July 09, 2008
Military.com|by Colin Clark
Defense Secretary Robert Gates has stripped the Air Force of authority to decide who will get the new contract award for the KC-X tanker.
Gates, who made the announcement at a July 9 Pentagon news conference, said the DoD hoped to issue a new contract before the end of the year. Undersecretary of Defense for Acquisition, Technology and Logistics John Young will make the decision whether to award the tanker buy to the Northrop Grumman-EADS team or Boeing, Gates said.
The Air Force awarded a $49 billion contract on Feb. 29 for 179 refueling tankers to Northrop Grumman and European Aeronautic Defense and Space to replace Cold War era KC-135 Stratotanker jets, beating out Boeing Co. which many thought had a lock on the contract.
After congressional uproar, Boeing protested the decision to the Government Accountability Office which ruled in mid-June that significant errors had been made during the bidding process.
The re-bid decision also creates a new advisory commission overseeing the new contract process, Gates added. Young, who spoke later in the press conference, said that once the contract is awarded he expects the Air Force to resume management of the program, signaling that service still retains the fundamental confidence of the Pentagon's senior acquisition officials.
But Congress is going to play a major role in this rebid - which pits one of America's defense giants against a European conglomerate -- and the defense secretary made very clear he knew lawmakers would be watching, noting that his office had informed the main congressional committee leaders of his decision earlier in the day.
For its part, Boeing issued cautious praise of Gates' decision.
"We welcome the decision by Defense Secretary Robert Gates not to proceed with the contract award to Northrop Grumman/EADS and to reopen the KC-X tanker competition," a company official said in a statement. "However, we remain concerned that a renewed Request for Proposals (RFP) may include changes that significantly alter the selection criteria as set forth in the original solicitation."
And Northrop Grumman launched a confident salvo of its own.
"We are reviewing the decision to ensure the re-competition will provide both companies a fair opportunity to present the strengths of their proposals," said Northrop Grumman spokesman Randy Belote. "The United States Air Force has already picked the best tanker, and we are confident that it will do so again."
Soon after Gates spoke, Boeing supporter Sen. Maria Cantwell (D-Wash.) kept the pressure on with a statement calling for "a real bid not a rehash," adding that "Congress must play a strong oversight role…."
She repeated a call made in a July 7 letter to Senate Armed Services Committee leaders for a full committee hearing to consider "several classified issues of concern that must be fully investigated" relating to the tanker deal. In her latest statement Cantwell said that if the Defense Department does "not address these concerns, it's a non-starter and I will place a hold on the nominations of the Secretary of the Air Force and ask that this information be declassified for public debate. This issue is too important to have another whitewashed contracting process."
Sen. Richard Shelby (R-Ala.) who wants to see Northrop Grumman's tanker jobs come to his state, said Gates' decision was "the best of all options," adding that the plan is "an appropriate solution to remedy the minor procedural flaws the GAO found in the initial award."
The chairman of the House Armed Services Committee, Rep. Ike Skelton (D-Mo.) issued a short statement saying he had spoken with Gates this morning and had "confidence in Secretary Young and I hope he can assemble the right people to move ahead with this important contract in a reasonable period of time."
Michael Donley, acting Air Force Secretary, spoke after Gates and tried to puncture one of the increasingly common assumptions arising from the Government Accountability Office's criticisms of the Air Force decision to award the tanker deal to Northrop Grumman, that the Air Force's acquisition system is broken.
He conceded the "need to rebuild confidence in" the military's ability to award and manage large contracts but said he did not believe the Air Force's systems was "fatally flawed."