Air Force agrees to brief Boeing on tanker loss
WASHINGTON (Reuters) - Under mounting pressure from lawmakers and a top Pentagon leader, the Air Force on Tuesday agreed to speed up a briefing with Boeing Co (BA.N) about why it lost a $35 billion aircraft contract to Northrop Grumman Corp (NOC.N) and its European partner EADS (EAD.PA).
Tight-lipped since it got the bad news on Friday, Boeing on Tuesday demanded immediate answers, calling the Air Force's plan to delay the briefing about the lucrative contract until March 12 inconsistent with procurement practices.
Sen. Patty Murray and Rep. Norman Dicks, both Democrats from Washington state, said the meeting would now be slated for Thursday, and would help Boeing decide whether to protest the contract award, which has sparked a political firestorm.
Pentagon acquisition chief John Young defended the contract award, saying the Air Force followed the rules carefully and there was no obvious reason for a protest in this case. He said an independent Pentagon team of civilian and military experts also tracked every step of the process, just to be sure.
Young said he had also urged the Air Force to brief Boeing "as soon as possible," possibly on Thursday, and there was no reason for an extended delay.
Despite the outcry on Capitol Hill about the potential for U.S. job losses, Young said federal law did not allow the Pentagon to consider how many jobs were created by a weapons program and required it to get the "best value" deal it could.
"I don't think anybody wants to run the department as a jobs program," Young said, noting he was usually under pressure from lawmakers to reduce the cost of weapons programs -- not maintain jobs in a certain region.
He also warned that any move by Congress to ban foreign-made weapons would be a "terrible reaction" and could trigger similar retaliation abroad.
Top Air Force arms buyer Sue Payton is due to testify about the tanker contract on Wednesday before the House of Representatives Appropriations defense subcommittee.
Air Force Secretary Michael Wynne is due to testify about the budget to the Senate Armed Services Committee, but he is sure to face questions about the tanker contract.
Lawmakers who backed the Boeing proposal say they are outraged that the contract went to a team that includes EADS, the parent of Airbus, instead of Boeing, which built the current fleet of KC-135 refueling tankers in the 1960s.
Republican Sen. Sam Brownback of Kansas, a member of the committee that controls the purse-strings of the Pentagon and other federal agencies, vowed to fight funding for the deal.
"I think it's the wrong thing to do. I'm going to fight against this in appropriations," Brownback said on the Senate floor. Sen. Pat Roberts, the other Kansas Republican, and Washington's two Democratic senators also criticized the deal.
If Boeing had won, it planned to build its 767 tanker in Washington state and modify it for military use in Kansas.
BOEING WANTS ANSWERS
Chicago-based Boeing called on the Air Force to explain immediately why it lost the lucrative contract, claiming its bid was more cost-effective and less risky than Northrop's.
"We do not understand how Boeing could be determined the higher-risk offering. It's important for us to understand how the Air Force reached their conclusion," said Mark McGraw, vice president of Boeing's 767 tanker programs, noting details of the Air Force's evaluation were already leaking out.
Losing bidders have 10 days after receiving a formal debriefing to file a protest against the contract award. Boeing has said it will review its options after the briefing.
Defense analyst Loren Thompson said on Monday that Northrop beat Boeing on every major evaluation criteria, including mission capability, price and performance risk.
The United Steelworkers on Tuesday joined the AFL-CIO in criticizing the contract award, saying it threatened U.S. jobs and rewarded a European company that has been accused of unfair subsidies by the U.S. government.
ALABAMA LAWMAKERS CITE JOB CREATION
Lawmakers from Alabama, where Northrop will build the tanker, say the deal will create jobs across the United States. They argue the Air Force rated the Northrop tanker superior to the Boeing plane in every technical category.
"I will be closely watching any efforts in the Senate to block or delay the Air Force's number-one acquisition priority," said Sen. Richard Shelby, an Alabama Republican.
"We are not doing the warfighter any service by holding up the Air Force's efforts to replace the aging tanker fleet with political fights," Shelby added.
In addition to concerns about jobs, critics of the deal question how much money will be needed to house and maintain the Northrop A330-based tankers, which are bigger and use more fuel than the current fleet of KC-135s.
Boeing has large manufacturing facilities in California, but the state is also home to Los Angeles-based Northrop.
Northrop says it will assemble its A330 aircraft and modify it for military operations in Mobile, Alabama, creating at least 2,500 new jobs and supporting 25,000 around the country.
EADS has also promised to assemble all its A330 commercial freighters at the new facility it plans to build in Mobile.
Northrop shares fell 2.8 percent to close at $80.25 on the New York Stock Exchange on Tuesday, while Boeing shares fell 1.3 percent to end at $79.62.
(Additional reporting by Bill Rigby and Rick Cowan; Editing by Tim Dobbyn and Braden Reddall)
