Boeing's tanker bid damaged when Air Force changed criteria, Dicks says

WASHINGTON — During a contentious hearing Wednesday over the Air Force tanker deal awarded to Airbus parent EADS and Northrop Grumman, Rep. Norm Dicks said the Pentagon changed contract specifications to favor that team's bid over Boeing's so they wouldn't drop out of the contest.

Waving documents, the Bremerton Democrat asked Air Force acquisitions director Sue Payton whether she had made changes "at the last minute" to the air-lift standards in the Request for Proposal (RFP) after the bidding process started Jan. 30, 2007 for the $40 billion contract.

"I urge you not to say 'No,' " Dicks said, adding, "I have the letter. You did it."

Payton, the main witness before the House Appropriations Committee, said any alterations to the criteria were not changes to the "requirements" in the RFP after it was formally issued.

Committee Chairman Rep. John Murtha, D-Pa., said he is considering legislation to hold up the tanker contract while members review it for bias toward France-based Airbus and for its impact on the U.S. economy and unemployment.

"All this committee has to do is stop the funding for the program," Murtha said.

Letters between Boeing and the Air Force dated March 2007 indicate the Pentagon raised the strength levels of the takeoff ramps for the tankers and shortened the amount of wing space needed between planes while they are parked.

This gave Airbus, with a heavier and wider aircraft, a better chance in the competition, Dicks said.

Boeing "strenuously objected" to the changes, he said. The company both wrote and called the Pentagon to complain.

Dicks said Boeing was told by the Air Force the revisions were necessary to keep the other team in the bidding and avoid a sole-source contract.

On one of the documents Dicks waved was a handwritten note from a Boeing employee, made after an unsuccessful appeal in a phone conversation with the Air Force. The note read: "This change was made to keep NG [Northrop Grumman] in the competition."

Payton declined to comment specifically on those documents.

She said there was no favoritism and repeated several times she had followed the law carefully in the bidding process.

"Northrop Grumman brought their 'A Game,' " to the competition, said Payton.

That remark provoked a Republican on the panel to complain Payton was avoiding mentioning Airbus or its European parent.

"Northrop's a front," said Rep. Dave Hobson, R-Ohio.

Republicans and Democrats questioned the choice of the Airbus larger airframe, the A 330.

Dicks called the size issue "most damning of all," adding that the Pentagon had pulled a "bait and switch" in telling Boeing that it wanted a medium-size tanker, such as the 767.

"Had Boeing known that the Air Force wanted more, it would have bid the 777," he said.

Boeing defense chief Jim Albaugh made that same point at an investor conference in New York.

"If they had wanted a big airplane, obviously we could offer the 777," Albaugh said, "and we were discouraged from offering the 777."

Murtha and Dicks alluded a few times to an unnamed member of the Senate, who put "tremendous pressure," on the Pentagon to accommodate Airbus, according to Murtha.

They were speaking of Sen. John McCain, R-Ariz., who brought down the last tanker contract, in 2004. McCain contacted the Pentagon in 2006 about the RFP draft, which Dicks said helped Airbus.

McCain said this week his only goal was an open competition.

Several committee members, including Rep. Todd Tiahrt, R-Kan., raised worries about the loss of jobs to Europe and the refusal of the Air Force to consider European governments' subsidies to EADS.

Hobson said "we have a different duty sometimes" in Congress — to protect America's industrial base and longterm manufacturing capability.

Payton said none of those issues could legally be included in contract deliberations.

Tiahrt prodded Payton about whether she applied the "Buy American" Act to the contract. She said she did, adding that the legislation allows the U.S. to treat firms based in NATO countries as U.S.-based companies.

Whether Murtha has enough votes to delay the program by stopping the funding remains to be seen.

After the hearing, Northrop Grumman issued a lengthy, irate statement objecting to what it called "inaccurate comments" by members of the House panel.

It said the contract with Airbus will "create a new aerospace manufacturing corridor in the southeastern U.S.," and return competitiveness to the industry.

Large sections of the tanker will be built in Europe, then shipped across the Atlantic for assembly in Mobile, Ala., which will gain some 1,500 direct jobs.

The Air Force will debrief Boeing on the details about its losing bid Friday.

At Wednesday's investment conference, Albaugh said Boeing will wait for that meeting before deciding whether or not to formally protest the tanker award.

Payton and her team also plan to meet soon with committee members behind closed doors.

Alicia Mundy: 202-662-7457 or amundy@seattletimes.com

Seattle Times aerospace reporter Dominic Gates contributed to this story.