Tanker Bid Moves Toward Endgame

But Aug. 21 two of Boeing's top executives -- Jim McNerney, the company's chairman, president and chief executive, and Jim Albaugh, president and chief executive of Boeing's Integrated Defense Systems, its $32.1 billion division that includes the tanker and other weapons programs -- appealed to Deputy Defense Secretary Gordon England in a meeting at the Pentagon to give them another four months to put together a new proposal for a bigger plane that will carry more fuel. One of Boeing's lobbyists is former Congressman Bill Paxon (R-N.Y.) of Akin Gump Strauss Hauer & Feld, and the company has gotten support from its labor unions in Washington state, where it has major operations.

"We certainly don't want to walk away," said Daniel Beck, a Boeing spokesman, "but we need to make sure we have enough time."

Some experts say Boeing is bluffing. The company is threatening to pull out to "see if the Defense Department blinks" and gives it more time, said David J. Berteau, a senior defense analyst at the Center for Strategic and International Studies.

A Boeing pullout would open the door for its biggest rival -- Airbus, which is owned by EADS -- to set up shop in the United States at a plant proposed for Mobile, Ala. "It isn't just tankers that will be built in Alabama. It will be Airbus commercial planes," said Loren Thompson, a defense consultant for several major firms. Jacques Gansler, who served as the Pentagon's top weapons buyer under Bill Clinton, said "Congress would raise a stink if Boeing pulls out.

"They've been defending their districts over the jobs involved in this and are trying to influence the decision," Gansler, who said he participated in a paid study two years ago for Northrop on its proposed tanker. "The companies now have tremendous lobbying power, but politics should not be the basis for deciding on national security needs."

Some analysts and executives at competing defense firms say the outcome of the presidential election could be critical for Boeing. The handicapping goes like this: Sen. John McCain, the presumptive Republican nominee, helped kill the previous leasing deal, and some of his advisers once worked as lobbyists for Airbus. Democratic nominee Sen. Barack Obama, on the other hand, is from Boeing's home state of Illinois.

Northrop is trying to hold its position as the winner. The Los Angeles-based company spent about $8 million this year on its own internal lobbyists and hired such big names as the lobbying firm of former Sen. John Breaux (D-La.) and Sen. Trent Lott (R-Miss.), according to recent lobbying reports. Northrop lists about 20 lobbyists and executives who have recently meet with Congressional leaders on the tanker and other issues, and it has gotten support from groups like Citizens Against Government Waste, a nonprofit group.

Northrop sends out daily e-mails that usually slam its competitor, and a recent full-page ad in The Washington Post castigated Boeing for trying to stall for time. "And should Boeing not prevail after its latest delay," the ad said, "what is to stop the company from demanding yet another and another until it is guaranteed a win?"

One thing both sides agree on is that the deal puts the spotlight on Young, the Pentagon's decision-maker, who will face political fallout from the losers no matter which side wins. Spokesman Chris Isleib said Young was in Italy this week and unavailable for comment, but said his office expected to have a final request for proposals out next week.

"Both companies are playing hardball, and their political backers are providing virtually unlimited support," said Richard Aboulafia, an aeronautics analyst at Teal Group in Fairfax. "If you're Young, you're in a weak position. Ideally, you want to make neutral decisions purely for best value for your money without fear of being second-guessed and overruled by politicians. But he is very definitely not in that position."

Staff researcher Julie Tate contributed to this report.