Boeing will file protest of tanker pact for rival

The Baltimore Sun

WASHINGTON -- Boeing Co. said yesterday that it would formally protest a $35 billion contract awarded by the Air Force to a team that would use a European plane to replace the aging fleet of U.S. aerial refueling tankers.

"Our team has taken a very serious look at the tanker decision and found serious flaws in the process that we believe warrant appeal," W. James McNerney Jr., Boeing's chairman, president and chief executive officer, said in a statement. "This is an extraordinary step rarely taken by our company and one we take very seriously."

McNerney said the company would file the protest today with the Government Accountability Office, the oversight branch of Congress.

The company provided no details about its protest. But Boeing indicated earlier in the day that it was concerned about "inconsistency in requirements, cost factors and treatment of our commercial data."

Boeing officials had previously said the Air Force had signaled that it wanted a medium-sized tanker, but later switched to a larger tanker in a move that didn't give Boeing an opportunity to offer a bigger plane.

The decision to protest came three days after Boeing received a briefing on the contract that the Air Force awarded to Northrop Grumman Corp. and the European Aeronautic Defence and Space Co., the parent company of Boeing's chief rival, Airbus.

Though the initial $35 billion contract is for 179 planes to start replacing the Air Force's Eisenhower-era KC-135s, the deal eventually could involve nearly 600 planes worth $100 billion.

The GAO will have 100 days to rule on the protest once it is filed.

The GAO will investigate the Air Force procedures that led to its decision to give the contract to Northrop/Airbus. If the agency determines that the Air Force violated laws regarding government defense contracts, it could cancel the contract and order the Air Force to reopen the bidding.

The GAO also can confirm that the tanker contract was awarded in conformity with the law and dismiss the Boeing protest.

"Based upon what we have seen, we continue to believe we submitted the most capable, lowest risk, lowest most-probable-lifecycle-costs airplane as measured against the Air Force's request for proposal," McNerney said.

Air Force officials had said previously that they hoped a protest wouldn't be filed because it would further delay the tanker program.

Air Force officials briefed Northrop and EADS on the contract competition yesterday.

Paul Meyer, who manages the Northrop/EADS program, said the government concluded the companies' tanker was more "advantageous" in such areas as mission capability, past performance and cost.

"We are under contract and moving out to get badly needed new tankers in the Air Force fleet as soon as possible," he said.

Northrop/EADS will use an Airbus A330 for its tanker. Boeing intended to use its smaller 767.

The A330s are normally assembled in Toulouse, France, with major portions of the aircraft produced by the French, Germans, British and Spanish. The tanker version is to be assembled in Mobile, Ala., where Northrop/EADS plan to build a plant. The companies say their tanker will be almost 60 percent American-made.

Boeing 767s are built in Everett, Wash., and tanker equipment would be added and final testing would be done in Wichita, Kan. Boeing says its planes are 85 percent American-made.

Hearst Newspapers contributed to this article.

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