updated 3/11/2008 6:43:17 PM ET 2008-03-11T22:43:17

As Boeing Co. formally protested a $35 billion Air Force contract on Tuesday, the winning bidder upped its projections of how many jobs the deal would create.

And on Capitol Hill, Air Force officials had yet to placate lawmakers from Washington, Kansas, Connecticut and other states that would have gained jobs had Boeing won. At least two— Rep. Todd Tiahrt, R-Kan., and Rep. Norm Dicks, D-Wash. — are considering legislation to overhaul the procurement process or even block funding for the tanker deal.

Tuesday brought new twists to the tanker battle, which is now in the hands of the Government Accountability Office after Boeing formally protested the contract given to European Aeronautic Defence and Space Co. and Northrop Grumman Corp. of Los Angeles. EADS is the parent of Boeing rival Airbus.

The GAO has 100 days to issue a ruling.

Boeing said the “seriously flawed” selection process was “replete with irregularities” and resulted in the “wrong airplane for the warfighter.”

Meanwhile, Northrop changed its job-creation projections and said it expects the tanker contract to support four new factories and 48,000 direct and indirect new jobs in 49 states. That’s up from sharply from its previous projections of 25,000 jobs at suppliers nationwide and more than 1,500 new jobs in Mobile, Ala., where the tanker would be assembled.

The contract to replace 179 air-to-air refueling tankers is the first of three Air Force awards worth as much $100 billion to replace its entire fleet of nearly 600 tankers over the next 30 years.

A spokesman for Northrop Grumman, said the company remains confident that the Air Force conducted “the most rigorous, fair and transparent acquisition in Defense Department history,” and that it won the competition by a wide margin.

Boeing has supplied aerial refueling tankers to the Air Force for nearly 50 years, experience the company said the Air Force ignored.

Air Force officials have said that the larger size of the plane offered by EADS and Northrop Grumman helped tip the balance in their favor.

But in its protest with the GAO, Boeing argued that the Air Force lost sight of the original mission for the tanker fleet — letting planes refuel without landing — by choosing a larger tanker that could carry more passengers and cargo.

“If they wanted a larger tanker, it would have been nice to be very clear that that was a requirement,” Boeing vice president Beverly Wyse said in a call with reporters and analysts on Tuesday. Wyse oversees production of Boeing’s 767 commercial aircraft, which would have been converted into the tanker had Boeing won.

Boeing also charged that the Air Force changed its requirements to accommodate the bigger tanker offered by EADS and Northrop Grumman.

For instance, the Air Force tweaked its estimates on tarmac sizes and allowed the EADS/Northrop Grumman team to propose parking its tankers closer together to fit more planes at operating bases, Mark McGraw, a Boeing vice president and manager of Boeing’s tanker program, said on Tuesday’s call.

Boeing also argued its tankers would cost the Air Force less to maintain. And it insisted that Air Force distorted its pricing data by treating its tanker as military-defense product instead of a commercial aircraft even though its tanker would be based on the company’s 767.

On Capitol Hill, Air Force were pressed to explain their decision at several open and closed hearings.

At a House Armed Services Committee hearing in the morning, Washington Democrat Rick Larsen demanded to know how the Air Force could square its decision to award the contract to EADS even as the U.S. Trade Representative pursues a complaint with the World Trade Organization charging the European Union with providing unfair subsidies to Airbus for commercial planes.

Larsen’s district includes the Boeing plant where the refueling planes would have been built.

Copyright 2008 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

Discuss:

Discussion comments

,

Most active discussions

  1. votes comments
  2. votes comments
  3. votes comments
  4. votes comments

Data: Latest rates in the US

Home equity rates View rates in your area
Home equity type Today +/- Chart
$30K HELOC FICO 4.91%
$30K home equity loan FICO 5.20%
$75K home equity loan FICO 4.57%
Credit card rates View more rates
Card type Today +/- Last Week
Low Interest Cards 13.42%
13.40%
Cash Back Cards 17.92%
17.92%
Rewards Cards 17.13%
17.12%
Source: Bankrate.com