Boeing to Challenge US Air Force Tanker Decision

Boeing on Monday said it will formally protest a $35 billion Air Force contract awarded to European Aeronautic Defence and Space and Northrop Grumman.

Boeing's chairman and CEO, Jim McNerney, said in a statement the Chicago-based aerospace company "found serious flaws in the process that we believe warrant appeal."

The award to replace 179 air-to-air refueling tankers is the first of three major Air Force contracts to replace its entire fleet of nearly 600 aging tankers and could be worth $100 billion over the next 30 years.

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[BA  Loading...      ()   ], which was debriefed by Air Force officials on Friday about why EADS and Northrop Grumman won the high-stakes deal, said Monday that it had "serious concerns" about the fairness of the competition, citing "inconsistency in requirements, cost factors and treatment of our commercial data."

"This is an extraordinary step rarely taken by our company, and one we take very seriously," McNerney said.

Representatives from EADS and the Air Force did not immediately have any comment.

Boeing hinted at the basis for its protest, claiming the Air Force changed its method for evaluating the two tankers even after issuing a request for proposals. These changes allowed a larger tanker to be competitive even though the Air Force originally had called for a medium-sized plane, Boeing said. Air Force officials have indicated that the larger size of the tanker offered by the EADS/Northrop team helped tip the balance in its favor.

Sen. Patty Murray, a Democrat, who represents a state that is home to many Boeing jobs, continued to criticize the Air Force's decision after Boeing announced its plans to protest the deal.

"The Air Force's short-sighted decision to place the future of America's aerospace industry and national security in the hands of an illegally subsidized foreign competitor is simply wrong for America," Murray said.

Once Boeing files its protest, the Government Accountability Office will have 100 days to issue a ruling. A protest could delay execution of the tanker contract by nearly a year, according to Loren Thompson, a defense analyst with the Lexington Institute, a think tank.