US Senate panel to look into tanker data mixup

* Armed Services panel to hold hearings next month

* Boeing welcomes hearings, EADS stays mum

* Potential $50 billion refueling fleet contract at stake

By Jim Wolf

WASHINGTON, Dec 23 (BestGrowthStock) – The U.S. Senate Armed
Services Committee will hold hearings next month into an Air
Force document bungle roiling a transAtlantic rematch for a
potential $50 billion aerial-refueling plane contract.

Senate Armed Services Chairman Carl Levin said Wednesday he
was prepared to launch an investigation into “the release of
proprietary data” from rival tanker bidders Boeing Co (BA.N: )
and Europe’s EADS (EAD.PA: ).

At issue is what the Air Force calls “a clerical error”
that sent Boeing and EADS computerized records in November with
sensitive data on each other’s bid for the contract.

“I also intend to hold one or more hearings by Feb. 1 to
consider these issues and to review the propriety of the
procurement process of the KC-X tanker competition as it
relates to this issue,” said Levin, a Michigan Democrat.

KC-X is the codename for the Air Force’s plan to buy 179
tankers to start replacing its 50-year-old Boeing KC-135
refueling fleet, a deal worth up to $50 billion.

The current contest marks the Air Force’s third try to buy
new tankers, which are used to refuel fighters and other planes
in mid-air. The mixup could lead to a fourth round, for
instance if it spurred a successful protest by the loser.

Levin was responding to a push for hearings from Senator
Maria Cantwell, a Democrat from Washington state, where Boeing
would manufacture tankers based on its 767 wide-bodied jetliner
if it won the deal.

Chicago-based Boeing welcomed the planned spotlight on the
issue.

“We’re prepared to answer any questions from the Senate
Armed Services Committee, in hearings or otherwise, that may
result from the commitment Senator Cantwell received from
Senator Levin to examine the recent release of our proprietary
information to EADS/Airbus,” said Dan Beck, a Boeing
spokesman.

EADS, Airbus’s corporate parent, was deferring comment to
the Air Force, said James Darcy, a spokesman for EADS’ North
American arm.

The Air Force had no immediate comment.

Beck in an email said Boeing remained concerned about “the
implications of the release of our proprietary information and
we feel some unresolved questions remain.”

“Until we’re satisfied we have a complete picture, we’re
keeping our options open for how we go forward,” he said.

The Air Force disclosed on Nov. 19 that it had
inadvertently provided the bidders “a limited amount” of each
other’s confidential information. It said at the same time it
was delaying the awarding of a contract until early next year,
from this fall, because evaluating the competition was taking
longer than had been expected.

A tanker contract would give EADS, headquartered in Paris
and Munich, an important beachhead in the United States, the
world’s most lucrative arms market.

Boeing, the Pentagon’s No. 2 supplier after Lockheed Martin
Corp (LMT.N: ), has argued that its tanker is an “all-American”
choice compared with the rival Airbus A330 offered by EADS.

An initial U.S. effort to lease and then buy 100 modified
Boeing 767 tankers collapsed in 2004 amid a scandal that sent
the Air Force’s former second-ranking arms buyer and Boeing’s
ex-chief financial officer to prison for conflict of interest
violations.

The current round is in many ways a rerun of 2008, when the
Air Force awarded a 179-plane deal to EADS’ North American
unit, which was then teamed with Northrop Grumman Corp (NOC.N: ).
That deal was overturned on appeal from Boeing after the U.S.
Government Accountability Office found the Air Force had made
enough mistakes in judging the bids to have changed the
outcome, a finding that led to the rematch.
(Reporting by Jim Wolf; Editing by Paul Simao)

US Senate panel to look into tanker data mixup