Boeing files protest over tanker choice
Boeing Co. launched what may be its biggest political fight in decades Tuesday as it seeks to reverse the awarding of a $40-billion defense contract to a joint U.S.-European entry headed by Northrop Grumman Corp.
The aerospace giant said it was “not treated fairly” in the selection process and cited “irregularities” with the way the Air Force evaluated its proposal. The Chicago-based company filed a formal protest challenging the Pentagon’s decision to buy 179 aerial refueling tankers from Northrop and European partner Airbus.
“The competition was seriously flawed and resulted in the selection of the wrong airplane,” said Mark McGraw, Boeing’s program manager for the tanker bid.
The protest with the Government Accountability Office, an investigative arm of Congress, marks the first step in what will probably be a protracted battle to overturn the Feb. 29 decision that stunned not only Boeing but most aerospace industry observers. Boeing was considered the favorite heading into the competition that started early last year.
The contract win by Century City-based Northrop and Airbus, a subsidiary of European Aeronautic Defense & Space Co., has also stirred “buy America” sentiments, particularly from unions and lawmakers in states where Boeing has big payrolls. They have criticized the contract, which they said would send jobs and key U.S. technology overseas.
Northrop’s bid called for modifying the Airbus A330, a jetliner developed and assembled in Toulouse, France. The tanker, dubbed the KC-45A, will be assembled in Mobile, Ala. Boeing’s proposal involved modifying its 767 passenger jet at company facilities in Everett, Wash., and Wichita, Kan.
In a teleconference Tuesday, Boeing executives said the company intended to argue that it was misled into believing that the Air Force wanted a medium-size tanker and that the larger Northrop plane benefited from changes made to evaluation criteria.
“We put an A-team effort into this,” McGraw said. “We were deliberate in this process and we think we were not treated fairly.”
The Air Force said in a statement that although it could not respond in detail, the winning bid “is the one the Air Force believes will provide the best value to the American taxpayer and to the war fighter.”
A GAO ruling in favor of Boeing would give ammunition to its supporters in Congress who can call for the Air Force to rescind the contract award and restart the bidding. That could further delay delivering the planes to the Pentagon.
Congress can’t force the Pentagon to alter it decision, but it can withhold funding.
If the GAO fails to find fault with the Air Force’s decision and denies Boeing’s challenge, Congress is unlikely to act to overturn the decision, several industry analysts said.
“If GAO finds no error then it will become a regional fight between Washington and Alabama and thus turn into a stalemate,” said Loren Thompson, a defense policy analyst for the Lexington Institute.
As Congress waits for the results of the GAO’s review, which can take up to 100 days, supporters on both sides have stepped up their high-stakes public relations campaigns.
Democratic Rep. Norm Dicks of Washington state, home to major Boeing assembly plants, said he would keep talking to his colleagues to “convince them that what the Air Force did was wrong.”
Northrop said it would began running today a “barrage of ads” in the District of Columbia touting the number of “American” jobs that would be created and how its tanker would be able to help the U.S. military.
Separately, the Associated Press reported Tuesday that two campaign advisors for Sen. John McCain’s presidential bid previously worked for a lobbying firm whose clients included Netherlands-based EADS, the Airbus parent.
McCain has kept a close eye on the tanker issue ever since his inquiries led to the cancellation of the initial $23-billion lease contract with Boeing. That deal was called off after a probe found that a civilian Air Force procurement official had favored Boeing on several contracts, including the lease deal, at the same time she was being recruited by Boeing for an executive position. The scandal prompted the Air Force to hold a second tanker contract competition.
McCain told the Associated Press that he had “nothing to do” with the current contract, “except to insist in writing, on several occasions, as this process went forward, that it be fair and open and transparent.”
