December 23, 2010 / 7:41 AM / 7 years ago

Senate panel to look into tanker data mixup

4 Min Read

WASHINGTON (Reuters) - The Senate Armed Services Committee will hold hearings next month into an Air Force document bungle roiling a transAtlantic rematch for a potential $50 billion aerial-refueling plane contract.

Senate Armed Services Chairman Carl Levin said Wednesday he was prepared to launch an investigation into "the release of proprietary data" from rival tanker bidders Boeing Co and Europe's EADS.

At issue is what the Air Force calls "a clerical error" that sent Boeing and EADS computerized records in November with sensitive data on each other's bid for the contract.

"I also intend to hold one or more hearings by February 1 to consider these issues and to review the propriety of the procurement process of the KC-X tanker competition as it relates to this issue," said Levin, a Michigan Democrat.

KC-X is the codename for the Air Force's plan to buy 179 tankers to start replacing its 50-year-old Boeing KC-135 refueling fleet, a deal worth up to $50 billion.

The current contest marks the Air Force's third try to buy new tankers, which are used to refuel fighters and other planes in mid-air. The mixup could lead to a fourth round, for instance if it spurred a successful protest by the loser.

Levin was responding to a push for hearings from Senator Maria Cantwell, a Democrat from Washington state, where Boeing would manufacture tankers based on its 767 wide-bodied jetliner if it won the deal.

Chicago-based Boeing welcomed the planned spotlight on the issue.

"We're prepared to answer any questions from the Senate Armed Services Committee, in hearings or otherwise, that may result from the commitment Senator Cantwell received from Senator Levin to examine the recent release of our proprietary information to EADS/Airbus," said Dan Beck, a Boeing spokesman.

EADS, Airbus's corporate parent, was deferring comment to the Air Force, said James Darcy, a spokesman for EADS' North American arm.

The Air Force had no immediate comment.

Beck in an email said Boeing remained concerned about "the implications of the release of our proprietary information and we feel some unresolved questions remain."

"Until we're satisfied we have a complete picture, we're keeping our options open for how we go forward," he said.

The Air Force disclosed on November 19 that it had inadvertently provided the bidders "a limited amount" of each other's confidential information. It said at the same time it was delaying the awarding of a contract until early next year, from this fall, because evaluating the competition was taking longer than had been expected.

A tanker contract would give EADS, headquartered in Paris and Munich, an important beachhead in the United States, the world's most lucrative arms market.

Boeing, the Pentagon's No. 2 supplier after Lockheed Martin Corp, has argued that its tanker is an "all-American" choice compared with the rival Airbus A330 offered by EADS.

An initial U.S. effort to lease and then buy 100 modified Boeing 767 tankers collapsed in 2004 amid a scandal that sent the Air Force's former second-ranking arms buyer and Boeing's ex-chief financial officer to prison for conflict of interest violations.

The current round is in many ways a rerun of 2008, when the Air Force awarded a 179-plane deal to EADS' North American unit, which was then teamed with Northrop Grumman Corp. That deal was overturned on appeal from Boeing after the U.S. Government Accountability Office found the Air Force had made enough mistakes in judging the bids to have changed the outcome, a finding that led to the rematch.

Reporting by Jim Wolf; Editing by Paul Simao

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