As I suspected, Boeing Inc. (NYSE: BA) was trying to exert pressure to change the terms of the competition when it signaled this week that it might withdraw from the bidding for the $35 billion Air Force contract for airborne refueling tankers. BusinessWeek reports that Boeing wants the Air Force to delay the date for submitting the proposal and to change the specifications to favor Boeing's smaller modified 767.
BusinessWeek also reveals that the competition is tied in with this November's election. John McCain's former finance committee chair, Tom Loeffler, is a lobbyist for EADS, parent of France's Airbus, which has joined with Northrop Grumman (NYSE: NOC) in a bid for the tanker. In June, the General Accounting Office (GAO) agreed with Boeing that the February award to Loeffler's client had process irregularities. So the Air Force announced it would rebid, but it did so in a way that -- if my hunch is correct -- Boeing believes will put Loeffler's French client at a big advantage.
As BusinessWeek points out, if the Air Force sticks with its current schedule and specifications, it will help McCain win Republican-dominated Alabama in November, which is where Northrop would build the modified A330 that it would deliver to the Air Force if it wins the competition. Democratic Washington would benefit if Boeing won the competition.
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