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The Honolulu Advertiser
Posted on: Thursday, July 10, 2008

Pentagon to reopen tanker bidding

By Les Blumenthal
McClatchy-Tribune News Service

WASHINGTON — Three weeks after a stinging rebuke from congressional auditors, the Pentagon announced yesterday that it will reopen bidding for a $35 billion contract to start replacing the Air Force's aging fleet of aerial refueling tankers.

Secretary of Defense Robert Gates said the Defense Department would solicit new bids from both Boeing, which complained bitterly after it lost the original competition, and a team composed of Northrop Grumman and the European Aeronautic Defense and Space Co., which won the original contract.

In a slap at the Air Force, Gates said his office, rather than the Air Force, will handle the new competition.

"Industry, the Congress and the American people all must have confidence in the integrity of the acquisition process," Gates said. "I believe the revised process will result in the best tanker for the Air Force at the best prices for the American taxpayer."

The Air Force's original selection of the Northrop-EADS team angered Boeing and its supporters in Congress when the decision was announced in February. Boeing officials protested the award two weeks later.

The complaints that Air Force officials had changed specifications and made other decisions that were intended to undercut Boeing's chance of winning the job gained credibility with a report from the Government Accountability Office last month.

That report concluded that the Air Force made a number of "prejudicial errors," including mistakes in calculating the so-called life-cycle costs of the two planes and uncertainty over whether the winning plane could refuel all of the Air Force's aircraft. The auditors also found that the Air Force held "misleading and unreasonable" discussions with Boeing.

"The Air Force did not fulfill (its) fundamental obligation" to ensure a fair evaluation of Boeing's bid, the report concluded, urging that bids be reopened.

While most on Capitol Hill applauded the decision, others were wary that the new competition still would favor Northrop-EADS. Gates said the competition would be completed by the end of the year and that there would be only "minimal" changes in the bidding process to respond to the GAO complaints.

Boeing said it welcomed the decision to reopen the competition, but that it, too, was reserving judgment.