Bidding starts anew for A.F. tanker

0 Comments | Deseret News (Salt Lake City), Aug 7, 2008 | by Stephen Manning Associated Press

WASHINGTON -- The Pentagon opened a second round of bidding Wednesday for a $35 billion Air Force tanker contract, following an error-plagued first attempt that featured bitter competition between Northrop Grumman Corp. and Boeing Co.

A revised draft request for proposals was issued to build 179 new aerial refueling tankers meant to replace the Air Force's current fleet that dates back to the 1950s.

The team of Northrop and Airbus parent European Aeronautic Defence and Space Co. won the original contract, but Boeing protested, saying the Air Force did not conduct the process fairly and favored Northrop. A Government Accountability Office review found "significant errors" in the Air Force's decision, and Defense Secretary Robert Gates later said he would reopen bidding.

The revamped competition will focus on areas where government auditors found problems with the initial process. Both companies have indicated their bids will be similar to their original plane proposals.

Northrop's version was larger than Boeing's, but the GAO concluded the Air Force unfairly gave Northrop extra credit and did not make it clear that size and the ability to carry more fuel would be a bonus.

Changes in the draft request for proposal make that clearer, saying "additional value" will be given to any proposal that can carry more fuel than required. It will also evaluate the cost of each program on the expectation that each plane will last 40 years, longer than the earlier proposed 25-year life cycle.

Shay Assad, the Pentagon's director of defense acquisition policy, said the new draft clarifies for the contractors how their bids will be reviewed. The revised document provides a "very clear and unambiguous insight into the relative order of importance and the technical factors we are going to evaluate," he said.

Northrop spokesman Randy Belote said the company was reviewing the request and planned a response soon. Boeing was checking to see if it addressed the GAO's criticisms, but company spokesman Dan Beck said it was too early to comment.

Boeing and its Capitol Hill supporters have charged that the Northrop partnership with a European company will siphon jobs away from the United States, as the nation's economy is swooning. But Northrop officials say much of the work would be done domestically, with 1,500 jobs created in Alabama alone.

Boeing estimates the tanker contract would support 44,000 new and existing jobs with more than 300 U.S. suppliers. The company would perform much of the work in Everett, Wash., and Wichita, Kan.

Northrop has said its tanker would support four new factories and 48,000 jobs with 230 U.S. suppliers, including more than 1,500 new positions in Mobile, Ala., where the tanker would be assembled.

Northrop -- which currently has 1,228 Utah employees -- has said 220 jobs would be added in Utah with the contract, both in Northrop's operations and with four supplier companies. Boeing has 739 employees and 236 suppliers and vendors in Utah.

The final version of the request for proposals is expected to be released to both companies on Aug. 15. The new bids are due Oct. 1 and a decision is expected by the end of the year.