Boeing Co. told the U.S. government that the Air Force used a "fatally flawed" analysis that made the company's bid for a $40 billion contract to build aerial refueling tankers look too expensive.


The Wall Street Journal reported that the Chicago-based aerospace company said faulty projections warped results in favor of the bigger plane made by Northrop Grumman Corp. and Airbus parent European Aeronautic Defence & Space Co.


Boeing added that its plane offered the fewest risks, the lowest costs over the full life of the project and the greatest capabilities. However, the Journal said that an unidentified Air Force representative said the military ran a clear and open competition.


Northrop Chief Executive Ronald Sugar stood by his company winning the bid and added that if the bidding process was altered or if the award was reversed, it "would discourage companies from making significant investments to compete and then the Defense Department wouldn't get full competition. The stakes here are bigger than just one contract."


Shares in Northrop were up 1.1 percent to $78.43 in early trading Monday.

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