Boeing demands tanker answers

Boeing Co demanded immediate answers on why it lost a $35 billion contract for refuelling tankers to Northrop Grumman Corp and its European partner EADS , as Boeing backers in Congress threatened to hold up funding for the deal.

A House of Representatives appropriations subcommittee has ordered senior US Air Force officials to explain at yesterday's hearing why they gave the contract - and several thousand related jobs - to Northrop and Airbus parent EADS.

In the Senate, Republican Sam Brownback of Kansas vowed to fight funding for the deal to replace the Air Force's aging KC-135 tankers, which were built by Boeing in the 1960s.

Mr Brownback is a member of the powerful Senate Appropriations Committee, which controls funding for the Pentagon and other federal agencies.

If Boeing had won, it planned to build its 767 tanker in Washington state and modify it for military use in Kansas.

Chicago-based Boeing called on the Air Force for an immediate briefing to explain why it lost the lucrative contract, claiming its offering was more cost-effective and less risky than Northrop's.

"We bid aggressively with specific focus on providing operational tanker capability at low risk and the lowest total life cycle cost," said Mark McGraw, vice president of Boeing's 767 tanker programmes, in a statement. "Based on values disclosed in the Air Force press conference and press release... we can only assume our offering was more cost effective from a life cycle standpoint." Boeing said the Air Force's plan to wait until around March 12 to brief Boeing was "unusual" and "inconsistent with well-established procurement practices."

"We do not understand how Boeing could be determined the higher risk offering. It's important for us to understand how the Air Force reached their conclusion," said Mr McGraw.

Losing bidders have 10 days after receiving a formal debriefing to file a protest against the contract award. Boeing has said it will review its options after the briefing.

Defence analyst Loren Thompson said on Monday that Northrop beat Boeing on every major evaluation criteria, including mission capability, price and performance risk.

Lawmakers who backed the Boeing proposal say they are outraged that the contract went to a team that includes EADS, instead of Boeing. Some wrote to Defence Secretary Robert Gates on Monday, demanding the Air Force brief Boeing by week's end.

The Air Force declined to comment on the requests for an earlier briefing, but defended its acquisition process.

"The AF followed a carefully structured process, designed to provide transparency, maintain integrity, and promote fair competition," said Lt. Col. Jennifer Cassidy.

Lawmakers from Alabama, where Northrop will build the tanker, say the deal will create jobs across the US.

They argue the Air Force rated the Northrop tanker superior to the Boeing plane in every technical category.

Joined by labour unions, some lawmakers are raising concerns about the loss of US jobs and future funding requirements to house and maintain the Northrop A330-based tankers, which are bigger and use more fuel than the current fleet of KC-135s.

Boeing has large manufacturing facilities in California, but the state is also home to Los Angeles-based Northrop.

Northrop says it will assemble its A330 aircraft and modify it for military operations in Mobile, Alabama, creating at least 2,500 new jobs and supporting 25,000 around the country.

EADS has also promised to assemble all its A330 commercial freighters at the new facility it plans to build in Mobile.