WASHINGTON—The U.S. Air Force spelled out to Boeing Co on Friday why it lost a $35 billion jet-refueling deal to a team including archrival Airbus of Europe, a possible prelude to a formal Boeing challenge.
Company officials were being briefed throughout the day on "the basis for the Air Force's decision" at a facility in suburban Arlington, Virginia, said Vicki Stein, a spokeswoman for the service.
After a long competition, the Air Force on Feb. 29 awarded the program, valued at $35 billion for 179 tankers over 15 years, to the team of Northrop Grumman Corp and Airbus parent EADS.
Tankers are used to extend warplanes' range by refueling them in mid-air. Ultimately, the Air Force plans to replace more than 500 of its current KC-135 tankers, built by Boeing and averaging 47 years old, as part of its top acquisition priority.
Chicago-based Boeing, the biggest U.S. exporter, has said it would decide whether to lodge a protest, probably this weekend, if it found cause to do so in the Air Force "debriefing."
"Our view is that the Air Force is buying a more costly and less capable aircraft and is taking on risk in doing so," Jim Albaugh, who heads Boeing's defense business, told a Citigroup conference Thursday.
After the briefing, Boeing has 10 calendar days to file a protest with the Government Accountability Office, or GAO, the audit and investigative arm of Congress. GAO then would have 100 days to make a recommendation to the Air Force. If it found merit, it could urge a new competition be held.
On his campaign plane, Sen. John McCain of Arizona, the presumptive Republican nominee for president of the United States, stoutly defended a drive he led in 2004 that derailed an initial Air Force plan to lease and buy 100 modified Boeing 767s as tankers.
Some Democrats, including Rep. Norm Dicks of Washington state, where Boeing has many manufacturing plants, have suggested voters punish McCain for Boeing's 767's loss to a tanker based on the Airbus A33O airliner.
"We stopped it because I had enough knowledge and experience about defense procurement to know that it was a rotten deal," McCain told reporters, of the original plan.
He said GAO later estimated he had "saved the taxpayers $6.2 billion." The deal collapsed in 2004 amid a procurement scandal that sent a former Air Force arms buyer, Darleen Druyun, to prison for negotiating a job with Boeing even as she oversaw billions of dollars of Boeing's weapons programs.
Boeing's then chief financial officer, Michael Sears, also went to prison and the then chief executive, Phil Condit, resigned in fallout from the deal that McCain called a taxpayer "rip-off."
GAO representatives did not immediately respond to a request for documentation of the $6.2 billion savings figure cited by McCain.
Airbus's chief executive said on Friday he was surprised at what he called a protectionist reaction in the United States to the Northrop-EADS team.
In a telephone interview with Reuters, Airbus CEO Tom Enders rejected criticism by some lawmakers that Airbus was responsible for destroying more jobs in the United States through domestic subsidies than it could create by assembling tankers there.
Members of the House of Representatives Appropriations Committee have said they are considering whether to withhold funds for the Air Force's chosen tanker to protect the U.S. defense industrial base and U.S. jobs.
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