Boeing-Airbus tanker battle resumes today

EVERETT — The Air Force will take another swing at replacing its tanker fleet when it releases new specifications to rivals the Boeing Co. and Northrop Grumman today.

The Air Force struck out in its two previous attempts to award the $35 billion aerial refueling tanker contract. The most recent contest, which pitted a Boeing 767 against an Airbus A330 proposed by Northrop and partner EADS, drew scorn from Congress and government auditors alike for its ambiguity.

“This is not a rerun of the last competition,” Deputy Secretary of Defense William Lynn said on Thursday.

Defense officials spent Thursday giving briefings about how the aerial refueling tanker competition will be conducted. The Air Force has reduced the requirements for the new tanker to 373 from 800 in an effort to make its priorities clear.

“This time, we are going to try to be, and are being, very precise about what the (competitors) need to do to win,” said Ashton Carter, under secretary of defense for acquisitions.

With the youngest KC-135 tanker in its fleet turning 45 this year, the Air Force desperately needs to avoid further delays in replacing 179 refueling tankers. If this contest goes smoothly, by the time the last KC-135 is retired, it still could be as old as 80, Lynn said.

But the Air Force didn’t get off to a good start with many Boeing supporters in Congress.

Although many lawmakers said they applaud the Air Force’s efforts to make its new competition fair, open and transparent, they felt the Pentagon left one important matter out. The World Trade Organization recently said that European countries gave Airbus launch aid for new aircraft, such as the A330, that gave it an unfair advantage over Boeing. Tanker rival EADS is the parent company of Airbus.

“It totally fails to take into consideration the massive illegal subsidies that one of the bidders (EADS) received,” said Rep. Jay Inslee, D-Wash.

Sen. Richard Shelby, R-Ala., has argued that the Air Force would break America’s trade agreements if it should punish EADS over a preliminary WTO ruling, especially since Airbus has a similar countercomplaint pending.

“The Air Force has made the fair and just determination to not include provisions that would irresponsibly penalize one competitor based on unfounded results of an interim World Trade Organization report,” he said.

But Inslee believes the United States has some wiggle room in its international agreements when it comes to matters of national security. He’ll look at legislative means of correcting the Air Force contest if the Pentagon doesn’t do so. Sen. Patty Murray, D-Wash., said Thursday that she’s reached out to Defense Secretary Robert Gates to make sure the WTO ruling is given consideration.

Deputy Defense Secretary Lynn, however, said the Air Force won’t include the ruling in either its draft or final request for proposals. But the Air Force has added a clause to its contest that “holds the taxpayer harmless” when the WTO decision has been finalized, he said.

Although the Air Force didn’t give details about the size or cargo-carrying capability it wants in a new tanker, some observers already feel Boeing’s 777 may be too big. On his blog Thursday, local analyst Scott Hamilton, with Leeham Co., noted that a 777-based tanker could receive poor marks from the Air Force on fuel-burn, life-cycle costs and its availability by 2015.

Boeing, however, also plans to propose its 767-based tanker. In an update since the last contest, Boeing will add fuel-saving winglets to the 767 tanker.

An Air Force selection of either the 767 or 777 would secure jobs at Boeing’s Everett factory for years to come. The Air Force will issue its final requirements perhaps by the end of the year and announce a winner by summer 2010.