Air Force changes rules for tanker bids

The U.S. Air Force said it would drop a controversial clause in its request for proposals on an aircraft-refueling tanker order that may be worth more than $10 billion.

The Air Force reconsidered its decision requiring bidders to figure into their proposals any possible international trade sanctions from the World Trade Organization (WTO) over aircraft subsidies. The final document will "hold all harmless to any future WTO claims," according to a statement Wednesday from Ken Miller, special assistant to Air Force Secretary Michael Wynne. The earlier decision had threatened the proposal of a team consisting of Airbus parent European Aeronautic Defence & Space (EADS) and Northrop Grumman.

"We have consistently maintained that the WTO issue was difficult, if not impossible, to settle within the confines of the tanker-acquisition program," said Randy Belote, a spokesman for Los Angeles-based Northrop. "With the trade-dispute issue resolved, fair competition is preserved."

The other expected competitor is Boeing.

The U.S. has complained to the WTO that European governments have provided up to a third of the cost of Toulouse, France-based Airbus projects, with the money paid back with interest only if the aircraft is a commercial success.

"We feel like we're working with the Air Force about those things and we won't do it publicly," Boeing spokesman Bill Barksdale said.

"The Air Force knows our thoughts on this issue. We're going to win."

The Air Force also delayed the bidding on the tanker contract by a month. The final request-for-proposal document will be issued by the end of January, Miller said in the statement.

Release of the final request for proposals, which spells out what the Air Force wants in the new tankers, will mark a major milestone for a program that was tainted by scandal after the Pentagon Inspector General, U.S. Government Accountability Office (GAO), Congressional Budget Office and other panels criticized a proposed contract to Boeing as wasteful and inefficient.