Defense Department grounds refueling-tanker competition

The delay in awarding the $35 billion contract for the Air Force KC-X refueling planes leaves the highly charged selection process and decision for the next president. The Pentagon has tried without success for about seven years to award a contract to replace its aging fleet of KC-135 tankers that refuel military planes in flight. Some of the planes are nearly 50 years old, and replacements are needed soon, according to defense officials.

In February, the Pentagon awarded a contract to the team of Northrop Grumman and Airbus parent European Aeronautic Defense and Space Co. (EADS), but bidding was reopened after a Government Accountability Office (GAO) report found several serious flaws with the Air Force’s decision. In the wake of the GAO report, the Pentagon had hoped to make a new contract decision before Jan. 1, 2009.

Defense Secretary Robert Gates consulted with senior defense and Air Force officials, and determined that the solicitation and award cannot be accomplished by January. A Defense Department press release explained: “Rather than hand the next administration an incomplete and possibly contested process, Secretary Gates has decided that the best course of action is to provide the next administration with full flexibility regarding the requirements, evaluation criteria and the appropriate allocation of defense budget to this mission.”

“Over the past seven years the process has become enormously complex and emotional – in no small part because of mistakes and missteps along the way by the Department of Defense,” Gates said. “It is my judgment that in the time remaining to us, we can no longer complete a competition that would be viewed as fair and objective in this highly charged environment. The resulting ‘cooling off’ period will allow the next administration to review objectively the military requirements and craft a new acquisition strategy for the KC-X.”

The Defense Department press release noted that the current KC-135 fleet can be adequately maintained to satisfy Air Force missions for the near future. “Sufficient funds will be recommended in the FY 09 and follow-on budgets to maintain the KC-135 at high-mission capable rates,” the Defense Department said. “In addition, the department will recommend to the Congress the disposition of the pending FY 09 funding for the tanker program and plans to continue funding the KC-X program in the FY 10 to FY 15 budget presently under review.”

Delay is ‘a reality check’ on the procurement process

As the timetable for a decision gets pushed back, thousands of jobs may hang in the balance. Boeing has said that 9,000 jobs in Washington state and 1,000 or more in Wichita, Kan., are at stake in the tanker decision. Meanwhile, Northrop-EADS was planning to assemble the tankers at a proposed plant in Mobile, Ala., which has not been built yet.

In a statement on the Defense Department’s tanker decision, U.S. Sen. Patty Murray, D-Wash., called the delay “a reality check on a procurement process that got very complicated and a little muddled.”

“My first goal is to get the best refueling tankers for our war fighters and our taxpayers,” Murray said. “ … I’m confident that under the next administration we will be able to have the kind of fair and open competition we need to ensure our war fighters get the best tankers for their mission.”

At the very least, the decision is good news for Chicago-based Boeing. The company had protested that it needed more time to bid on the huge procurement contract for the Air Force.