Air Force tanker request gives Boeing edge, for now

After a behind-the-scenes battle in which politics counted as much as procurement goals, the Pentagon on Tuesday unveiled its rules for a potential $100 billion contract to replace the Air Force fleet of refueling tankers — and the balance of power tilted toward Boeing.

The request for proposal (RFP) issued by the Pentagon "inherently favors Boeing" against its only competitor, a partnership between European Aeronautics Defence & Space (EADS), and Northrop Grumman, said Richard Aboulafia, an aerospace industry analyst.

However, a win for Boeing is not guaranteed, and the battle over the RFP in Congress may not be over.

"This is the most politicized RFP I have ever seen," said Aboulafia, of The Teal Group near Washington, D.C.

The first stage of the three-phase contract would be completed over 15 years and worth about $40 billion for 179 planes. The replacement of all 533 Cold War-era tankers could be worth $100 billion in the long term.

The political battle pitted Washington Democrats Sen. Patty Murray and Rep. Norm Dicks against presidential contender Arizona Sen. John McCain, the ranking Republican on the Senate Armed Services Committee.

"It's very partisan; the EADS support group is very Republican, and Boeing's is very Democratic," said Aboulafia.

The Air Force decided to adapt commercially available planes. They wanted "more planes in the air, and more [refueling] booms," said Aboulafia.

Boeing has long proposed using modified 767s, which would be built in Everett. But it hasn't ruled out offering its larger 777 as the basis for a tanker, either.

Following yesterday's release of the RFP, Boeing spokesman Bill Barksdale said, "We plan to examine it closely and be prepared to offer our most capable tanker to the Air Force."

The competing EADS-Northrop proposal calls for using an Airbus 330, which has a longer range than the 767 and could carry more fuel.

But it would cost about 30 percent more per plane, so the military would buy fewer of them. The A330 also needs slightly larger runways and takes up more parking space.

The EADS-Northrop partnership had hoped the Air Force would expand its RFP to give points for transporting cargo and personnel, factors that would aid the A330 proposal.

Over the past year, Airbus and Northrop tried, through supportive members of Congress and consultants, to get the Pentagon to focus on the A330's larger fuel capacity and longer range.

Boeing had an earlier contract to lease refueling tankers to the Air Force, at an estimated cost of $23 billion.

It lost that deal after a congressional investigation that led to federal criminal convictions of two Boeing executives in 2005, and several resignations from the company and the Air Force.

Since then, McCain, who spurred that review and other hearings targeting Boeing, has scrutinized the Pentagon's process to replace the tankers.

Congressional staffers say he is concerned the new RFP is biased against EADS. His office did not comment.

But he and Sen. Jeff Sessions, R-Ala., whose state would benefit from a planned Airbus-Northrop factory to assemble tankers in Mobile, have said they want hearings on the RFP, which would further stall the contract.

Los Angeles-based Northrop has said it might not bid on the contract if the specifications seemed stacked against it. That outcome would embarrass the Pentagon and undermine Boeing's prospects for clinching the deal.

Northrop and McCain were said by Capitol Hill staffers to be pushing for revisions to RFP right up until its release Tuesday, hours later than expected.

McCain's proposals would mean basic changes to the actual Air Force requirement of a tanker, said Aboulafia.

But McCain and Sessions have been counterbalanced in the past year by Dicks, who has hovered over the Air Force contract's wording at every phase.

Gaining majority status for the Democrats in the November congressional elections also helped the state's delegates against Airbus' backers.

Monday morning, staff for Dicks and Rep. Todd Tiahrt, R-Kan., whose Wichita district includes a Boeing plant, waited in Dicks' suite for word that the RFP was basically the tanker contract they had sought. Over in the Senate, McCain's supporters peppered Pentagon's procurement officers with questions.

Dicks said last week that the Air Force would not bend to pressure. He was right.

In the end, the Air Force made only minor modifications to the RFP. It calls for a plane essentially equivalent to the old KC-135 refueling tankers and emphasizes it will be a fuel tanker first and foremost.

The first group of tankers would take 12 to 15 years to build. Without a potential chunk of U.S. defense money during that time, the partnership between Airbus and Northrop Grumman could dissolve, leaving Boeing in a stronger position to vie for the next 180 tankers.

But if the second phase includes a "tanker-transport" vehicle, EADS could bid for it without Northrop, pushing a version of its own A350, said Aboulafia.

Meanwhile, Airbus' teammate has 60 days to respond to the RFP.

"Northrop Grumman is deferring comment until its KC-30 team has completed a thorough review of the document," said Northrop's communications leader, Randy Belote, in a statement Tuesday.

Is the battle for the RFP really over?

"That's a great question," said Aboulafia. McCain could drag out the process. But "the 767 has a larger industrial constituency in many states, which McCain has to consider as he's running for president," said Aboulafia.

Alicia Mundy: 202-662-7457 or amundy@seattletimes.com

Copter deal said to have flaws

WASHINGTON — A closed-door government hearing identified a number of mistakes in the award of a $15 billion helicopter contract to Boeing, which is being challenged by Lockheed Martin and Sikorsky Aircraft, a source briefed on the hearing said Tuesday.

The four-day Government Accountability Office hearing revealed over "two dozen major areas of concern" about how the Air Force handled the contract award, the source said, speaking on condition of anonymity. "The more they look at it, the more mistakes they find."

Top Air Force officials were due to meet with acquisition officials as part of an internal review of the decision in coming days, he said.

The Air Force and Boeing declined comment. Lockheed and Sikorsky confirmed their lawyers took part in the hearing, but declined comment on anything discussed.

The GAO has until Feb. 28 to rule on the protest.

Defense analyst Loren Thompson of the Virginia-based Lexington Institute, who is a consultant to Lockheed and other defense companies, said the selection of Boeing's CH-47 Chinook helicopter in November surprised analysts and even some Air Force insiders, prompting speculation about "potential problems in the acquisition."

Reuters