By Marina Malenic and Emelie Rutherford
The Pentagon will hold a new, expedited competition for a disputed Air Force tanker aircraft contract, with Defense Department officials now in charge of the selection process, Defense Secretary Robert Gates said yesterday.
“I have concluded that the [current] contract cannot be awarded,” Gates told reporters at a Pentagon briefing.
Gates had previously said he is seeking “an approach that has the confidence of the Congress” and examining “several options” on how to proceed with procurement of a new fleet of KC-X refueling aircraft (Defense Daily, June 27).
The Government Accountability Office (GAO), Congress’ auditing agency, last month sustained Boeing‘s [BA] March 11 protest of the award to rival Northrop Grumman [NOC] and industry partner European Aeronautic Defense and Space Co. (EADS). The auditors found that the service “had made a number of significant errors that could have affected the outcome of what was a close competition” and recommended that the bidding process be reopened (Defense Daily, June 19).
Gates said the Pentagon “will address all of these [findings] in the new solicitation, and we will request revised proposals from industry.”
While Gates said last month that the Air Force would retain control over the acquisition process, he said yesterday that John Young, the undersecretary of defense for acquisition, technology and logistics, would lead the effort.
“I have, with full support of the Air Force, directed Undersecretary Young to serve as the new source selection authority, as well as support a new source selection advisory committee,” Gates said. He said the committee would be made up of “new personnel” but did not elaborate further.
The Air Force will run the program once a contractor is selected, he added, and the effort will remain in “open competition” status with a stop-work order in place.
Young said the Pentagon will issue a revised request for proposals (RFP) “in late July or early August.”
The reopened process “does not represent a return to step one,” according to Young, and a new contract is scheduled to be awarded by the end of the year. To that end, he said bidders would be asked to modify their proposals to address the specific GAO concerns, with as few details as possible altered in the revised RFP.
In reaction, Northrop Grumman released a statement yesterday afternoon commending the decision to expedite the new source selection process.
“Northrop Grumman applauds Defense Secretary Gates and Under Secretary Young for recognizing that the acquisition of replacement refueling tankers for the Air Force should be put on a path toward quick closure,” the company said. “We are reviewing the decision to ensure the re-competition will provide both companies a fair opportunity to present the strengths of their proposals.”
Boeing hailed the announcement of a new competition, with caveats.
“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,” Boeing’s statement reads. “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. As the Government Accountability Office reported in upholding our protest, we submitted the only proposal that fully met the mandatory criteria of the original RFP.”
Young and his Air Force counterpart, Sue Payton, are scheduled to testify today before the House Armed Service air and land forces subcommittee–the first of what is likely to be an extended series of congressional hearings on the topic.
Key lawmakers were informed of Gates’ decision earlier in the day.
On Capitol Hill, Boeing’s supporters in Congress hailed Gates’s decision, while Northrop Grumman backers were quick to note the recompetition is not a rejection of the Northrop Grumman-EADS offering.
“The plan the Department of Defense has come up with is an appropriate solution to remedy the minor procedural flaws the GAO found in the initial award,” said Sen. Richard Shelby (R-Ala.), whose state would benefit if Northrop Grumman retains the contract. In a statement he called the expedited recompetition “the best of all options.”
Fellow Northrop Grumman backer Rep. Jo Bonner (R-Ala.) called on all lawmakers in a statement “to listen very carefully to what the secretary of defense said about the urgent need to get on with the tanker program.”
Meanwhile, several defense committee leaders praised Gates’s decision, joining a chorus of jubilant Boeing supporters in Congress from states including Washington, Kansas, Missouri, and Connecticut.
House Appropriations defense subcommittee Chairman John Murtha (D-Pa.), who previously had suggested cutting off tanker funding if the contract remained with Northrop Grumman, said yesterday he agrees with Gates’s decision to recompete the tanker and place it under Young’s purview. Murtha’s panel is scheduled to mark up the fiscal year 2009 defense appropriations bill next week.
“I would expect the Secretary to take into full consideration the recommendations of the Government Accountability Office (GAO),” Murtha said in a statement. “The Tanker Refueling Program is vital to our national security, and I will recommend to the subcommittee that we provide the funding necessary to support an expedited decision. I’m hopeful that a decision can be made by December of this year, and once the competition is complete the subcommittee’s goal will be to build 24-36 Air Force Refueling Tankers per year.”
Presidential candidate Sen. John McCain (R-Ariz.) said the steps Gates announced “reflect careful consideration of the GAO’s decision and the need for continuing oversight of the process by which the Department decides to purchase its largest and most expensive weapons.”
Democratic White House hopeful Sen. Barack Obama’s (D-Ill.) campaign did not comment by Defense Daily‘s deadline.