EVERETT — Fuel capacity and cost could loom largely in an expedited re-bid of a failed Air Force tanker competition, congressional lawmakers learned Thursday.
The official in charge of overseeing the reopened competition between the Boeing Co. and Northrop Grumman and its partner EADS testified in front of members of a U.S. House of Representatives subcommittee. Lawmakers questioned Undersecretary of Defense John Young and government auditors about the Air Force’s mistakes with the original $35 billion contract. The Department of Defense will supervise the shortened re-bid.
“The Defense department does not care which tanker wins the competition,” Young said. But the agency wants to ensure the best tanker is selected for the taxpayer. And time is an important factor in the process, considering the Air Force has been looking to replace its tankers since 2001. The existing fleet of tankers have an average age of 47 years in service.
On Wednesday, Defense Secretary Robert Gates responded to a ruling from the Government Accountability Office, which said the Air Force committed a number of significant errors when it awarded the bid to Northrop and EADS. The GAO suggested a re-bid, and Gates agreed. The Defense secretary took the Air Force out of the process, however, in an effort to assure the competitors and Congress that the re-bid would be fair.
Boeing had protested its loss of the $35 billion deal to the GAO, which eventually said Boeing had a good chance at winning the award to replace 179 tankers had it not been for Air Force errors.
But Boeing backers in Congress said late Wednesday that they were concerned the Pentagon would change the contract requirements to favor the larger Northrop and EADS’ KC-30 over Boeing’s Everett-built KC-767 tanker.
“What bothers me was that Congress was misled … we were told the Air Force wanted a medium-sized aircraft,” said Rep. Norm Dicks, D-Wash.
Young said the Air Force disagreed with the GAO’s findings in respect to fuel capacity requirements. The agency intends to give extra credit for exceeding the fuel capacity of the KC-135s, the tankers the new fleet will replace. The GAO ruled that the Air Force didn’t clearly specify this intention and unfairly rewarded Northrop and EADS.
Dicks and other Boeing supporters questioned Young on how tanker life-cycle costs will be evaluated. With the high cost of jet fuel, Dicks suggested that the Air Force could end up paying as much for fuel for the Northrop tankers as it did to buy the tankers in the first place. “You don’t want this great big monstrous airplane … smaller is better,” he said.
Young does plan to “elevate” cost in the consideration process.
Lawmakers from Alabama, where Northrop and EADS would build their KC-30, pointed out that the GAO’s ruling did not suggest the Air Force’s selection of the KC-30 was the wrong decision.
“You’re not making any statement that the wrong plane was selected,” said Rep. Mike Rogers, R-Ala. “There were seven deviations in the process that may or may not have changed the outcome at all.”
Daniel Gordon, GAO’s deputy general counsel, confirmed Roger’s assertion but reiterated that the GAO “would not characterize the errors we found as minor.”
Young said he intends to send around drafts of a new request for proposal by early August and release the final call for revised bids in mid-August. The competitors would have 45 days, or until early October, to submit their proposals to Young, who wants to pick a tanker winner by the end of 2008.
However, Young said, “it’s difficult to see a scenario” in which Boeing or Northrop wouldn’t protest the outcome, drawing out the process even further.
Reporter Michelle Dunlop: 425-339-3454 or mdunlop@heraldnet.com.
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