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Wed, Jul 09, 2008

Once More, With Feeling: KC-X To Be Rebid... Again

USAF Booted From Selection Role

ANN REALTIME UPDATE 07.09.08 1715 EDT: More details have emerged regarding the Department of Defense's call that the US Air Force KC-X contract be sent to rebid. In a stunning development, the DoD has stripped decision-making authority on the bid from the USAF.

Replacing the Air Force as the "source selection authority" is John J. Young Jr., undersecretary of defense for acquisition, technology and logistics. He is tasked with appointing an advisory committee to oversee the selection of a bidder to supply the modified commercial aircraft fleet that will phase out the current KC-135 tankers, which are 47 years old, on average.

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

Original Report

1415 EDT: Here we go again. Defense Secretary Robert Gates announced Wednesday the US Air Force will once again reopen bidding on a stalled multibillion-dollar contract to replace its aging fleet of KC-135 aerial tankers with modern aircraft.

The decision adds a new, sad chapter to a tortured story that started over five years ago, when the Air Force pulled its original contract award to Boeing after it became known one Pentagon official in charge of the procurement process, Darleen Druyun, hopped the fence to go to work at Boeing even as the final "i's" were being dotted on the deal to give the contract to the planemaker's KC-767.

As ANN reported last month, the Government Accountability Office -- acting on a protest filed by Boeing, upon losing the previous KC-X contract bid in February to a partnership between Northrop Grumman and European aerospace consortium EADS -- determined the Air Force took its level of bungling to new heights in awarding an initial $40 billion contract to a plane based on the Airbus A330-200.

Specifically, the GAO said the Air Force selection process was "undermined by a number of prejudicial errors that call into question the Air Force's decision" to give the contract to Northrop/EADS.

In addition to miscalculating maintenance costs, failing to follow its own evaluation process, and failing to adhere to their own self-aggrandizing statements that KC-X was an "incredibly open and transparent" process, was the discovery the Air Force appeared to give outright preferential treatment in the bidding process to Northrop.

In one case, USAF officials reportedly told Boeing it had met a set of objectives... but later said it had not, after discussions had already closed. Conversely, the Air Force told Northrop about areas its bid had fallen short on, then gave the company time to alter its proposal.

Those revelations cast doubt on the fairness of the Air Force's bidding process, and fed rumors of possible political pressure to hand the contract to the European team. That may bode ill for current Republican presidential candidate John McCain, who as a member of the Senate Armed Services Committee led the charge to pull the tanker contract from Boeing after the Druyun scandal came to light.

The latest news casts some doubt on whether Northrop/EADS will bother to resubmit a bid. Since the original contract bidding process began, several European and Middle Eastern countries have selected the KC-330 Multi-Role Tanker Transport -- on which the KC-45A is heavily based -- over Boeing's smaller, older KC-767.

"EADs feels very raw over this," said Alexandra Ashbourne, who heads Ashbourne Strategic Consulting in London, an aerospace analysis firm. "There was a lot of effort expended for no return. You cannot underestimate how raw and burnt they feel as a result of all this."

More to follow...

FMI: www.northropgrumman.com/kc45, www.af.mil, www.defenselink.mil, www.newglobaltanker.com

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