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Wed, Sep 10, 2008

Terminated: DoD Tanks KC-X Competition

Aging KC-135s To Soldier On Indefinitely

ANN REALTIME REPORTING 09.10.08 1030 EDT: It may be the final postscript in the evergreen KC-X tanker competition... but it's not a satisfying ending. On Wednesday, the Department of Defense notified the Congress and the two competing contractors, Boeing and Northrop Grumman, that it is terminating the current competition for a US Air Force airborne tanker replacement.

Secretary Gates, in consultation with senior Defense and Air Force officials, has determined the solicitation and award cannot be accomplished by January. 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.

"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," said Gates in testimony before the House Armed Services Committee. "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 added.

As ANN reported, the Pentagon assumed authority over the KC-X selection process in July, after the Government Accountability Office upheld a protest lodged by Boeing against the original USAF decision on February 29 to award the initial $40 billion contract to a team comprised of Northrop Grumman and EADS. DoD was expected to release new guidelines on the competition last month... but had repeatedly delayed the release of those final stipulations.

The Pentagon did release a 98-page briefing on proposed amendments and clarifications to the original RFP in early August... and immediately caught flak from Boeing, which asserted the new competition would place greater emphasis on aerial refueling duties, and capabilities above and beyond the Air Force's original plan. Industry analysts said that would favor the Northrop/EADS KC-30, which offers much greater fuel capacity than the smaller Boeing KC-767.

In turn, Boeing later threatened to pull out of the competition completely, unless the Pentagon granted the company a six-month reprieve to develop a more competitive plane. On Wednesday, Boeing welcomed the Pentagon's decision to stall the process, saying the delay would allow "the appropriate time for this important and complex procurement to be conducted in a thorough and open competition," reports The Associated Press.

In its own statement, Northrop said the Pentagon's decision only serves to further put off the needed replacement of the Air Force's aging fleet of KC-135 Stratotankers. "With this delay, it is conceivable that our warfighters will be forced to fly tankers as old as 80 years of age," Northrop spokesman Randy Belote said.

The Pentagon asserts that in making its decision, the DoD determined the current, aging KC-135 fleet can be adequately maintained to satisfy Air Force missions for the near future. Gates said sufficient funds will be recommended in the FY09 and follow-on budgets to maintain the KC-135 at high-mission capable rates.

In addition, the Department will recommend to the Congress the disposition of the pending FY09 funding for the tanker program and plans to continue funding the KC-X program in the FY10 to FY15 budget presently under review.

FMI: www.dod.mil, www.boeing.com/ids, www.northropgrumman.com

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