EADS Accuses Pentagon of Favoring Boeing in Tanker Battle

Oct. 20, 2009
Key pricing information from previous competition not being shared equally, Northrop Grumman partner claims.

EADS, the European Aeronautic Defence and Space Co., accused the Pentagon Tuesday of favoring Boeing in the competition for a $35 billion contract to replace the U.S. Air Force's aging tanker planes.

EADS chief executive Louis Gallois said the Pentagon has revealed to Boeing the price that Northrop Grumman and EADS had offered in their previous bid to replace the refueling plane. "Of course, it's convenient for Boeing to have the price of our tanker," he said, adding that the competing aircraft are "globally the same."

His comments echoed a charge last month by EADS partner Northrop Grumman that the Pentagon gave Boeing key pricing information from the previous tanker competition while denying Northrop Grumman access to comparable pricing data.

Asked to respond, the U.S. Air Force cited a statement by Ashton Carter, the undersecretary of defense for acquisition in technology, rejecting the charge that it had favored Boeing.

The Defense Department "has examined this claim and found both that this disclosure was in accordance with regulation and, more importantly, that it created no competitive disadvantage because the data in question are inaccurate, outdated and not germane to this source-selection strategy," Carter said.

An air force spokeswoman would not say why both sides in the competition had not been provided comparable information.

Gallois said EADS was concerned because Boeing has "full information on our cost breakdown, and we don't have the same information on our side."

"It's because we were the winners of the first competition and so they have access to our file. And we have been disappointed not to gain the same access to their file," he said.

The U.S. Air Force's two previous attempts to find a replacement for its KC-135 air refueling tanker have been checkered by scandal, furious lobbying and political controversy.

The Pentagon announced on Sept. 24 that it would reopen the competition for 179 tanker planes to replace its aging fleet, a huge prize that initially was awarded to EADS and Northrop Grumman in February 2008. Boeing successfully appealed the contract decision to the U.S. watchdog agency the Government Accountability Office, setting the stage for another round of fierce competition between the two groups.

In reopening the competition, the Pentagon said it would use concrete criteria in judging proposals to avoid "confusion" that sank the previous contract award.

"We are this time going to try to be, and are being, very precise" about what comprises a winning bid, said Carter, the Pentagon's acquisitions chief. "It will be crystal clear when a winner is picked, why they won and the other offer did not win," he told a news conference.

But in a statement Sept. 29, Northrop vice president Paul Meyer said his company was concerned that Northrop-EADS pricing information from the previous tanker competition was provided to Boeing. He said his company has been unable to get similar information about its rival's bid.

"Access to comparable pricing information from Boeing has thus far been denied by the Pentagon," he said.

Meyer pointed out that "with predominant emphasis placed on price" in the competition, and with Northrop again proposing its KC-45 refueling tanker, "such competitive pricing information takes on even greater importance."

Copyright Agence France-Presse, 2009

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