Pentagon reopens refuelling deal
Firms asked to resubmit bids for tankers after report criticises initial process.
Last Modified: 09 Jul 2008 20:24
Gates said the Pentagon would handle the bidding to restore confidence in the system [Reuters]

The US defence department has reopened the bidding on a $35bn contract to supply the air force with a new generation of refuelling aircraft.

Robert Gates, the US defence secretary, said on Wednesday that Northrop Gruman and Boeing would be asked to resubmit bids for the contract awarded to Northrop earlier this year.

The Government Accountability Office last month detailed "significant errors" that the air force made in awarding the original contract to the Northrop team.

It said Boeing, which protested against the deal, might have won the contract had the service not made mistakes in evaluating the bids.

Gates said that the Pentagon rather than the air force would now handle the bid, looking solely at the eight issues where the auditors found problems in the initial process.

"We believe that we can complete all of this and award a contract by December," he told a Pentagon briefing.

Richard Shelby, a Republican senator from Alabama, where the Northrop Grumman team would assemble its aircraft, called it "the best of all options" that would address the "minor procedural flaws" the GAO cited.

Political pressure

Congressmen from Washington state and Kansas, where Boeing employs thousands of workers, have put considerable pressure on the air force to reopen the bidding process and cancel the contract with the Northrop team.

"The GAO report made it impossible for Secretary Gates to make any other decision," Maria Cantwell, a Democratic senator from Washington, said.

"The American people and the American warfighter cannot afford the same defence procurement team to make the same mistakes."

Gates said he had confidence in the air force's acquisition team, but it was necessary to regain the confidence of politicians.

"Industry, congress and American people all must have confidence in the integrity of this acquisition process," he said.

'Necessary step'

Michael Donley, the acting air force secretary, called the Pentagon action an "appropriate and necessary step".

The air force in February selected the Northrop team to replace 179 aerial refuelling aircraft and Boeing filed its protest in March.

The Pentagon will have to choose between the KC-45, a militarised version of Airbus's 330, and the KC-767, a new version of the Boeing 767.

A senior air force acquisition official was sent to prison for conflict of interest during a procurement deal in 2003, leading to the collapse of an earlier tanker contract with Boeing.

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