Financial Times FT.com

Boeing makes good its pledge to fight

By Justin Baer in New York

Published: March 11 2008 23:26 | Last updated: March 11 2008 23:26

Boeing followed through with a promise to protest against the US air force’s decision to award a refuelling tanker project to EADS, its main European rival, accusing the military of running a “fundamentally flawed” evaluation.

The air force’s decision to assign the $35bn contract to EADS and Northrop Grumman has drawn scrutiny from politicians, including Democratic presidential hopefuls Senators Barack Obama and Hillary Clinton, and renewed concerns for US job losses.

Citing a litany of mistakes that the air force made in weighing the Boeing tanker’s strengths against those of its rivals, from cost and size to past performance, the Chicago-based aircraft manufacturer said the competition “resulted in the selection on the wrong airplane”.

Mark McGraw, vice-president of Boeing’s tanker programmes, saidduring a conference call with reporters: “We think we were not treated fairly.”

Boeing filed its formal protest with the US Government Accountability Office, which will spend 100 days reviewing the process and its outcome.

The air force and the GAO did not respond to requests for comment.

The protest will further delay the replacement of the an ageing tanker fleet.

While the air force initially chose Boeing for the project in 2002, Congress cancelled the deal after the government learned that a top procurement official had held illegal job talks with the company.

The scandal sent Boeing’s chief financial officer to prison and forced its chief executive to resign.

On the call, Boeing executives declined to speculate on whether politics had played a role in the air force’s decision.

They said that they would at least like to come away from the GAO protest with a clearer understanding of how to pursue military tanker contracts in the future.

The executives took issue with the air force’s decision to go with EADS’s larger, “less capable” A330 jet, even though its proposal request initially called for a medium-sized tanker.

Boeing’s tanker, which is based on the 767 aircraft, matched the needs outlined in the request, the company said.

Beverly Wyse, another Boeing vice-president, said on the conference call: “If they wanted a larger tanker, it would have been nice to be very clear that that was a requirement”.

Air force officials have said the EADS-Northrop proposal was superior to Boeing’s on every level.

Northrop said on Monday that its successful bid would support 48,000 US jobs, which was double its previous estimate.

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