DoD Kicks Tanker Decision to Next Administration
U.S. Defense Secretary Robert Gates has opted to leave the tanker decision, including the parameters of competition, up to the next administration, Pentagon officials said.
The Boeing KC-767, top, and the Northrop Grumman/EADS KC-30 have been candidates to be the new U.S. Air Force tanker. (Photos courtesy of Boeing and Northrop Grumman/EADS.)
The Pentagon told bidders Boeing and Northrop Grumman this morning that it was "terminating the current competition for a U.S. Air Force airborne tanker replacement," according to a Sept. 10 press release.
"Secretary Gates, in consultation with senior Defense and Air Force officials, has determined that the solicitation and award cannot be accomplished by January," the release said. "Rather than hand the next Administration an incomplete and possibly contested process, Secretary Gates 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."
In the statement, Gates said, "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."
At a 10 a.m. hearing before the House Armed Services Committee, Gates added a bit more.
"Most recently, we have been engaged in discussions with the competing companies on changes to the draft RFP [request for proposals] that would address the findings and recommendations of the GAO's review of the Boeing protest," he 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."
Gates' statement said DoD officials had determined that the Air Force's current KC-135s "can be adequately maintained to satisfy Air Force missions for the near future. Sufficient funds will be recommended in the FY09 and follow-on budgets to maintain the KC-135 at high-mission capable rates."
The announcement came as a relief to beleaguered Boeing, which had threatened to drop out of the competition if an additional four months was not added to the timeline.
Boeing "welcomes the Defense Department's decision and believes that it will best serve the war fighter in allowing the appropriate time for this important and complex procurement to be conducted in a thorough and open competition," the company said in a statement issued shortly after the announcement. "This will assure delivery of the right tanker to the Air Force and serve the best interests of the American taxpayer."
Boeing, which built the entire current tanker fleet, also holds the maintenance contract on the aging KC-135s.
Northrop, however, was not as pleased with Gates' decision.
"The Department of Defense, as recently as last week, stated the urgency to replace the Eisenhower-era fleet of refueling tankers," Northrop spokesman Randy Belote in a statement. "With this delay, it is conceivable that our war fighters will be forced to fly tankers as old as 80 years of age. While we understand, we are greatly concerned about the potential future implications for the defense acquisition process."
Perhaps the Pentagon's acquisition process suffered the most in the seven-year tanker-replacement saga.
The Office of the Secretary of Defense (OSD) took over the competition for the $35 billion Air Force program earlier this year after Boeing protested the February award to the Northrop Grumman/EADS team. With presidential elections nearing, OSD had pushed for speed, with competitors expected to submit their final offers by the last week of December and a Pentagon award before the Jan. 20 start of a new presidential administration.
That was an aggressive timeline - too aggressive, Gates and his team ultimately decided.
"The problem the government faces at this point is that there's no time left to do a normal competition," Loren Thompson of the Lexington Institute think tank, Arlington, Va., said last week.
The first round of the tanker debacle - a 2001 plan for the Pentagon to lease 100 Boeing 767-derived tankers at a cost of $20 billion over 10 years - was ultimately scrapped by Congress in 2003.
The Air Force awarded the 179-plane deal to Northrop and Airbus parent EADS on Feb. 29. But a protest from Boeing froze the deal and was subsequently upheld by the Government Accountability Office (GAO).
Among other problems, the GAO concluded, the Air Force gave "extra credit" to Northrop's larger plane because it can carry more fuel even though the service did not say size would be a factor.
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