Was Boeing led to offer wrong jet?

EVERETT — The Boeing Co. reiterated on Wednesday that its 767 tanker was the better offering for a lucrative government contract, while Air Force officials disputed the claim.

The two sides are expected to meet Friday to discuss why Boeing lost a $35 billion deal to EADS and Northrop Grumman. The decision, announced late last week, sparked debate in a Congressional hearing whether American job creation and foreign government handouts should be a factor in U.S. military contracts. Boeing will ponder a protest after its debriefing with the Air Force.

“We will only protest in the event that we think there is an irregularity in the proposal phase,” Jim Albaugh, Boeing’s chief of its defense division, said during a conference in New York.

Boeing’s Albaugh suggested the Air Force’s emphasis on a larger tanker wasn’t communicated clearly, leading Boeing to pitch perhaps an aircraft too small to meet the Air Force’s needs. Boeing offered a tanker based on its Everett-built 767 commercial jet, which Albaugh claimed is less expensive and less risky than Northrop-EADS’ tanker.

The Northrop-EADS’ KC-30, its design based on an Airbus A330 jet, is a bigger aircraft with a greater ability to carry cargo and passengers, the Air Force has said. The European and Aeronautic Defence Space Co. is the parent company of Airbus.

“In our reading of the (bid criteria), it wasn’t about a big airplane. If they’d wanted a big airplane, obviously we could have offered the 777. And we were discouraged from offering the 777,” Albaugh said, declining to elaborate.

On Capitol Hill, U.S. Rep. Norm Dicks, D-Wash., gave a similar account to members of the House Appropriations Defense subcommittee on Wednesday. The panel met with Air Force officials, hoping to gain insight on the agency’s reasons for passing over Boeing, which has been the agency’s tanker provider for more than 50 years. Dicks accused the Pentagon of making last-minute criteria changes that benefited Boeing’s rival.

“The most damning of all is the bait-and-switch tactics used by the Air Force,” Dicks said.

Dicks said the changes were made in order to keep Northrop-EADS from dropping out of the competition. The duo considered doing so in January 2007, about the time the evaluation criteria was finalized, said Sue Payton, an Air Force acquisition official. The Air Force already was forced to redo its tanker procurement process having awarded Boeing a leasing deal several years ago. The agreement was nullified over an ethics scandal.

Payton said the Air Force worked diligently to ensure an open and fair competition this time around. She disputed Dicks’ accusation.

“I am not willing to say changes were made to accommodate Airbus,” she said.

Payton did confirm, however, that the Air Force gave no weight to which proposal would create the most American jobs. Boeing has said its KC-767 tanker supports 44,000 positions while Northrop-EADS creates 25,000. The consortium will assemble its KC-30 tanker in Mobile, Ala.

In a statement released Wednesday by Northrop, the Los Angeles-based defense contractor asserted that its tanker program “does not transfer any jobs from the United States to France or any other foreign country” — another concern raised by Dicks and Rep. Todd Tiahrt, R-Kan., during the subcommittee hearing. Boeing would do finishing work on its tanker in Kansas.

“We are stacking the deck against the American manufacturer,” Tiahrt said.

“Congress must act to save the Air Force from itself.”

The two Congressmen also suggested the Air Force should have considered a trade dispute between Boeing and Airbus in which the Chicago-based jet maker alleges that European governments subsidized the development of Airbus’ A330.

The Air Force isn’t supposed to consider those factors under its procurement guidelines, Payton said. She couldn’t reveal the details of how the competitors fared until the companies are debriefed.

Boeing’s Albaugh wouldn’t rule out a protest but said the company disagrees with the protest strategy adopted increasingly by other contractors in recent years.

“I think any company that protests and makes a protest part of their capture strategy is doing a real disservice to the country and to our military,” Albaugh said. “They have a need for these programs, and to put delay into the procurement process unnecessarily is a disservice.”

The Associated Press contributed to this report.

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