Boeing says Air Force tanker award flawed

By Bill Rigby

NEW YORK (Reuters) - Boeing Co (BA.N: Quote, Profile, Research) formally protested the U.S. Air Force's rejection of its proposal for a $35 billion (17 billion pound) aerial tanker program, saying its bid was evaluated unfairly and the competition was seriously flawed.

The U.S. defense contractor, which lost to rival Northrop Grumman Corp (NOC.N: Quote, Profile, Research) and Europe's EADS (EAD.PA: Quote, Profile, Research), filed its protest with the U.S. Government Accountability Office (GAO) on Tuesday, in hopes of canceling the decision.

"This competition was seriously flawed and resulted in the selection of the wrong airplane for the warfighter," said Mark McGraw, manager of Boeing's tanker programs.

The company charges the Air Force changed its requirements and the way it evaluated the competing bids, after it sent out requests to bid on the contract, in a way that favored the larger Northrop/EADS aircraft.

Boeing was never even told of certain changes in requirements, McGraw said on a conference call. He added that the Air Force never indicated that Boeing's 767 airframe, which is smaller than the Airbus A330 airframe proposed by Northrop, was unsuitable for the competition.

"It is clear that the original mission for these tankers -- that is, a medium-sized tanker where cargo and passenger transport was a secondary consideration -- became lost in the process, and the Air Force ended up with an oversized tanker," said McGraw.

Despite those misunderstandings, Boeing said it scored identical marks to Northrop on the five main criteria of the competition, contradicting Air Force officials who have said that the Northrop bid was superior on all but one of the criteria.

Losing the work build 179 tankers, worth $35 billion over 15 years, was a blow to Boeing, which built the current U.S. fleet of KC-135 tankers, now almost 50 years old on average.