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<< Previous   of   Next >>   ADVERTISEMENT   CONTACT THE HERALD Mike Benbow, Business Editor benbow@heraldnet.com   Published: Wednesday, August 13, 2008 Boeing says it's committed to staying in tanker contest By Michelle Dunlop Herald Writer EVERETT -- The Boeing Co. said Tuesday it's committed to providing the Air Force with aerial refueling tankers despite an earlier report suggesting the company may drop out of the $35 billion contest. Both Boeing and its main competitor, Northrop Grumman, met Tuesday with Pentagon officials to discuss revised specifications for a re-bid of the disputed contract. The Pentagon hopes to announce the winner of the expedited competition by the end of this year. "Our hope is this is just the beginning of a continuing dialogue" between Boeing and the Defense Department, said Dan Beck, a spokesman for Boeing. On Monday, speculation surfaced that Boeing might not submit a proposal to replace 179 aerial refueling tankers for the Air Force. A report in Aviation Week, which cited unnamed sources, said the Chicago-based aerospace giant might not compete for the lucrative contract because of concerns over the Pentagon's latest requirements. Boeing's Beck said Tuesday that any comment about the company's decision would be "premature." The company protested when the Air Force initially awarded the $35 billion contract to Northrop Grumman and its partner EADS in late February. The Government Accountability Office sustained much of Boeing's protest, saying that the Air Force made "significant" errors that could have cost Boeing the contract. The Defense Department took over the process and has said it plans to release a final draft of the new tanker requirements as early as Friday. A draft of those new requirements was made available to Boeing and Northrop last week. Boeing supporters immediately labeled the revised request for proposal biased toward Northrop's larger KC-30 tanker. Northrop and EADS would assemble their tanker, based off an Airbus A330 commercial jet, in Mobile, Ala. Paul Meyer, program manager for Northrop's KC-30 tanker, called his company's talks with Defense Department officials productive. "It is clear that the Defense Department met the concerns raised by the Government Accountability Office, and the draft amendment to the KC-X Tanker request for proposals addresses those concerns by clarifying, but not altering, the tanker requirements and specifications," Meyer said in a statement. Boeing had offered the Air Force its Everett-assembled KC-767 tanker. The company also answered questions Tuesday about penalties it may face for late deliveries on a 767-based tanker built for Italy. Boeing is several years behind schedule in its commitment to Italy. "We are in negotiations with the Italians in terms of a penalty," Beck said. The penalty likely will be a combination of cash and extra services to make up for the late deliveries. Boeing plans to deliver the first of four tankers to Italy later this year. Boeing has gone through several delays on its 767-based tanker deliveries to both Japan and Italy, which could influence the U.S. Air Force tanker bid. Boeing has said that it learned valuable lessons on the international tankers and would apply those to deliveries for the Air Force. Past performance was one of the factors the Air Force evaluated in the initial competition. In its protest to the GAO, Boeing alleged that the Air Force treated the two offers disparately and failed to evaluate a single Northrop program that was deemed "relevant" to the tanker evaluation. The Air Force gave both Boeing and Northrop overall ratings of "satisfactory confidence" for past programs. "Had the Air Force assessed the (EADS) A400M, it would have seen extensive program delays, multiple lost customers, and a recent charge of $2 billion," Boeing wrote. The company suggested that looking into this EADS program could have caused Air Force officials to change their minds about Northrop and EADS having an advantage over Boeing in past management performance. Although the GAO sided with Boeing on many aspects of the protest, the government auditors found "no basis" for Boeing's claims about the Air Force's evaluation of its past performance. Reporter Michelle Dunlop: 425-339-3454 or mdunlop@heraldnet.com.

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