Boeing (BA) Cries To Congress

Military

Published: March 12, 2008 4:26 am

Boeing (NYSE: BA) made an official complaint with the Government Accountability Office about a $35 billion Air Force tanker deal which it did not get. The deal went to Northrop Grumman (NYSE: NOC) and French-based EADS.

All information out of the Air Force shows that the bidding process was reasonable and that the Northrop group got the deal on its merits. Boeing is hoping to sway Congress to reverse the contract because it would cause some of the jobs for the work to go abroad to Europe. In other words, it does not matter whether Boeing can do good work at a reasonable price. Legislators get to stay in their seats if they bring home the bacon to their districts. The most vocal complaints have come from law-makers who represent regions with big Boeing plants.

Congress needs to be careful. Boeing has tens of billions of dollars of contracts to deliver commercial jets to flag carriers in Europe. If the EU sees the decision on the tanker as one driven strictly by politics and Boeing gets the assignment, a lot of the purchase deals for Boeing products could be canceled by EU nations.

Douglas A. McIntyre

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