Boeing may opt out of bidding for tankers
BY DION LEFLER
The Wichita Eagle
BY DION LEFLER
The Wichita Eagle
A Boeing Co. team will meet today with government procurement officials to discuss specifications for the Air Force's next-generation tanker, against a backdrop of reports that Boeing may drop its bid for the $100 billion contract.
Aviation Week magazine reported that Boeing was considering withdrawing from the bidding process over concerns that project specifications favor a competing bid built around an Airbus model. Airbus' parent company -- the European Aeronautic Defence and Space Co. --and Northrop Grumman Corp. are competing with Boeing for the contract.
Boeing's options
But Boeing will wait to see what the Pentagon's final requirements are before making a decision, people familiar with the company's thinking said. If Boeing opts not to bid for the disputed tanker deal, it would leave the Pentagon little choice but to award a sole-source contract to Northrop, or to change its tanker requirements or the timetable for picking the winner. If the Pentagon awarded the lucrative deal to Northrop without a competition, it could face a backlash in Congress.
Boeing's other options are either to protest the Pentagon's final tanker proposal, once it is issued, on grounds that it is not fair, or go ahead and bid and then decide whether to protest the contract award if Northrop wins.
By refusing to bid, Boeing would be hoping to force the Pentagon to change the requirements and level the playing field between the 767 and A330, or delay the competition until Boeing has more time to make a competitive bid with a bigger plane, either the 767-400 or 777, according to sources.
Tiahrt weighs in
Rep. Todd Tiahrt, R-Goddard, said he met with Boeing executives and told them "one of the options they have to consider is just walking away from the deal." Tiahrt said the bidding process needs to be fair in order to repair problems cited by the Government Accountability Office, which found serious flaws in an earlier process that forced the contract to be rebid.
If that does not happen, he said he would expect some serious pushback from Congress.
The bill authorizing the new tanker requires approval from both House and Senate defense appropriation committees before the Department of Defense can spend the money, Tiahrt said.
"We could just cut the funding off until they do it right," he said.
Aviation Week magazine reported that Boeing was considering withdrawing from the bidding process over concerns that project specifications favor a competing bid built around an Airbus model. Airbus' parent company -- the European Aeronautic Defence and Space Co. --and Northrop Grumman Corp. are competing with Boeing for the contract.
Boeing's options
But Boeing will wait to see what the Pentagon's final requirements are before making a decision, people familiar with the company's thinking said. If Boeing opts not to bid for the disputed tanker deal, it would leave the Pentagon little choice but to award a sole-source contract to Northrop, or to change its tanker requirements or the timetable for picking the winner. If the Pentagon awarded the lucrative deal to Northrop without a competition, it could face a backlash in Congress.
Boeing's other options are either to protest the Pentagon's final tanker proposal, once it is issued, on grounds that it is not fair, or go ahead and bid and then decide whether to protest the contract award if Northrop wins.
By refusing to bid, Boeing would be hoping to force the Pentagon to change the requirements and level the playing field between the 767 and A330, or delay the competition until Boeing has more time to make a competitive bid with a bigger plane, either the 767-400 or 777, according to sources.
Tiahrt weighs in
Rep. Todd Tiahrt, R-Goddard, said he met with Boeing executives and told them "one of the options they have to consider is just walking away from the deal." Tiahrt said the bidding process needs to be fair in order to repair problems cited by the Government Accountability Office, which found serious flaws in an earlier process that forced the contract to be rebid.
If that does not happen, he said he would expect some serious pushback from Congress.
The bill authorizing the new tanker requires approval from both House and Senate defense appropriation committees before the Department of Defense can spend the money, Tiahrt said.
"We could just cut the funding off until they do it right," he said.
Pentagon officials will meet separately with Boeing and Northrop executives today to go over in detail its draft tanker requirements. The Pentagon has said it hopes to be ready to issue a final request for proposals by the end of this week and pick the winner by the end of the year.
The contract would allow the Air Force to replace 179 aging refueling tankers. The deal is worth $35 billion and, with options, as much as $100 billion over the next 30 years.
If Boeing lands the deal, it is expected to create between 300 and 500 jobs at the company's Wichita facility and another 500 for local parts suppliers, including Spirit AeroSystems.
Boeing stock dropped $1.24, or 1.83 percent, in trading Monday after the report that it was considering dropping out of the running for the tanker contract. The company's shares closed at $66.62
Proposal revisions
Boeing spokesman Dan Beck said the company wants the contract, but would not comment on any internal deliberations about it.
He said about 10 Boeing executives and engineers will meet with officials at Wright-Patterson Air Force Base in Ohio today to suggest changes in the draft request for proposals.
The Northrop-EADS team will get the same opportunity.
The contract would allow the Air Force to replace 179 aging refueling tankers. The deal is worth $35 billion and, with options, as much as $100 billion over the next 30 years.
If Boeing lands the deal, it is expected to create between 300 and 500 jobs at the company's Wichita facility and another 500 for local parts suppliers, including Spirit AeroSystems.
Boeing stock dropped $1.24, or 1.83 percent, in trading Monday after the report that it was considering dropping out of the running for the tanker contract. The company's shares closed at $66.62
Proposal revisions
Boeing spokesman Dan Beck said the company wants the contract, but would not comment on any internal deliberations about it.
He said about 10 Boeing executives and engineers will meet with officials at Wright-Patterson Air Force Base in Ohio today to suggest changes in the draft request for proposals.
The Northrop-EADS team will get the same opportunity.
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