Contest for Refueling Tanker Heats Up Once AgainOctober 08, 2009

 

tanker view

The Pentagon is taking heavy fire from all sides as the refueling tanker battle heats up once again, according to an article in the Los Angeles Times.

The primary contractors—Boeing and Northrop Grumman—along with politicians and special interest groups are questioning the process for evaluating the bids for a $35 billion contract to develop a modern refueling tanker to replace the aging Eisenhower administration-era fleet.

Some defense industry analysts are going as far as questioning whether the U.S. Air Force will ever have these tankers delivered given the litigious atmosphere surrounding the competition.

"I don’t see how either of these two companies walk away being the sole winner of the contract,” Loren Thompson, defense policy analyst for the Lexington Institute, told the Los Angeles Times. "The Pentagon says the competition will be objective, but that's going to be hard. It's a very complicated framework."

The only solution may be splitting the award.

Some of the issues that have cropped up include the following:

  • Northrop has complained that the newly opened competition was unfair at its kick off because the Pentagon provided Boeing with Northrop's pricing information from the previous tanker bid. The complaint continues that Northrop, however, was not given Boeing's pricing information. The Pentagon responded that "it created no competitive disadvantage because the data in question is inaccurate, outdated and not germane to this source-selection strategy."

  • According to the Los Angeles Times, Boeing has amassed support from a gang of eight leaders from conservative groups, who presented a letter to each member of Congress asking them to consider the recent World Trade Organization ruling that European Union governments illegally and unfairly provided subsidies to Airbus. "The illegal trade subsidies were specifically intended to enable Airbus to underbid its chief rival Boeing," Kerri Toloczko, a policy researcher at the Institute for Liberty, told the Times.

The Pentagon has tried to be objective, listing 373 mandatory requirements and 93 optional providers that the bidders have to consider. James McAleese, a lawyer who specializes in defense contracts, told the Times that with such precise criteria, it leaves little room for variation between the competitors. Price will be determining factor, he said.

This is significantly different from the previous competitions. Nonetheless, most industry watchers doubt the contract will be settled by mid-2010 as promised by the Air Force.

(U.S. Air Force photo/Master Sgt. Andy Dunaway; RELEASED)