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Boeing says weighing protest over tanker deal snub

muddy the waters
by Staff Writers
Washington (AFP) March 8, 2008
Boeing said it will decide "early next week" whether to file a protest over the US Defense Department's decision to award a lucrative aircraft contract to Europe's Northrop Grumman/EADS group.

Boeing officials "will take the next few days to evaluate the data presented and will give serious consideration to filing a protest," the US aerospace giant said in a statement issued late on Friday.

"Our plan now is to work through the weekend to come to a decision on our course of action early next week," said Mark McGraw, Boeing vice president.

The company issued the statement after meeting Pentagon officials as they sought a full explanation as to why the Defense Department rejected Boeing's bid in favor of its European rival.

The US Air Force announced its decision a week ago to select a team led by Northrop Grumman Corporation and the European Aeronautic Defence and Space Company (EADS) to provide 179 new KC-45A aerial refueling tankers in a 35-billion-dollar deal.

Boeing had been heavily favored to win the contract, an initial phase in replacing the air force's aging fleet of Boeing tankers.

"While we are grateful for the timely debriefing, we left the room with significant concerns about the process in several areas, including program requirements related to capabilities, cost and risk; evaluation of the bids and the ultimate decision," said McGraw, the program manager of the KC-767 tanker.

"What is clear now is that reports claiming that the Airbus offering won by a wide margin could not be more inaccurate," he said.

Boeing's arch-rival in commercial aircraft, EADS subsidiary Airbus, based in Toulouse, France, will now assemble the new tankers in Alabama. Northrop Grumman and other US firms will militarize the planes.

The unexpected choice of EADS for part of a major military contract has sparked a backlash among unions and lawmakers, particularly in those states in line to gain jobs if Boeing won.

Some prominent Democrats in Congress pinned blame on Republican presidential candidate John McCain, who had led calls for cancelling an earlier contract for Boeing amid allegations of fraud and favoritism.

"The person that stopped (the tanker) from going to a US company was Senator McCain, and now we are going to send major high-paying jobs overseas," Representative Rahm Emanuel, a senior Democrat from Illinois, was quoted as saying by the Seattle Post-Intelligencer.

While McCain had charged the Pentagon was showing favoritism in its dealings with Boeing, advocates for the US aerospace firm argued that Airbus enjoyed an unfair trade advantage because of financial subsidies it receives from the European Union.

But McCain had advised the Pentagon not to take the Airbus subsidy into account.

"And the only reason that they could even bid a low price is because they receive a subsidy," said Representative Norm Dicks, a Democrat from Washington state whose district is home to Boeing workers.

"And, you know, again, Senator McCain jumped into this last and said that they could not look at the subsidy issue, which I think is a big mistake," Dicks told the Public Broadcasting Corporation on Thursday.

In May 2003, a similar tanker contract was awarded to Boeing, but it was annulled under allegations of procurement fraud, for which Boeing paid a record 615-million-dollar settlement to the US government.

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