August 16, 2005

Pentagon to review tanker study before any decision

By Andrea Shalal-Esa

WASHINGTON (Reuters) - The U.S. Defense Department said on
Tuesday it would take two months to review a long-awaited Rand
Corp. study on replacing the Air Force's fleet of refueling
tankers before making any decisions.

Pentagon spokeswoman Cheryl Irwin said Rand delivered its
report on Monday, and the Pentagon's program analysis and
evaluation (PA&E) office would study it, postponing any
decision on a fresh tanker competition until October at the

The Virginia-based Institute for Defense Analyses will also
review the Rand study, the Defense Department said.

Congress last year killed a $23.5 billion Air Force plan to
lease and buy 100 Boeing Co. 767s as tankers after convicted
ex-Air Force official Darleen Druyun admitted she accepted an
inflated price as a "parting gift" to Boeing before taking a
$250,000-a-year job with the Chicago-based company.

Rand has been working on an analysis of the alternatives
since late 2003, although the scope of the project has grown
substantially under pressure from Sen. John McCain, an Arizona
Republican who spearheaded scrutiny of the lease deal.

"It's really important to make sure all the i's are dotted
and the t's are crossed," said Keith Ashdown at the government
watchdog group Taxpayers for Common Sense. "There's a sort of
presumed guilt on anything that's done."

The future of any new tanker replacement program remains
uncertain, given budgetary pressures on the military and
especially the Air Force, which is also facing steep bills for
its F/A-22 and F-35 fighter jet programs.

The focus on tankers has also shifted, with Air Force
officials saying the service needs to ensure the proper mix of
smaller and larger tankers, like its 59 KC-10 Extender tankers,
which can carry more fuel and fly longer distances.

Air Force spokesman Doug Karas said the service still
expects to initiate a tanker competition soon, with a contract
award due to be made sometime in calendar year 2006.

No decision had yet been made on which specific tanker
aircraft to purchase, he said.

Boeing has received nearly a dozen new orders for its 767
commercial aircraft, delaying any decision on whether to close
that production line at least until the first quarter of 2006,
said spokesman Doug Kennett.

He said Boeing stood ready to provide the Air Force with
"whatever aircraft" best met its needs.

Guy Hicks, spokesman for the North American unit of the
European defense company EADS, said his company supported a
careful review of the tanker alternatives and remained
confident it could offer an aircraft that would meet U.S.

EADS is still negotiating a possible partnership with
Northrop Grumman Corp. to offer a tanker based on its Airbus
A330, industry sources said.

The Boeing 767 and A330 are seen as likely candidates in
any competition to replace the KC-135, but the new interest in
larger tankers could shift the focus to other aircraft,
including Boeing's new 777 or the Airbus 340.