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
NOC
65.70 UNCH 0
NYSE
Quote | Chart | News | Profile
[NOC 65.70 --- UNCH (0) ]/EADs had been awarded the $35 Billion contract over Boeing
BOEING COMPANY
BA
65.99 UNCH 0
NYSE
Quote | Chart | News | Profile
[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
Looks like they are going to try once more, but for some reason I have a feeling that hey will give in to the senate out cry and give it to Boeing and not NORTHROP GRUMMAN.
