Boeing defense chief: 767 tanker was better, cheaper

The head of Boeing's defense division said the Air Force had discouraged Boeing from proposing a bigger tanker built on the 777, and he challenged Pentagon leaks suggesting that the rival Northrop Grumman-EADS team's plane had beaten Boeing's smaller offering on all counts.

Speaking at an investor conference in New York, Jim Albaugh, chief executive of Boeing's Integrated Defense Systems (IDS), direct contradictedviews expressed today by Air Force Secretary Michael Wynne at a Senate Armed Services Committee hearing.

Albaugh insisted that Boeing's bid for the $40 billion refueling tanker contract was cheaper, lower risk and met military requirements better than the winning Northrop/EADS bid, despite suggestions to the contrary since Friday's surprise announcement.

"Frankly nothing that was said last Friday, or nothing that's been leaked to the press, changes our view that we address those three criteria better than the competition," Albaugh said.

Albaugh went on to question the leaks from the Air Force in the past week, which suggested that the Northrop/EADS A330 airplane beat out the Boeing 767 because of its larger size and increased capacity for fuel, cargo and troop-carrying.

"This was never about the biggest airplane and it was never about who could haul the most cargo and it wasn't about... who could haul the most gas," Albaugh said. "What this thing was about was deploying fuel to the fight and being able to get to austere forward base runways."

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

On cost, Albaugh cited the $35 billion mentioned in last Friday's announcement as the full price of the 179 tankers (not counting operational support and maintenance costs) as evidence that Boeing was cheaper.

"Our proposal is less than $35 billion and we were lower cost than that," said Albaugh. "It was about life cycle cost and we know that the 767 burns less fuel than A330, so it's hard for us to understand how from the life-cycle cost standpoint we weren't lower."

With regard to risk, Albaugh expressed disbelief that the Northrop/EADS plan to build parts in Europe and ship them across the Atlantic to a new plant in Alabama that is still to be built could be considered less risky than building the 767 tanker in Everett.

"Boeing is a single company. It uses common operating systems. We've been building tankers for 60 years. And we know how to work together (Boeing Commercial) and IDS," Albaugh said. "Look at the competition. We're talking about two companies that will be working together for the first time on a tanker, different systems, different languages, different cultures, across an ocean. It's difficult for me to understand how we could be higher risk."

Albaugh said Boeing will wait for a debriefing from the Air Force Friday before deciding whether or not to formally protest the tanker award. Until then, Boeing is clearly out on a limb.

"Our view is obviously different than the Air Force, and we need to have that debrief so we can understand" why Boeing lost, Albaugh said.

Secretary Wynne told a Senate hearing Wednesday that the European refueling tanker "was clearly a better performer" than Boeing's.

Dominic Gates: 206-464-2963 or dgates@seattletimes.com

Secretary Wynne's comments provided by The Associated Press.