Boeing: Pentagon process didn't favor us

Boeing on Wednesday defended the Pentagon’s bidding process for the controversial $35 billion tanker contract, saying it did not favor the Chicago-based company.  


Company officials were surprised when Boeing’s only rival for the contract, Northrop Grumman and EADS North America, pulled out of the competition on Monday, said Tim Keating, Boeing’s senior vice president for government operations.  

“It's just not the case that it [the bidding process] tilted toward one side or the other,” Keating said.  

The request for bids the Pentagon issued almost two weeks ago favored neither competitor, he insisted.  

Northrop Grumman blamed the Pentagon bidding process when it pulled out this week. It said the process favored the smaller refueling aircraft offered by Boeing, meaning the Northrop-EADS team had little chance to win the contract even if it spent millions on the competition.  

The decision leaves Boeing as the only bidder, and Boeing officials are already working to dispel any perceptions that the company would take advantage of the situation.  

“We remain in a competitive situation,” Keating said Wednesday. “There is a contract we have to win. We have not won it yet.” 

Sources said the Pentagon had been prepared for a scenario in which one of the competitors bowed out, but it is unclear how the Pentagon will proceed.  

The Pentagon can keep the request for proposals on the current schedule, with the bids due May 10. The Pentagon can also choose to truncate the request for proposals process by sending out letters of intent to go to a sole source.  

Boeing has repeatedly argued the contract will create jobs at a time of high unemployment.  

On Wednesday, a report commissioned by Boeing found a Boeing-built tanker would create 10 times as many new U.S. jobs as the one that Northrop and EADS would have built.  

The study was released by Sonecon LLC, a private consultancy headed by Robert Shapiro, a U.S. undersecretary of commerce for economic affairs from 1997 to 2001. 

Specifically, Shapiro’s study found that Boeing would create between 62,605 and 70,706 new U.S. jobs over the life of the contract. By contrast, the Northrop-EADS tanker would have led to the creation of up to 7,080 new U.S. jobs, according to the study. 

The study was done before Northrop announced its withdrawal.  

The disparity in job numbers was attributed to a higher level of investment in U.S. plants, property and equipment by Boeing than by Northrop-EADS. The Shapiro study assumes that EADS, the European consortium behind Airbus, would be the primary company in the Northrop-EADS partnership for the tanker.  

Northrop and EADS have long argued that they rely heavily on U.S. manufacturing and that their bid would lead to more than 48,000 direct and indirect jobs in the United States.

 

Silla Brush contributed to this article.


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