July 10, 2008

Boeing Gets 2nd Chance to Bid for $35B Tanker

By Edward Iwata

The Pentagon said Wednesday that it is re-opening the bidding between Seattle-based Boeing and two defense industry rivals to vie for a prized contract to make aerial refueling tankers for the Air Force.

The move is a win for Boeing, which had lost the $35 billion contract in February to Northrop Grumman of Los Angeles and Europe-based EADS, the parent company of Airbus, to make 179 Air Force tankers.

After Boeing appealed the decision, the U.S. Government Accountability Office investigated and sided with Boeing, saying last month that the Air Force had made "a number of significant errors" that may have swayed the bidding.

Among other findings, the GAO, the investigative arm of Congress, said the Air Force "improperly increased" some of Boeing's estimated engineering costs and "conducted misleading and unequal discussions with Boeing" on a key aircraft performance measure.

In a media briefing Wednesday, Defense Secretary Robert Gates said that the Pentagon is addressing the key issues raised by the GAO.

Gates said that the defense industry, Congress and the American people "all must have confidence in the integrity of this acquisitions process."

Gates said he hopes the contract will be awarded by December. The bidding will be reviewed by Defense Undersecretary John Young and an advisory selection committee.

Gates also said that U.S. fighter jets and taxpayers must get the best tanker at the best price.

Northrop Grumman Vice President Randy Belote said in a statement that the 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."

Boeing executives, in a statement, said they're encouraged that "the Defense Department intends to take steps to ensure a fair and open competition."

But Boeing said it is concerned that the renewed proposal process could include changes in the original selection criteria.

Winston Wheeler, director of the Straus Military Reform Project at the Center for Defense Information, blasted the Air Force's questionable actions in the current tanker bidding, and during a sweeping procurement scandal involving Boeing and the Air Force five years ago.

Wheeler recommends that a joint Pentagon panel -- with decision-making power and free of business ties to defense contractors and major subcontractors -- be formed to pick the winning contractor. (c) Copyright 2008 USA TODAY, a division of Gannett Co. Inc. <>