Boeing Says It Will Protest Tanker Deal

Team Infidel

Forum Spin Doctor
New York Times
March 11, 2008
Pg. C1
By Jeff Bailey and David M. Herszenhorn
CHICAGO — Boeing said Monday that it would protest the Air Force’s award of a $35 billion contract to build aerial refueling planes to a group that includes its European rival Airbus.
The protest, to be made Tuesday to the Government Accountability Office, has appeared increasingly likely in recent days as Boeing officials issued a series of statements indicating that they felt they had been treated unfairly. Boeing has a long history of making refueling tankers and was widely expected to win the contract.
The G.A.O. would have 100 days to review the action, which can be expected to stoke a debate about American jobs and military competitiveness in an election year.
Boeing’s chief executive, W. James McNerney Jr., said company officials “found serious flaws in the process that we believe warrant appeal.”
The company acknowledges that the protest could slow delivery of the tankers, which are needed to begin replacing a nearly 50-year-old fleet of cold-war-era refuelers. “This is an extraordinary step rarely taken by our company,” Mr. McNerney said.
Boeing said it would make more detailed comments when it filed the protest.
The battle to overturn the award could be an uphill one for Boeing.
Air Force officials anticipated opposition to the award, made to a team formally led by Northrop Grumman, which is also a big United States military contractor. In a news conference announcing the decision on Feb. 29, an assistant secretary of the Air Force, Sue C. Payton, described a careful path officials had walked in assessing the two proposals, and added, “We’ve got it nailed.”
Also on Tuesday, Ms. Payton is scheduled to meet privately with members of the defense subcommittee of the House Appropriations Committee to provide information on the award that she would not discuss in public last week.
The decision particularly angered representatives from Washington State and Kansas, where Boeing would have built its tankers. Members from Alabama, where the Airbus planes would be assembled, were delighted.
The Air Force chose a tanker based on the Airbus A330 passenger jet, which can hold more fuel, troops and supplies than the rival proposal, which was based on the Boeing 767.
Boeing said the Air Force unfairly faulted it for the way it presented its cost data. The Air Force also apparently found the Boeing proposal to be higher risk, which Boeing disputed, noting that its rival bidder for the tanker deal included “two companies from different countries and business cultures who have never worked together on a program of this size before.”
Northrop said Monday that its tanker proposal had been based on a plane sold to Australian officials, “which has been built, flown and is undergoing flight tests.” It includes a refueling boom the Airbus group spent $100 million to develop.
Boeing’s tanker and boom, Northrop said, “were never built, flown or tested.”
Loren B. Thompson, a military analyst at the Lexington Institute, said of the 767-based proposal, “Boeing jazzed it up so much the government felt the company was pitching a plane it had never developed before.”
Representative Norm Dicks, Democrat of Washington, a member of the defense appropriations subcommittee and a Boeing ally, accused Pentagon officials of asking for a midsize tanker and then switching specifications to favor the bigger A330.
“If they had been transparent and honest, they would have said, ‘We want a large tanker.’ We got a raw deal,” Mr. Dicks added, noting that Boeing might have offered a tanker based on its larger and newer 777 jet.
After Boeing files a written complaint and it is assigned to a G.A.O. lawyer and accepted, the Air Force will have 30 days to respond. Both Boeing and Northrop Grumman will be allowed to respond to the Air Force.
A hearing could be required or further evidence sought before the G.A.O. makes a decision, all within 100 days.
The agency, formerly called the Government Accounting Office, is the investigative arm of Congress. It receives about 1,400 protests a year, though most are about much smaller contracts.
Jeff Bailey reported from Chicago and David M. Herszenhorn from Washington.
 
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