Boeing rejects protectionist motive over U.S. tanker

By Jim Wolf

FARNBOROUGH (Reuters) - The head of Boeing Co's (BA.N: Quote, Profile, Research, Stock Buzz) defense business rejected suggestions he was banking on protectionism to win back a $35 billion defense deal from Europe's EADS and its partner, Northrop Grumman Corp (NOC.N: Quote, Profile, Research, Stock Buzz).

The U.S. Defense Department agreed last week to reopen the bidding for 179 midair refueling planes after Boeing successfully challenged, on procedural grounds, the Air Force's choice of a rival Airbus A330 derivative.

The Air Force picked the Northrop-EADS team over Boeing on February 29, sparking a challenge that ended up giving the biggest U.S. exporter a new chance at the deal, one of the Pentagon's costliest acquisitions ever.

"We protested based on the process and the fact that the RFP (request for proposal) wasn't followed," Jim Albaugh, head of Boeing's Integrated Defense Systems, said in an interview at the Farnborough International Airshow, a global arms bazaar and aviation industry showcase.

In sustaining parts of Boeing's protest, the U.S. Government Accountability Office, Congress's audit arm, found last month the Air Force did not stick to its own rules for evaluating the rival aircraft.

They were a modified Boeing 767 tanker versus the A330 offered by Airbus parent EADS (EAD.PA: Quote, Profile, Research, Stock Buzz), which is based in Munich and Paris.

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"And I reject the view that this is something driven by a protectionist desire on the part of Boeing," Albaugh said. "That said, I think if you were to review the industrial policies of a lot of other countries that we buy hardware from, that they have industrial policies that provide exclusive treatment for some of their domestic suppliers."