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Tanker Contract In Turmoil

Another Delay Possible For $35 Billion Deal

Friday, August 22, 2008

The Pentagon’s $35 billion plan to buy new refueling tankers for the Air Force hit new turbulence Friday.

The Boeing Company said it is considering dropping out of the competition for the contract.

It came after Boeing lost the initial contract in February to Northrop Grumman and its partner Airbus parent European Aeronautic Defense and Space Co.

The competition was reopened after government auditors found “significant errors” in the Air Force’s decision.

When the project took a step back and restarted, Defense Department officials discussed the new request for proposals with Boeing and Northrop Grumman representatives during meetings this month at Wright-Patterson Air Force Base.

But then Friday, Boeing said it needed more time to put its proposal together and threatened to drop out of the running altogether.

Boeing spokesman Daniel Beck said no final decision has been made by the company.

“It is very clear to us this is a new competition. Clearly the requirements have changed and the Defense Department is essentially asking for a different kind of plane from the first competition,” Beck said.

With the initial contract worth $35 billion, the total project would reach $100 billion to replace nearly 600 refueling tankers over the next 30 years.

Northrop Grumman Chief Operating Officer and President Wes Bush criticized Boeing’s desire for additional time to revise its latest offer, saying it will only cause more delays and higher costs for the taxpayer.

Jim.otte@whiotv.com

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