Pentagon revives tanker contest; bids due by Oct 1
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By Andrea Shalal-EsaWASHINGTON (Reuters) - The Pentagon on Wednesday reopened a $35 billion refueling aircraft competition between Boeing Co and Northrop Grumman Corp , with sources saying aerial refueling was viewed as more important than survivability, airlift and operational utility.The Defense Department last month said it would redo the competition for 179 new aerial tankers after government auditors found significant errors in the Air Force's handling of the last contest, which Northrop and its European subcontractor EADS EAD.PA> won in February.On Wednesday, it gave the companies 98 pages of amendments and clarifications to the original request for proposals, addressing concerns raised by the Government Accountability Office when it sustained a protest by losing bidder Boeing.In a briefing for lawmakers, Pentagon officials said the revamped competition would also give more credit for an aircraft's ability to offload fuel beyond the required amount, a decision that could favor the larger A330-based plane offered by the Northrop team, said two congressional aides."There is additional value to the government for the additional fuel offload amount above threshold," the revised document now reads.Boeing had argued in its protest that the Air Force wrongly gave Northrop credit for exceeding the threshold requirement, even after assuring Boeing officials that no extra credit would be given. Now the military is stating its wishes more clearly.The change "appears to justify a bigger aircraft with greater fuel offload capability," said an aide to Rep. Norman Dicks, a Washington state Democrat who has strongly backed Boeing.Northrop's A330-based plane can hold about 250,000 pounds of fuel, compared to 205,000 pounds for a Boeing 767.At the same time, the revised request for proposals will measure life cycle costs over 40 years not 25, which could help Boeing with its smaller 767 airplane, said a second congressional aide briefed on the proposed changes.On a scale of 1 to 3, aerial refueling was rated most important, while operational utility, survivability and airlift capability were overall rated a 2. Operational utility includes factors such as the ability to land on a 7,000-foot runway, which was rated a 3, said one of the aides.Under aerial refueling, the Pentagon said the aircraft's ability to deliver fuel through various means, including a boom, probe and drogue, were given a priority of 1, while the size of the boom envelope was rated 2, and efficiency was 3.Company officials said they were poring over the documents, but had no immediate comment on their content. Pentagon officials are due to meet with officials from Boeing and Northrop next Tuesday. The companies have until Sunday to respond to the draft, according to congressional aides.Pentagon officials plan to issue a final request for proposals in mid-August, followed by submission of revised bids by October 1, the congressional aides said.The overall goal was still to award a contract by the end of the year, Pentagon spokesman Bryan Whitman told reporters."We are continuing to move along at a very deliberate and aggressive pace here because our desire remains to complete the source selection process by the end of this year," he said.Congressional aides said pushing ahead too quickly with the revised request for proposals could invite another protest by either of the two company teams. That in turn could delay a contract award until well into next year.Shay Assad, Pentagon director of defense procurement and acquisition policy, is due to brief reporters on details of the new draft request for proposals at 3 p.m. (1900 GMT) after making calls to lawmakers and the companies.The Air Force's efforts to begin replacing its aging fleet of KC-135 refueling tankers -- which are over 40 years old on average -- have been fraught with problems for years.Congress in 2004 killed an earlier plan to lease and buy 100 Boeing 767s tankers. A former senior Air Force acquisition executive was sentenced to prison for violating federal conflict of interest laws by negotiating a job with Boeing while still overseeing the tanker deal.(Additional reporting by David Morgan; Editing by Tim Dobbyn)
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