Gates orders reopening of $35 billion USAF tanker contract
10 Jul 2008
Washington: Acting on the recommendations of a Congressional oversight body, the Government Accountability Office (GAO), the US defence secretary, Robert Gates, yesterday reopened a $35 billion aerial tanker contest for the US Air Force (USAF) which the GAO said was flawed. At the end of the selection process, that came to an end this February, USAF had picked a Northrop Grumman Corp and EADS NV product over an offering from rival Boeing Co.
In a significant shift from the earlier contest, Gates has designated John Young, the Pentagon's chief weapons buyer, to oversee the contest. Gates hoped a decision could be reached by December since the current process had already "gone on far too long."
"The GAO sustained eight of the slightly more than 100 issues protested with this contract. We will address all of these in the new solicitation, and we will request revised proposals from industry," he told reporters.
The Air Force award for 179 new aerial refuelling tankers prompted an immediate protest from Boeing and an equally anticipated one from the company's Congressional backers, who resented the contract going to what they dubbed was a foreign concern.
In its audit, the GAO said it found "significant errors" in the Air Force selection process, and urged the service to rebid the competition. Boeing had offered a version based on its 767 airliner but the USAF opted for the larger Northrop/EADS offering based on the A330 airliner built by EADS's Airbus SAS unit. Airbus and Boeing are bitter rivals in the market for commercial civilian aircraft.
The new aircraft are to replace the air force's fleet of ageing KC-135 tankers made by Boeing, which historically has dominated all contracts for supply of aerial tankers to the US military.
The 179 plane contract is only the initial part of what is expected to be three phase, $100-billion contract spread over the next 30 years.
Northrop Grumman said in a statement it wanted to ensure that the bidding remained fair. "We are reviewing the decision to ensure the re-competition will provide both companies a fair opportunity to present the strengths of their proposals," said Randy Belote, vice-resident at Northrop Grumman.
"We look forward to working with the new acquisition team as it reopens the competition, but we will also take time to understand the updated solicitation to determine the right path forward for the company," a Boeing statement said.
Louis Gallois, chief executive of the European Aeronautic Defence and Space Company, said the company would "fully support our partner Northrop Grumman in rapidly addressing our customer's requirements."
