Boeing protests 'skewed process' in tanker bidding

WASHINGTON — Boeing Co. said Air Force officials tilted the playing field in a $40 billion contract competition toward Northrop Grumman Corp. and European Aeronautic Defence and Space to keep the two in the game.

In its formal protest of the air tanker award, released publicly 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 proposal is Boeing's latest public relations salvo in the tanker battle. Last week, the Chicago-based company filed its protest with the Government Accountability Office to overturn the Air Force award. It has also enlisted several big lobbying firms, notably McBee Strategic Consulting, Denny Miller Associates, Gephardt Group and Akin Gump Strauss Hauer & Feld, to press its case.

Northrop Grumman's CEO also went on the offensive last week, warning that tossing the tanker award would undermine all government procurement and defending the Air Force's evenhanded review.

In its protest, Boeing said the review "was not a fair and open competition, but a skewed process that unfairly compromised Boeing's proposal."

The contract to replace 179 air-to-air refueling tankers is the first of three Air Force deals worth as much $100 billion to replace the entire fleet of nearly 600 tankers over the next 30 years.

The surprise selection of EADS, parent of Boeing rival Airbus, and Los Angeles-based Northrop Grumman is major blow to Boeing. The company has supplied fueling tankers to the Air Force for nearly 50 years and was considered the heavy favorite to win the new contract.

The GAO has 100 days from the date of Boeing's March 11 protest filing to issue a decision.

The award has drawn intense interest on Capitol Hill. At a series of hearings over the past two weeks, lawmakers from states that would have gained jobs from a Boeing win have pressed Air Force officials to explain their decision. At least two — Rep. Todd Tiahrt, R-Kan., and Rep. Norm Dicks, D-Wash. — are considering legislation to overhaul the procurement process or even block funding for the tanker deal.

Meanwhile, lawmakers from Alabama and other states where the Northrop/EADS team will perform its tanker work are rallying the defense. Although the underlying Airbus plane would be built mostly in Europe, the companies plan to perform final assembly work in Mobile, Ala., and use General Electric Co. engines built in North Carolina and Ohio.

The contract has even seeped into the presidential race. The presumptive Republican candidate, Sen. John McCain, played a lead role in uncovering a procurement scandal in 2003 that sent a top Air Force acquisition official to prison for conflict of interest and led to the collapse of an earlier tanker contract with Boeing.

McCain pressured the Air Force to open the new tanker contest to competition and to disregard concern over European Union subsidies to Airbus, which are at the heart of a U.S. Trade Representative complaint against the EU before the World Trade Organization.

That history forms the backdrop of a key complaint in the Boeing protest — namely that "the process became driven by the Air Force's determination to create the possibility for competition between two planes that offered dramatically different capabilities."

In its filing, Boeing said that pressure from Capitol Hill and the Northrop Grumman/EADS team ultimately led the Air Force to pick the larger plane offered by Northrop and EADS even though it had originally asked for a medium-sized tanker.

Air Force officials have said they choose the EADS/Northrop tanker, which is based on the Airbus 330 commercial plane, in large part because its size will enable it to carry more fuel, cargo and passengers.

But Boeing said the original request for proposal "did not call for a jumbo-sized tanker."

The company proposed a tanker based on its 767 commercial aircraft, but said it would have used a larger 777 platform if it had known the Air Force wanted a larger plane.

The protest also charges that the Air Force changed its requirements to accommodate the bigger tanker — assuming maximum runway strength and ignoring estimates on tarmac sizes, for instance, to make it appear that more air bases would be able to handle the larger plane.

In addition, the protest argues that the Air Force ignored Boeing's lengthy track record of producing aerial refueling tankers for the military and "the inherent manufacturing genius of its bid."

Boeing also said it was unfairly penalized for not providing adequate commercial cost and pricing data for the underlying 767 plane even though the Air Force had told Boeing officials that it was satisfied with the data it had supplied.

And it claimed that EADS had an unfair advantage in the competition since its Airbus unit benefited from illegal European Union subsidies.