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Boeing Ponders Next Move While Northrop Fights Back

Boeing was debriefed by the U.S. Air Force today on why it lost the massive $40 billion tanker deal in a shocking defeat to Northrop Grumman and EADS.

Mark McGraw, head of Boeing's tanker program, spoke with me just minutes after the meeting ended. He says the company will decide by the early part of next week whether to file a formal protest, which could potentially set back production.

McGraw couldn't tell me exactly why Boeing lost, but he did say, "Reports last week that Airbus and EADS and Northrop had won this by a large margin, from what we heard today, that could not be more inaccurate."

He says he's concerned with what he calls "a disconnect" between what the Air Force asked for in a tanker, and what it actually wanted. The Air Force touted the Northrop tanker as "bigger is better," but McGraw says "the requirements didn't define bigger is better."

Meantime, Northrop Grumman and its European partner (full name: European Aeronautic Defence and Space Company) finally staged a PR offensive, holding a news conference with Alabama politicians today to try to turn the tide of outrage over Airbus building an airplane for the U.S. Air Force. Labor unions have been particularly vocal in their protest of jobs going overseas.

But in Mobile, Ala., where the tanker will be put together, the talk was about building the best airplane regardless of who's involved. Northrop President Wes Bush (yes, they have a President Bush) said, "We, too, are committed to jobs. But first and foremost we are committed to supporting the jobs that America is asking our warfighters to perform."

Standing near him was Airbus CEO Thomas Enders, sporting an American flag sticking out of his lapel pocket.

Alabama Governor Bob Riley acknowledged Boeing's hard feelings -- Boeing employs a whole lot of Alabamians -- but added, "Ultimately, we have to decide what's best for our warfighter."

He said that even though they've never built a tanker in Alabama, there was a time not too long ago when they'd never built an automobile there. This year Alabama will produce over 800,000 cars.

Finally, Republican Senator Jeff Sessions called accusations that the plane will not be American, "just a total false statement. It's an American plane!"

He also praised Presidential candidate John McCain for pushing to re-open bidding on the tanker years ago after a Boeing scandal. "He smelled a rat," Senator Sessions said.

Boeing supporters hope to convince Congress there's a different rat stinking up the place now. We should know by the beginning of next week whether a formal protest kicks this battle up to the next level.

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  • Based in Los Angeles, Jane Wells is a CNBC business news reporter and also writes the Funny Business blog for CNBC.com.

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