McCain calls for watchdog over U.S. tanker rematch

WASHINGTON (Reuters) - Sen. John McCain said an independent watchdog should keep tabs on a rematch pitting Boeing Co (BA.N) against the team of Northrop Grumman (NOC.N) and Europe's EADS (EAD.PA) to build a multibillion-dollar refueling fleet for the U.S. Air Force.

McCain, now top Republican on the Senate Armed Services Committee, sparked a transatlantic battle and strains in Congress by opposing an initial, post-September 11 tanker acquisition plan as a "sweetheat" deal for Boeing.

Speaking at the Reuters Washington Summit on Wednesday, he singled out the Government Accountability Office, Congress's audit and investigative arm, as a good choice to make sure the next competition is fair.

The Air Force had picked Northrop over Boeing last year to build an initial 179 mid-air refueling aircraft, but Boeing successfully protested the award to GAO.

"I'd like to see them track it along the way," the Arizona Republican said in a wide-ranging interview with Reuters. "And I would trust their judgment as to whether the whole process is biased toward one side or the other."

"Given Boeing's past experience, it's just hard for me to believe that they would try to skew the process in an unfair fashion," added McCain. "But that's why we have watchdog agencies that have the talent and expertise, I think, to make those kind of judgments. I cannot make a judgment."

Early on in the rematch, Northrop said last month the U.S. Defense Department had given Boeing a "fundamentally unfair" edge for a potential $50 billion mid-air refueling fleet. It cited pricing information Boeing gained on Northrop's winning offer as part of its successful challenge to the contract.

The Pentagon's top weapons buyer, Ashton Carter, has dismissed Northrop's complaint, saying the pricing data was inaccurate, outdated and not germane to the new competition.

Chuck Young, a spokesman for GAO, said if a formal request came in for GAO involvement "we will follow our usual protocols and consider it as appropriate."

Northrop Grumman declined to comment and Boeing did not immediately respond to a query. The Pentagon and Air Force did not respond to requests for comment.

McCain said he agreed with Defense Secretary Robert Gates that the Defense Department should steer clear of throwing up its hands and splitting the tanker deal between the rivals.

"If there was going to be no (additional) cost, I think you might want to consider that," he said. But Gates has argued that there would be huge increases in cost to the taxpayers.

McCain defended his initial push to scuttle a $23.5 billion plan to lease modified 767 aircraft from Boeing as tankers, saying he knew the deal was corrupt.

Boeing's former chief financial officer and an ex-Air Force arms buyer ended up in federal prison for conflict-of-interest violations.

"I sure as hell knew," he said. "I just knew it was a matter of time before we caught somebody. If it walks like a duck and quacks like a duck, it's a duck."

(Reporting by Jim Wolf; editing by Anthony Boadle)