Battle over tankers is awaiting GAO ruling

WASHINGTON — Northrop Grumman Corp. and European Aeronautic Defence and Space Co. beat out Boeing Co. to win a $35 billion order from the Air Force three months ago.

Yet the contract to build 179 aerial refueling tankers is hardly a done deal.

The surprise selection of a team that includes EADS — the parent company of Boeing's rival Airbus — has ignited a backlash among unions representing Boeing workers, lawmakers from Washington, Kansas and other states with Boeing plants and "Buy American" proponents in Congress.

They have pinned their hopes on the Government Accountability Office, which will rule on Boeing's protest of the massive military contract by June 19. While the Air Force is not bound by the GAO review, the decision will shape the tug-of-war on Capitol Hill and potentially determine which company walks away with the high-stakes award.

A ruling that finds problems with the Air Force selection would give critical ammunition to Boeing's congressional supporters as they try to block funding for the contract or force a new tanker competition. And that could position Boeing to capture part or all of the deal.

But a GAO ruling that upholds the award would leave Boeing backers with little justification to overturn the order. To be sure, the Boeing side wouldn't just abandon the fight, yet it would be an uphill effort.

"The outcome here is so unsettled that nobody knows where this will end up," said Loren Thompson, a defense industry consultant at the Lexington Institute in Virginia.

Further complicating matters is last week's ouster of the two top Air Force officials over mistaken nuclear shipments, leaving the service ill-equipped to answer difficult questions it may soon face about the contract, Thompson said.

The Air Force is under intense pressure to prove that it ran a fair competition after a procurement scandal in 2003 sent a top Air Force acquisition official to prison for conflict of interest and led to the collapse of an earlier tanker contract with Boeing.

The current contract is the first of three Air Force deals worth as much as $100 billion to replace its entire fleet of nearly 600 aerial refueling tankers over the next 30 years. With so much at stake, both sides have poured money into lobbying, advertising, media campaigns and blogs, though neither will say how much they've spent.