Boeing to challenge U.S. Air Force tanker decision

WASHINGTON (Reuters) - Boeing Co said on Monday it would formally challenge a decision by the U.S. Air Force to award a $35 billion aerial tanker program to a team led by Northrop Grumman Corp and Europe's EADS.

"This is an extraordinary step rarely taken by our company, and one we take very seriously," Jim McNerney, Boeing chairman, president and chief executive officer, said in a statement.

Boeing said it would ask the Government Accountability Office, the investigative arm of Congress, on Tuesday to review the February 29 decision that has triggered outrage from some lawmakers sympathetic to Boeing and unhappy the winning bid features EADS' Airbus aircraft. Airbus is Boeing's chief rival in the commercial sector.

Boeing said on Friday it had "significant concerns" about the decision following an Air Force briefing on why it lost the contract award. The company said it conducted a "rigorous analysis" of the Air Force evaluation.

McNerney said based on "what we have seen," Boeing continues to believe it had the "most capable, lowest risk" and most cost-competitive bid over the life of the program.

"We look forward to the GAO's review of the decision," he said.

Northrop completed its debriefing on Monday, and said the Air Force called its winning bid "more advantageous to the government" in the key areas of capability, past performance, cost and refueling performance.

Air Force officials said last week that the Northrop/EADS bid was superior in a number of areas.

Northrop said in a statement the Air Force review was "the most rigorous, fair and transparent acquisition process" in Pentagon history.

"Until we have had the opportunity to review the specifics of the protest, we will not comment further," Northrop said.

Lt. Col. Michael Paoli, a spokesman for the Air Force, said: "We still have great confidence in the openness and transparency of the KC-45A acquisition process."

Democratic U.S. Sen. Patty Murray of Washington state, where Boeing has its main production facilities, called the Air Force decision "short-sighted" based on economic and national security concerns. "It is my hope that the GAO moves forward with its review in a thorough matter," Murray said.

Military and GAO officials are scheduled to answer questions about the tanker situation on Capitol Hill on Tuesday in hearings and closed-door briefings.

The Air Force plans to buy 179 tanker aircraft over the next 15 years to begin replacing its fleet of Boeing KC-135 tankers, which are 47 years old, on average.

Boeing had offered a tanker based on its 767 commercial jetliner but the Air Force picked the Northrop/EADS proposal for a modified A330 made by Airbus.

Under its plan, EADS will assemble Airbus A330 freighters at a new plant in Mobile, Alabama, while Northrop turns them into military tankers at an adjacent facility.