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Boeing, Northrop Tanker Fight May End in Court

Boeing Co. and Northrop Grumman Corp., locked in a three-month dispute over a $35 billion U.S. Air Force refueling-tanker contract, may wind up in court before the fight is done, Bloomberg reports.


Northrop and partner European Aeronautic, Defence & Space Co. won the contract Feb. 29 by beating Boeing, the Air Force’s only supplier of the aircraft for half a century. Boeing protested the award to the U.S. Government Accountability Office, a congressional watchdog agency that must make its recommendation to the Pentagon by June 19.


History doesn’t favor Boeing, because the GAO sustains only about one in every four such protests. With decades of work and as many as 44,000 jobs in the balance for Boeing and suppliers, the Chicago-based company may risk the enmity of its largest customer and seek redress at the U.S. Court of Federal Claims, said Richard Lieberman, a federal contracting attorney with McCarthy Sweeney & Harkaway in Washington.


“If Boeing loses at the GAO, I’ll bet you will see this in the Court of Federal Claims,” said Lieberman, who is author of “Elements of Government Contracting,” and isn’t involved in the tanker protest. “If Boeing went up there and said the GAO got it wrong and asked for an injunction, I think the court would grant it.”


The GAO decision will dictate Boeing’s action, said Mark McGraw, vice president of tanker programs. “Nothing is ruled out,” he said when asked specifically if the company would consider taking its case to the Washington court.


Before today, Boeing shares had declined 14 percent since the decision, compared with an 11 percent drop in Northrop. Boeing rose $3.25, or 4.4 percent, to $76.56 at 10:10 a.m. in New York Stock Exchange trading, while Northrop gained $1.57, or 2.2 percent, to $73.03.


Read the full Bloomberg story

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