

Los Angeles-based Northrop, which would have been the prime contractor, withdrew on March 8 from the planned rematch, which is valued at up to $50 billion.

In dropping plans to bid, Northrop chief Wes Bush said the Pentagon's final tender "clearly favors" Boeing's smaller 767-based plane over the larger Airbus A330 derivative pitched by EADS.

EADS had hoped to use the tanker contract as a beachhead in the United States, the world's most lucrative market for military goods.

The Pentagon, battling cries of foul and charges of protectionism from European allies, reiterated on Thursday that it would welcome an EADS bid and would weigh a "reasonable" deadline extension.

In the latest twist, Russia's UAC would seek to offer a tanker version of its Ilyushin Il-96 wide-body jetliner, dubbed the Il-98, Kirkland said in a telephone interview.

The planes would be largely built in Russia and assembled in the United States, according to The Wall Street Journal, the first to report the plan.

"They've been planning this for more than a year," Kirkland said, adding that he had been involved for more than six months. "If it's a fair competition, UAC wins," he said.

He declined to name the U.S. joint venture partner but said it was publicly traded and due to be announced by Monday.

Prime Minister Vladimir Putin told Clinton at their meeting Friday that Russian companies needed more help to penetrate the U.S. market.

EADS, in its statement, said the Defense Department had welcomed a possible proposal under which EADS' North American unit would be prime contractor, not merely the partner of a U.S.-based firm.

Boeing, the Pentagon's No. 2 contractor by sales after Lockheed Martin, recognized that it must earn the deal by meeting or beating all requirements with a tanker that is "cost-effective to buy, own and operate," said spokesman William Barksdale in an e-mail.

This is the third attempt since 2001 to start buying new tankers, which are used to refuel other planes in midair.