updated 8/11/2008 12:17:33 PM ET 2008-08-11T16:17:33

Shares of Boeing Co. fell nearly 2 percent on Monday after reports that the company is considering not bidding in the next round for the Pentagon's $35 billion airborne refueling tanker contract.

Aviation Week reported Monday that the Chicago-based company is "strongly considering" not submitting a bid for the Air Force tanker after the Pentagon issued new guidelines last week for the plane. The report cited unnamed sources familiar with Boeing's internal strategy.

Boeing's Capitol Hill supporters have complained that the new rules favor Northrop's larger plane and give Boeing little time to make any changes to its original proposal.

Boeing spokesman Dan Beck would not comment on the report, saying the company does not talk about its internal discussions. He said Boeing submitted its reply Sunday to the draft request for proposal the Pentagon put out last week and will meet tomorrow with Pentagon officials to discuss the new guidelines.

Boeing lost the first round of bidding to rival Northrop Grumman Corp. earlier this year, but the Government Accountability Office later ruled that the Air Force had committed several errors in awarding the contract. The Pentagon decided to reopen the bidding and hopes to award a new contract by the end of the year.

The new request for proposal said the Pentagon will give "additional value" to a plane that can carry more fuel than is required. Boeing's supporters, especially those from the company's industrial base in Washington state, say that unfairly favors Northrop's larger plane. George Behan, a spokesman for Norm Dicks, D-Wash., said the timeline of the new contract award will make it hard for Boeing to present a bigger plane.

Northrop made similar no-bid threats during the initial round of bidding because of what they thought were unfavorable terms in the Pentagon's guidelines.

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 This material may not be published, broadcast, rewritten or redistributed.

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