The Air Force’s quest to replace its fleet of refueling tanker may be nearing its end with some lawmakers saying Wednesday that the contest favors the Boeing Co.
The Pentagon released today its final tanker requirements for the estimated $35 billion contest to Boeing and rival duo Northrop Grumman and EADS.
Some members of Congress, who were briefed on the competition early Wednesday, said the contest is slanted toward Boeing and its Everett-built KC-767 tanker.
The Air Force “clearly favors” Boeing’s “smaller, less capable airframe and I am concerned the Department may not get two competitive bids in this process,” said Sen. Richard Shelby, R-Ala., in a statement.
Northrop and EADS would assemble their KC-30 tanker in Alabama. Northrop officials previously threatened to drop out of the contest unless the Air Force made substantial changes from the initial rules.
But Defense Deputy Secretary William Lynn hopes that Northrop will remain in the contest.
“Obviously Northrop has a choice to make. We’re hoping that, with its European partner, it chooses to be in the contest.
“They were very competitive before,” Lynn continued.
This is the Air Force’s third try at replacing 179 of its KC-135 tankers. In its last attempt in 2008, the Air Force selected Northrop and EADS’ larger KC-30 tanker. But that award was halted when government auditors found serious flaws in the competition.
Boeing expressed disappointment Wednesday afternoon at the Air Force’s refusal to take a trade dispute into consideration in the tanker contract.
“We are disappointed that the RFP does not address some of our key concerns, including Airbus’ unfair competitive advantage derived from subsidies from its sponsor European governments – subsidies that the World Trade Organization has found to be illegal and harmful to U.S. workers and industry – and how fuel and military-construction costs over the life of the tankers will be factored into consideration of the competing bids,” said Jean Chamberlin, Boeing’s general manager of the tanker program, in a statement.
Northrop officials remained tight-lipped on whether they will bid for the tanker contract, saying only that the company has received and is reviewing the revised requirements.
The Pentagon made 230 changes to the request for proposals from its initial requirements released last September, according to Defense Deputy Secretary Lynn’s presentation to members of Congress.
But Lynn emphasized that it maintained its objective of being “crystal clear ” how the winning bidder will be selected.
Rep. Norm Dicks, D-Wash., told reporters in Washington D.C, that the changes made by the Air Force are “rather minimal”, suggesting the specifications could favor Boeing’s proposal for a smaller, less expensive tanker. The previous specifications were considered by most analysts to support Boeing’s plan to offer a tanker based on the 767 airframe.
Despite allegations by the competitors that the Air Force has favored one or the other, “the requirements are determined by the warfighter and are clear and stable,” Lynn said.
But Lynn’s words haven’t kept Boeing backers or Northrop supporters from weighing in on the contest.
“At this point I can only say that I’m disappointed,” said GOP Rep. Jeff Sessions, of Alabama. “It appears that the fundamental document has not been changed.”
Rep. Mike Rogers, R-Ala., who joined Sessions in a briefing by Pentagon leaders, agreed. “I don’t think it looks promising,” he said.
Boeing supporters emerged from the briefing optimistic.
“I’m pleased with what I heard,” said Rep. Jay Inslee, a Democrat from Washington, where Boeing plans to build its tankers. “As far as the specifics of the proposal, we’re very much in the game.”
Sen. Patty Murray, D-Wash., said she’ll be looking over the Air Force’s request for proposals carefully to ensure a “fair and transparent” contest. A Boeing win would secure jobs in Murray’s state for years to come.
“Our state and nation need this contract now more than ever,” Murray said. “The bottom line is that the tanker brings jobs.”
In its new requirements, the Air Force did not back away from a fixed price contract though it did add a little flexibility over the life of the contract. Northrop’s officials previously have express concern over a fixed price contract.
“This is a best value competition. … A bidder could actually have a higher proposed price and still win,” Lynn said in his presentation.
Other highlights from the briefing document include:
Since releasing the draft rules, the Pentagon received 350 questions and comments from the industry.
The Defense Department won’t take into consideration trade disputes between Boeing and EADS that are in front of the World Trade Organization. “It would be premature as well as inappropriate to take account of the interim WTO ruling …”
The Air Force plans to operate the new tankers for 40 years and will factor in the price of fuel to operate each of the competitors’ tankers over four decades.
Boeing and Northrop will have 75 days to submit their proposals.
The Air Force plans to announce the winner in the fourth quarter of the fiscal year.
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