Boeing: Air Force tilted the playing field

updated 7:10 p.m. ET March 18, 2008

WASHINGTON - Boeing Co. said Air Force officials tilted the playing field in a $35 billion tanker contract competition toward Northrop Grumman Corp. and European Aeronautic Defence and Space Co.

In a formal protest of the contract made public on Tuesday, Boeing said the Air Force “repeatedly made fundamental but often unstated changes to the bid requirements and evaluation process” to keep the Northrop Grumman/EADS proposal alive.

The release of the executive summary of the protest is Boeing’s latest public relations salvo in its attempt to overturn the Air Force award of the tanker deal to the Northrop/EADS team. Doing so won’t be easy — a fact Boeing acknowledged Tuesday.

Mark McGraw, manager of Boeing’s tanker program, said reversing the Air Force’s decision will be “an uphill battle,” but he’s confident the company will prevail.

Last week, the Chicago-based company filed its protest with the Government Accountability Office, which has 100 days from the date of the filing to rule. In the protest, Boeing maintains that the Air Force review “was not a fair and open competition, but a skewed process that unfairly compromised Boeing’s proposal.”

Boeing has also turned to several of its existing lobbying firms, including Denny Miller Associates and Gephardt Group, to press its case. And on Monday, Boeing said its tanker could have saved $30 billion in fuel bills over 40 years.

Northrop Grumman, too, has gone on the offensive. Paul Meyer, manager of Northrop’s refueling tanker program, said Tuesday he doesn’t understand Boeing’s claims since both companies had adequate opportunity to comment on and help shape several versions of the Air Force’s request for proposal. He added that his competitor’s attacks on the Air Force acquisition process come as a surprise.  

On the lobbying front, Northrop has hired former Senators Trent Lott, R-Miss., and John Breaux, D-La. to keep the contract where the Air Force first put it on Feb. 29.

In a statement, the Air Force defended the tanker competition as transparent and fair, saying it provided both bidders with continuous feedback on the strengths and weaknesses of their proposals.

The surprise selection of Europe’s EADS, parent of Boeing rival Airbus, and Los Angeles-based Northrop Grumman is major blow to Boeing. The company has supplied refueling tankers to the Air Force for nearly 50 years and was considered the heavy favorite to win the new contract to replace 179 planes. The deal is the first of three Air Force awards worth as much $100 billion to replace the entire fleet of nearly 600 tankers over the next 30 years.

Boeing’s shares rose $1.04 to $76.53 Tuesday. And Northrop’s shares were up 49 cents $79.79.

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