Boeing: Far from Satisfied


After meeting with Air Force leaders on Mar. 7, Boeing executives are weighing a formal protest of the refueling tanker contract lost to Northrop/EADS

An hours-long meeting on Mar. 7 with Air Force officials has not calmed the waters with Boeing over the military's controversial decision to award a U.S.-European consortium a lucrative $35 billion contract for refueling tanker aircraft. Boeing (BA) executives said they are "seriously considering" filing a formal protest—an attempt to overturn the decision.

The executives emerged from several hours with Air Force leaders with numerous concerns over how the military chose the team of Northrop Grumman (NOC) and EADS, the parent of commercial jetmaker Airbus. And they rejected assertions that the U.S. aeronautical behemoth hadn't even come close to competing for the contract.

Fair Treatment?

Boeing said it will decide early in the week of Mar. 10 whether to file a formal protest with the government. "While we are grateful for the timely debriefing," says Mark McGraw, a Boeing vice-president who serves as program manager of the rejected KC-767 tanker, "we left the room with significant concerns about the process in several areas."

Specifically, McGraw has concerns regarding how Air Force officials estimated the cost of Boeing's proposal and evaluated the risk that it would complete the job successfully and on time. Adds McGraw: "Reports claiming that the Airbus offering won by a wide margin could not be more inaccurate."

The Air Force compared the bids in nine areas. "Across that spectrum, all evaluated, the Northrop Grumman airplane was clearly a better performer," Air Force Secretary Michael Wynne told Congress Mar. 5.

Boeing executives planned to huddle over the weekend and decide whether to file the formal protest with the Government Accountability Office. Says McGraw: "We're balancing the needs of the warfighter with our desire to be treated fairly."

Epstein is a correspondent in BusinessWeek's Washington bureau.

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