updated 6/8/2005 9:36:04 AM ET 2005-06-08T13:36:04

The parent company of European jet-maker Airbus and U.S. defense contractor Northrop Grumman Corp. have agreed to team up to build a refueling plane for the Pentagon in an effort to compete with Boeing Co.’s troubled tanker program, according to a published report.

European Aeronautic Defence and Space Co. and Los Angeles-based Northrop Grumman have a draft agreement and EADS plans to announce on June 22 where it will build a U.S. factory for the project if it wins the Pentagon contract, according to The Wall Street Journal, which cited people familiar with the joint-venture talks.

The news report comes a day after the Pentagon’s inspector general issued a report — the latest in a series of critical reports — that said the Air Force ignored legal requirements and violated its own rules as U.S. officials pushed for a now-canceled $23.5 billion deal to lease and buy refueling tankers from Boeing. Lawmakers have called it the most significant defense contract abuse in decades.

It also comes as the United States and the EU trade complaints to the World Trade Organization, with Washington accusing the EU of providing unfair aid to Airbus and the EU claiming that Chicago-based Boeing gets unfair aid from the U.S. government.

Officials from France-based Airbus did not return calls for comment. The Journal said Randy Belote, a spokesman for Northop, declined to comment on a joint tanker bid.

© 2012 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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