U.S. won't make same mistakes on tanker: AF chief

WASHINGTON Thu Jun 11, 2009 6:46pm EDT

WASHINGTON (Reuters) - The U.S. Air Force has stepped up training, elevated oversight and reached out to outside experts to avoid making the same mistakes that doomed its last attempt to buy new aerial refueling tankers, the service's top military officer said on Thursday.

Air Force Chief of Staff General Norton Schwartz said he expected Defense Secretary Robert Gates to make decisions soon on the acquisition process for the next tanker competition between Northrop Grumman Corp and Boeing Co.

"The bottom line is we have taken lessons from that very searing experience and we intend to be very much more rigorous here once the secretary of defense decides one, what the acquisition strategy will be and two, who will execute that strategy," Schwartz said told a Heritage Foundation event.

He said the Air Force had elevated the level of supervision of the source selection process for the tanker acquisition program, was reaching out to a "broader array of talent" within the Air Force, and had added a panel of outside experts to point out possible shortfalls and add more "quality control."

The Pentagon last year decided to redo the tanker competition amid a political firestorm that erupted after government auditors upheld a Boeing protest against the Air Force award of a $35 billion contract to Northrop and Europe's EADS in February 2008.

Gates this week said he expected to make a decision within the next two weeks about the acquisition process, with an eye to releasing a draft request for proposals this summer, after getting input from lawmakers.

Schwartz said he respected the work done by Air Force acquisition officials on the contract, and noted that only eight of over 100 issues raised by Boeing were upheld by GAO.

Mark Werfel, a Virginia-based consultant who spent three decades working on federal acquisition issues, argues that the Air Force could have legally awarded the contract to Boeing after the GAO ruling last summer.

That would have saved the time and the cost of running a whole new competition, and gotten the Air Force the new refueling tankers it needs sooner, Werfel said.

In its decision, GAO concluded that the Air Force improperly accepted the Northrop bid because the company explicitly took exception to a requirement to help the Air Force set up a depot maintenance facility within two years.

"Boeing's proposal was still in play for award," Werfel said. "Given the rules clearly allowed an award to Boeing, the public should know why none was made."

Werfel noted that the GAO decision said the Air Force repeatedly contacted Northrop about correcting what it knew to be a material deficiency before the contract award was made, an implicit acknowledgment that the proposal was not acceptable.

Moreover, Werfel said, the Pentagon could have grounds to refuse to pay Northrop's termination costs, a matter still being negotiated, since the company had explicitly refused to meet the requirement for the proposal.

Schwartz said the Air Force had learned important lessons from the GAO report and the issues raised by both companies, but declined comment on the termination cost issue.

"That is for the lawyers to debate and we'll see what the outcome is," he said.

(Reporting by Andrea Shalal-Esa; Editing Bernard Orr)