Boeing to protest decision on air tanker contract

McClatchy NewspapersMarch 10, 2008 

WASHINGTON — The Boeing Co. said Monday it will 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," Jim McNerney, Boeing's 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 Tuesday with the Government Accountability Office.

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 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 and the European Aeronautic Defense and Space Co., the parent company of Boeing's chief rival, Airbus.

Though the initial 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.

"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. "We look forward to the GAO's review of our decision."

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-EADS on the contract competition Monday.

Paul Meyer, who manages the Northrop-EADS program, said the government concluded the companies' tanker was more "advantageous" in such areas a 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, while Boeing would use the 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 will be assembled in Mobile, Ala., where Northrop-EADS said it will build a new 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.

In announcing its selection, the Air Force said that Northrop-EADS had brought its "A game" to the competition, that their plane could carry more fuel, cargo and passengers than 767, and that their bid had surpassed Boeing's in virtually every category.

But the contract award has sparked serious criticism on Capitol Hill and talk of blocking the deal.

"I now believe the Air Force misled Boeing and the Congress," Rep. Norm Dicks, D-Wash., said in an interview. "This thing just doesn't feel right."

Dicks said he had a copy of a statement that Air Force Secretary Michael Wynne made early in the competition saying the Air Force wanted a medium-sized tanker.

"What they bought is a bigger tanker," Dicks said. "This is serious business."

Wynne will testify Tuesday before the House Appropriations defense subcommittee. Dicks is a senior member of that committee.

Sen. Patty Murray, D-Wash., said she supported Boeing's decision to file a protest.

"I also believe it is Congress' duty to continue to look into the ramifications of the Air Force's decision for America's national security and economic strength," Murray said in a statement.

Rep. Todd Tiahrt, R-Kan., also said he supported the Boeing protest.

"They have very solid reasons to protest this unfair outsourcing of our economic and national security," he said. "I hope the Government Accountability Office will take into consideration the illegal subsidies provided to EADS, the difference in application of regulations for U.S. and European suppliers, the loss of American jobs and the revenue associated with those lost jobs, and most of all, the impact of outsourcing our national security."

McClatchy Newspapers 2008

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