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Gates On Tanker Rebid: "Not A Return To First Step"
Posted By:Jane Wells
Topics:Defense | Defense Contractors
Companies:Northrop Grumman Corp | Boeing Co

Defense Secretary Robert Gates has made it official. The Air Force tanker contract will be rebid. He says a decision on who will build the tanker is supposed to be made by December, it will address all of the GAO findings, and he is transferring the authority to pick a winner to the Pentagon, away from the Air Force. Sec. Gates says, however, "This does not represent a return to the first step of the procedure."

(Northrop Grumman
NORTHROP GRUMMAN CORP
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[NOC  65.70  ---  UNCH  (0)   ]/EADs had been awarded the $35 Billion contract over Boeing
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[BA  65.99  ---  UNCH  (0)   ], and Boeing had been contesting the contract.)

Gates is putting Under Secretary John Young in charge of picking a winner, a final blow to the Air Force. But Acting Secretary of the Air Force Mike Donnelly says he fully supports that decision.

Donnelly was not on the job during the original source selection process, having been hired only a few weeks ago after Gates fired top Air Force brass. Donnelly feels that in an environment of fewer contracts and fewer contractors, putting the Pentagon in control is a "appropriate and necessary step" to ensure the confidence of Congress and the public.

Under Secretary Young says once a selection is made (adding that the December deadline "is a goal"), the Air Force will be in charge of managing and executing the contract. He says the Defense Department will expedite the decision making process, but not expedite the steps in the process, saying it will be done "methodically, fairly, and showing no bias." He hopes to change "the minimum amount of things" in the new bidding process, rather than changing all the rules.

Secretary Gates adds that he hopes to avoid another challenge by communicating honestly with both companies (another slap at the Air Force), so that there is "nothing done that is not fair."

NORTHROP GRUMMAN RESPONDS:
Here is the statement from Northrop Grumman to today's announcement:
"Northrop Grumman Corporation (NYSE:NOC) applauds Defense Secretary Gates and Under Secretary Young for recognizing that the acquisition of replacement refueling tankers for the Air Force should be put on a path toward quick closure. We are reviewing the decision to ensure the re-competition will provide both companies a fair opportunity to present the strengths of their proposals. The United States Air Force has already picked the best tanker, and we are confident that it will do so again. Our men and women in uniform deserve nothing less. The Northrop Grumman KC-45 tanker is needed now and is ready now."

Update: Here is the Boeing statement on the announcement:
"We welcome the decision by Defense Secretary Robert Gates not to proceed with the contract award to Northrop Grumman/EADS and to reopen the KC-X tanker competition. However, we remain concerned that a renewed Request for Proposals (RFP) may include changes that significantly alter the selection criteria as set forth in the original solicitation. As the Government Accountability Office reported in upholding our protest, we submitted the only proposal that fully met the mandatory criteria of the original RFP.
"We look forward to working with the new acquisition team as it reopens the competition, but we will also take time to understand the updated solicitation to determine the right path forward for the company.
"It's encouraging that the Defense Department intends to take steps to ensure a fair and open competition that, among other things, fully accounts for life-cycle costs, such as fuel, to provide the most capable tanker at the best value for the American taxpayer."

CNBS

U.S. lawmakers, in their first chance to respond to the Pentagon plan to recompete the U.S. Air Force's new aerial refueling tanker, cited the service's alleged failings as the pinnacle of a failed defense acquisition system.

"How does a high-priority acquisition program, with intense oversight and scrutiny at the highest levels of the Department of Defense, fall so short of the mark," said Rep. Jim Saxton (N.J.), the ranking Republican on the House Armed Services airland subcommittee.

"This source selection was thought to be the most thoroughly vetted, carefully considered process in the department's history," said HASC Chairman Ike Skelton (D-Mo.). "I was certainly told as much."

The July 10 airland hearing, which drew far wider panel attendance than a typical subcommittee hearing, got off to a slow start and revolved around acquisition process concerns - rather than who should provide the next tanker, Boeing or Northrop Grumman and EADS. Pentagon acquisition chief John Young Jr. was not slated to testify until late afternoon and Air Force acquisition chief Sue Payton was reserved for a closed-door hearing involving proprietary business issues.

Nevertheless, lawmakers expounded on the service's shortfalls, as identified in a harsh Government Accountability Office report June 18. Republicans and Democrats alike bemoaned the years-long delay for new tankers as the procurement process enters its third try.

During the announcement July 9, where Defense Secretary Robert Gates and Young announced Young will decide the next tanker winner, acting USAF Secretary Mike Donley rejected whether the service's acquisition process was broken. But he said Payton would be tasked with disseminating lessons learned across the USAF competitions (Aerospace DAILY, July 10).

Also at the announcement, Young lamented that his so-called shadow team of Payton's team did not start until last December. The award was made in February, and he and former USAF leaders had spent the interval between then and the GAO decision claiming that the service had made an excellent and sound decision.

But lawmakers at the hearing took an even wider perspective than whose team was responsible. "Has the complexity of modern weapons systems raised the complexity of the acquisition such that programs can't be successfully managed," Saxton pondered.

"I believe we are letting down the war fighter, not so much in current operations where the tanker fleet is performing well, but in future operations when the KC-135 fleet is at risk of reaching the end of its service life without adequate replacement," Skelton said.
Aviation Week

If they do it'll be the USAF's loss.

I can't believe one of the arguments is that Airbus offered a tanker that was too capable, and that they should have offered something 767 sized. Er, shame that the A300's out of production then, and even if it wasn't, why would they want to offer a 35 year old airframe!

Seems they arent yet sure about what they really want: a pure tanker or something that offers cargo space in addition to being a refueller

But Boeing keeps saying "if they wanted a bigger plane we could have given them the 777."

But Boeing keeps saying "if they wanted a bigger plane we could have given them the 777."

I suspect Boeing were a little complacent - they offered the 767 as it's the platform they chose to continue their 707 based platforms (JASDF AWAC, Italian and JASDF tanker etc) for other users after the delivery of the last "707s" to the RAF in 1990 ...

But Boeing keeps saying "if they wanted a bigger plane we could have given them the 777."

I suspect Boeing were a little complacent - they offered the 767 as it's the platform they chose to continue their 707 based platforms (JASDF AWAC, Italian and JASDF tanker etc) for other users after the delivery of the last "707s" to the RAF in 1990 ...

Dunno what the problm of the USAF is with that 767 variant... it's already proven to work (see above). the 'mission survivability' tale is not something i believe in... why at all risk your tanker / awacs.
And given the overall fear for anything foreign at the usaf... i think the final order will go to boeing

There are three tanker competitions the Airforce has planned, KC-X, KC-Y, and KC-Z.

KC-X is the competition to replace the KC-135 and is currently being offered. It is supposed to be the smallest tanker of the three. Boeing offered the 767. Airbus offered the A330 which is more suited to the KC-Y competition than the KC-X. Does Airbus have anything smaller currenty in production?

For the KC-Z, I believe that a A340 made into a beluga like plane could possibly do that, as I know that the wings on the A340 are very strong and can hold a ton of weight, and just look at the Beluga Airbus, an a300 on two engines that can hold fully assembled planes + helicopters on it's own. Not to mention it's take of length isn't that far, so imagine the range of a beluga'd A340...

For the KC-Z, I believe that a A340 made into a beluga like plane could possibly do that, as I know that the wings on the A340 are very strong and can hold a ton of weight, and just look at the Beluga Airbus, an a300 on two engines that can hold fully assembled planes + helicopters on it's own. Not to mention it's take of length isn't that far, so imagine the range of a beluga'd A340...

What? I think you'll find that the A340 has more than enough fuel capacity - do any current tankers have any resemblance to the Beluga? No. If they did want to fit extra fuel capacity it would be in internal tanks in the fuselage, such as the VC10 K3 and I believe some 135s.