Wednesday October 21, 12:01 AM
EADS complains of Boeing advantage in tanker battle
WASHINGTON (AFP) - EADS (EAD.NX - news) , the European Aeronautic Defence and Space Company, said Tuesday the Pentagon has given Boeing (NYSE: BA - news) a pricing advantage in a competition for a 35-billion-dollar contract to supply the air force with tanker aircraft.
EADS chief executive Louis Gallois expressed concern at a news conference over the Pentagon's disclosure to Boeing of the price and costs of a refueling plane that Northrop Grumman (NYSE: NOC - news) and EADS had offered the Pentagon last year.
"The fact that our competitor has a full information on our cost breakdown, and we don't have the same information on our side" was cause for concern, Gallois said.
He said the pricing information was provided to Boeing after Northrop Grumman and EADS initially were awarded the tanker contract last year. Boeing successfully challenged the award, forcing the Pentagon to recompete it.
EADS' chief executive was in Washington to announce that Sean O'Keefe, a former NASA administrator, will take over as chief executive of EADS North American operations on November (Frankfurt: A0Z24E - news) 1.
Gallois suggested that the pricing information put Northrop Grumman/EADS at a competitive disadvantage with respect to Boeing, arguing that the aircraft it was offering this time was "globally the same."
"Of course it's convenient for Boeing (...) to have the breakdown of our cost and price. And we could find (it) convenient for us to have the same as a reciprocity," he said.
An EADS official said Gallois's comments, which echoed similar statements by Northrop Grumman last month, should not be taken as an accusation that the Pentagon acted improperly.
"Providing comments and concerns to the Department is a normal part of the iterative process and should never be misinterpreted as an accusation of favoritism or wrongdoing," said Guy Hicks, vice president for communication of EADS North America.
Asked to respond, the air force cited a statement by Ashton Carter, the under secretary 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and, more importantly, that it created no competitive disadvantage because the data in question are inaccurate, outdated and not germane to this source-selection strategy," Carter said.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.
The 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 September 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's successfully appeal of the contract decision set 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 September 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."
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