Boeing confident of winning back tanker deal

Boeing Co's program manager for tanker aircraft voiced great confidence on Tuesday about winning back a $35 billion aerial-refueling deal from a team that includes European archrival Airbus. ( Reuters )

Mark McGraw, a company vice president, said he was "as confident as I can be" that congressional auditors would find fault with the U.S. Air Force's February 29 choice of the rival team of Northrop Grumman Corp and Airbus parent EADS to build 179 planes.

On March 10, Chicago-based Boeing, in a protest to the Government Accountability Office, said the Air Force had gone overboard to keep Northrop and EADS from withdrawing and to preserve the "possibility of competition."

In an edited summary of its complaint provided to reporters on Tuesday, Boeing said the winning plane, a modified Airbus A330, was a much riskier choice than Boeing's proposed tanker based on its smaller 767 airliner.

In picking the A330, the Air Force misapplied its own selection criteria, disregarded its bidding specifications and breached federal acquisition rules, Boeing told the GAO.

The result was a contract "that is fundamentally unfair not only to Boeing, but to the warfighter and the American people," the protest summary said.

Despite his stated confidence in reversing the outcome, McGraw, in a teleconference with reporters, said Boeing faced an "uphill battle" to persuade the GAO, which has up to 100 days to make a recommendation to the Air Force.

"I think the best we can hope for is another shot" at the competition, he said, referring to a possible rerun of all or part of the contest to correct alleged flaws in the process.

The Air Force has said the Northrop/EADS plane was the best suited to replace aging tankers used to extend the range of warplanes by in-flight refueling.

Boeing, in its complaint, said the Air Force had opted for among other things "an illusory cost benefit fueled by EADS' reliance upon illegal foreign subsidies."

The United States has accused Europe of improperly subsidizing Airbus, while Europe has complained of U.S. help for Boeing, in twin complaints to the World Trade Organization.

In a hastily called teleconference to respond to Boeing, Northrop Grumman's tanker program manager, Paul Meyer, said he considered the WTO dispute a "red herring" with no relevance to the tanker contest.

Meyer also denied that Northrop, the prime contractor for the winning plane, had threatened to walk away even though he said Northrop failed to persuade the Air Force to change evaluation criteria in a way it had sought.

He rated as "low" the chance that GAO would uphold all or part of Boeing's protest. Northrop halted work on the tanker contract after receiving a routine "stop work" letter sparked by Boeing's protest, Meyer said.

Randy Belote, a spokesman for Northrop Grumman, said the Air Force made clear that capabilities outweighed cost in its choice of the newly named Northrop/EADS KC-45A tanker.

"The KC-45 was selected as a result of the most rigorous, transparent, acquisition process in the history of the U.S. Defense Department," he said in reply to the Boeing complaint.

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