EXCLUSIVE-Boeing, Northrop CEOS met with Air Force on tanker

WASHINGTON (Reuters) - The Air Force met last week with the chief executives of Boeing Co BA.N and Northrop Grumman Corp NOC.N to voice concern about the "vitriolic" tone of public statements over a $35 billion refueling aircraft program, two sources briefed about the meeting said on Monday.

The Air Force surprised the industry by awarding the contract for new aerial tankers to Northrop and its European subcontractor, EADS EAD.PA. The decision has sparked howls of protest from Boeing and its supporters in Congress.

Boeing Chief Executive Jim McNerney and Northrop Chief Executive Ron Sugar met on Friday with Gen. Duncan McNabb, the Air Force vice chief of staff since September, said the sources, who asked not to be named.

“There is a lot of unhappiness about how vitriolic the debate has become,” said one of the sources. He characterized the meeting as “polite.”

Prior to McNabb’s current job, he headed Air Mobility Command, the part of the Air Force that provides airlift and aerial refueling for all of the U.S. armed forces.

Boeing has protested the February 29 contract award with the nonpartisan Government Accountability Office, accusing the Air Force of steering the contract to Northrop. Boeing’s backers in Congress have vowed to halt funding for the deal if the appeal fails.

Boeing has also run a series of full-page advertisements in U.S. newspapers condemning the Air Force’s handling of the deal as “flawed by countless irregularities.”

“It’s really gotten ugly,” said one Air Force official who spoke on condition he not be identified.

The GAO, which oversees federal contract disputes, has said it expects to rule on the case by June 19.

The Air Force insists the Northrop plane, based on the A330 airliner built by EADS’s Airbus unit, is the best one to replace aging KC-135 tankers used to extend the range of warplanes by in-flight refueling.

The Air Force declined comment on the Friday meeting.

Officials at Boeing and Northrop said it was their corporate policy not to comment about the schedules of their top executives.

Defense analyst Loren Thompson, of the Virginia-based Lexington Institute, said the meeting was clearly prompted by Air Force concerns about the tanker debate.

“The tone of the tanker debate has turned so negative that Air Force leaders are concerned that it could damage their long-term relationship with Boeing,” he said.

McNabb is the most senior Air Force official with an intimate understanding of how the new airplanes will be used to refuel U.S. military aircraft, Thompson said. “He represents the warfighter who’s ultimately going to be using these things.”

An earlier $23.5 billion Air Force deal with Boeing to replace over 500 KC-135 tankers fell apart in 2004 amid a procurement scandal that sent the former No. 2 Air Force acquisition official to prison. The official, Darleen Druyun, admitted to accepting a higher price as a parting gift before leaving the service to take a senior job with Boeing.

Given the delays caused by the scandal, and a shortage of funds that allows the service to buy only 15 new airplanes a year, the Air Force now estimates that some of its current aerial tankers will be approaching 90 years in age when they are finally replaced.

The refueling tankers are the Air Force’s No. 1 acquisition priority.

Reporting by Andrea Shalal-Esa; Editing by Tim Dobbyn