Pentagon kicks off second round of tanker bidding; Boeing's allies aren't pleased

WASHINGTON — The Pentagon opened a second round of bidding today for a $40 billion Air Force tanker contract following an error-plagued first attempt that featured bitter competition between Northrop Grumman and Boeing.

A revised draft request for proposals was issued to build 179 new aerial refueling tankers meant to replace the Air Force's current fleet that dates back to the 1950s.

But the revised draft request drew criticism today from some of Boeing's allies on Capitol Hill.

The team of Northrop and Airbus parent European Aeronautic Defence and Space (EADS) won the original contract, but Boeing protested, saying the Air Force did not conduct the process fairly and favored Northrop. A Government Accountability Office review found "significant errors" in the Air Force's decision, and Defense Secretary Robert Gates later said he would reopen bidding.

The revamped competition will focus on areas where government auditors found problems with the initial process. Both companies have indicated their bids will be similar to their original plane proposals.

A key focus will be the guidelines set out for the plane's design. For example, Northrop's version was larger than Boeing's, but the GAO concluded the Air Force unfairly gave Northrop extra credit and did not make it clear that size and the ability to carry more fuel would be a bonus.

Changes in the draft request for proposals make that clearer, saying "additional value" will be given to any proposed aircraft that can carry more fuel than required. It will also evaluate the cost of each program on the expectation that each plane will last 40 years, higher than the earlier proposed 25-year life cycle.

Shay Assad, the Pentagon's director of defense acquisition policy, said the new draft clarifies for the contractors how their bids will be reviewed. The revised document provides a "very clear and unambiguous insight into the relative order of importance and the technical factors we are going to evaluate," he said.

Northrop spokesman Randy Belote said the company was reviewing the request and planned a response soon. Boeing was checking to see if it addressed the GAO's criticisms, but company spokesman Dan Beck said it was too early to comment.

Boeing's allies on Capitol Hill, especially those who represent the company's industrial base in Washington state, were not pleased.

The revised draft "clearly favors the larger aircraft," said George Behan, a spokesman for Rep. Norm Dicks, D-Wash.

Sen. Patty Murray, also a Washington Democrat, said the new draft "changes the rules in overtime."

Meanwhile, Sen. Maria Cantwell, D-Wash., said she is blocking Senate action on President Bush's nomination of Michael Donley to be Air Force secretary. Cantwell said she is not satisfied that Air Force and Pentagon leaders will conduct a fair rebid of the tanker contract. In a July 31 letter to Gates, Cantwell expressed concerned that he and other Pentagon leaders have not recognized the gravity of flaws in the tanker acquisition process.

Under Senate rules, a single senator can block a nomination or legislation by issuing a "hold," or block, that may or may not be announced publicly.

The struggle between Boeing and Northrop, two of the nation's biggest military suppliers, has been particularly acrimonious. The two have sniped at each other through public relations campaigns that included full-page newspaper ads, Internet spots and sharp words from company executives.

Boeing and its Capitol Hill supporters have charged that the Northrop partnership with a European company will siphon jobs away from the U.S. as the nation's economy is swooning. But Northrop officials say they plan to do much of the work at a new plant in Alabama that would provide up to 1,500 jobs.

Aerospace analyst Richard Aboulafia of the Teal Group said congressional involvement on behalf of both contractors — including lawmakers pressuring the Pentagon to take into account the jobs each program would create instead of just choosing the better plane — will complicate efforts to pick a new winner.

"At this point it is a fair bet that politicians are going to start meddling in the selection process," he said.

The final version of the request for proposals is expected to be released to both companies on Aug. 15. The new bids are due Oct. 1 and a decision is expected by the end of the year.