The Defense Department will push back its decision on a $35 billion tanker contract to the next administration, delaying again the hotly disputed competition between Boeing and Northrop Grumman to replace the Air Force’s aging aerial refueling fleet.
Defense Secretary Robert Gates said Wednesday he decided to cancel the current round of bidding on the plane – a competition that has stretched seven years – because the Pentagon’s plan to award the contract by the end of the year no longer seemed possible given the complexity of the project and the rancor between the two companies. He said a delay would provide a “cooling off” period.
“We can no longer complete a competition that would be viewed as fair and objective in this highly charged environment,” Gates said in a statement.
The Pentagon was expected to release its formal set of guidelines as early as Aug. 15 for the last round of bidding for the right to build 179 new planes, but that target has continued to slip. The deal would be the first phase of what could eventually be a much larger fleet and much more lucrative contract. Many of the Air Force’s current airborne tankers are around 50 years old.
Northrop Grumman Corp., which has partnered with Airbus parent European Aeronautic Defense and Space Co., was awarded the contract earlier this year, but a subsequent Government Accountability Office review found major flaws with the way it was awarded. The Pentagon reopened the bidding in August.
Boeing said the new competition was unfairly tilted against its smaller plane, a version of the commercial 767 jet. It threatened to back out of the bidding if the Pentagon did not give it more time to come up with a new proposal.
“They didn’t have enough time to do it right,” Boeing supporter Rep. Norman Dicks, D-Wash., said in an interview.
Dicks blamed the extensive changes made by the Pentagon in its revised request for bids, saying it forced Boeing to ask for additional time, or else be forced to bail out of the contest.
Sen. Richard Shelby, R-Ala., who has backed Northrop team because its assembly plant would be in Mobile, Ala., called the Pentagon’s decision “unacceptable.”
“This misguided decision clearly places business interests above the interests of the warfighter,” he said. “We are a nation at war, sending our pilots into battle on planes that are largely older than they are. This approach is irresponsible, shortsighted and harmful to both the warfighter and the nation.”
Representatives from Boeing and Northrop could not immediately be reached for comment Wednesday morning.
The Pentagon said it planned to ask for money it its fiscal year 2009 budget request for maintenance of the current fleet and planned to continue funding those planes through fiscal 2015. In deciding to again delay the new contract award, the military concluded its planes could continue to fly for “the near future,” according to a statement.
Air Force officials, however, have warned that any further delays could force the service to fly its existing tankers for several more decades.
Share of Chicago-based Boeing fell $1.70 to $62.32 in morning trading, while Los Angeles-based Northrop dipped 87 cents to $69.92.
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Associated Press Writer Ben Evans contributed to this report.
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