BusinessWeek reports that Defense Secretary Robert Gates is expected to make an announcement today about whether the Air Force will reopen the bidding for the $35 billion tanker program. Boeing Inc. (NYSE: BA) thought it had a lock on it but earlier in the year, the Air Force awarded the contract to EADS, parent of Airbus, and Northrop Grumman (NYSE: NOC). Boeing protested and last month, the General Accounting Office (GAO) reported that the award process was flawed.

That should come as no surprise. After all, Senator John McCain (R-AZ) was pushing for the European company to win the competition -- possibly since his then national finance chairman lobbied for that company. One of the sources I spoke with said that people suspect McCain arranged for a change in Tanker specifications to tilt the playing field in favor of EADS. This source also said that the Air Force neglected to notify Boeing of the change. Evidently, the GAO agreed that something was fishy here. It would be at least the fifth time that McCain had been influenced by lobbyists.

Now attention turns to Gates and Congress which hosts a battle between Senators from Washington, where Boeing has operations, and Alabama, where Northrop employs workers. BusinessWeek quotes Senator Patty Murray (D-Wash.), who introduced a Senate resolution on July 8, calling on the Pentagon to rebid the flawed tanker contract, as saying: "The GAO's decision was clear, and today we are reiterating that message so that the Pentagon knows there is no wiggle room. It's time to go back and hold a truly transparent competition that does our war fighters and taxpayers justice."

Despite excellent earnings from Boeing Co. (NYSE: BA) yesterday, a bit of a shadow still hangs over the company. That's because in February the Air Force awarded a $100 billion contract for in-flight refueling craft -- known as tankers -- to EADS's Airbus and Northrop Grumman (NYSE: NOC). Boeing is currently challenging this award. But an interview I did for my book on Boeing suggests that Boeing will not win this contract because George W. Bush and John McCain want to award the contract to Bush's new friends: France's Nicolas Sarkozy and Germany's Angela Merkel.

I got this theory from a veteran Wall Street analyst who covers the aircraft industry. He suggested that Boeing lost the Tanker bid because John McCain -- who is ranking member on the Senate Armed Services Committee -- had the Air Force change the specifications for the tanker bid so Airbus and Northrop would be able to field a competitive bid. My source noted that the one problem with the change was that the Air Force did not inform Boeing about it.

After the bid was awarded to Airbus, it became clear that the original specifications had changed from a small, 767-sized craft to a medium-sized 777 one. During the review process, my source contends that Boeing asked the Air Force if the 767-sized craft was what it wanted. Boeing also told the Air Force that it would be happy to bid with a different model if the Air Force wanted. But the Air Force told Boeing that it still wanted the 767-sized craft.

Boeing Co. (NYSE: BA) filed a formal protest this week against the U.S. Air Force's decision to award its $35 billion contract for refueling tankers to EADS, the parent of Europe's Airbus. The value of the contract could grow to $100 billion over the life of the program, and Boeing is not going to let that money slip away easily.

The decision has generated a lot of political heat in the U.S., as politicians decry the loss of American jobs and American profits. The problem is, though, that the United States loses no matter which firm gets the contract.

If Boeing is given the contract, the U.S. gets lower quality planes in smaller numbers. By all accounts, the Boeing tanker, based on the 767, is smaller and older than the EADS tanker, based on the larger and newer Airbus A330. And EADS promised to deliver more of the planes at an earlier date. As BloggingStocks' Peter Cohan wrote when the decision was made, the choice between the two planes wasn't close on the merits.

On the other hand, if EADS gets the contract, the U.S. loses tens of thousands of high-paying, high-tech defense jobs. Boeing claims the contract would provide over 40,000 jobs. Although EADS claims that it would assemble its planes in the U.S. and provide roughly 20,000 American jobs, it's pretty clear that most of the tanker-related jobs would be in Europe, where most Airbus parts are made.

So it's a lose-lose situation. Either you get jobs, exorbitant corporate profits and inferior planes, or fewer jobs, no (American) profits and superior planes. Usually, our lion-hearted men and women of the U.S. Congress chooses the former course. We'll see if their preference for the latter will survive the growing political storm.