WASHINGTON - Boeing said March 10 it will protest a $35 billion aircraft refueling contract awarded by the U.S. Air Force to Northrop Grumman and European aeronautics giant EADS.
Jim McNerney, Boeing chairman, president and chief executive officer, said in a statement that the company was taking the step because it found "serious flaws in the process that we believe warrant appeal."
The company said it will file a formal protest on March 11 asking the Government Accountability Office (GAO) to review the Air Force's decision to award the contract to the Northrop Grumman and EADS team.
The Air Force announced on February 29 that it had picked the Northrop Grumman and EADS to build up to 179 of the next generation tanker planes in a stunning upset for Boeing, until now the sole supplier of air refueling planes to the U.S. military.
The contract raised a furor among Boeing backers in the U.S. Congress who charge that it will cost US jobs, and that the requirements were changed in a way that favored the larger Airbus aircraft built by EADS.
The Air Force briefed Boeing on March 7 on why its bid was rejected.
Northrop Grumman and EADS received a briefing on March 10.
"Based upon what we have seen, we continue to believe we submitted the most capable, lowest risk, lowest 'most probable life cycle cost' airplane as measured against the air force's request for proposal," McNerney said.
"We look forward to the GAO's review of the decision," he added.
"This was widely expected," said Richard Aboulafia, an analyst with the Teal Group consultancy of Fairfax, Va., noting that even an unsuccessful protest could have benefits for Boeing.
"The potential upside outweighs the potential downside," he said.
The Boeing protest is seen in some financial quarters as being unlikely to succeed.
One Wall Street analyst said, "It's interesting what Boeing is not saying. We don't hear them saying that this lot of planes or this production run will be cheaper than the Northrop-Airbus plane."
The analyst was also skeptical of the contention that the KC767 would be cheaper over the life of the aircraft.
"The commercial market decided a long time ago which was the best plane, and that's the A330," he said.
The Pentagon has defended the contract, saying it resulted from a fair competition that gave the American taxpayer the best value for the best price.
The new air refueling tanker, dubbed the KC-45, will replace the air force's fleet of aging KC-135 tankers.
Staff writers Gayle S. Putrich and John T. Bennett contributed to this report.
The Army's Future Combat Systems (FCS) program is ready to test a few components that soldiers may have in their hands by 2010.
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