US Air Force sees tanker rules out after Feb. 23

WASHINGTON Feb 8 (Reuters) - The U.S. Air Force plans to issue final terms soon, but not before Feb. 23, for bids on a multibillion-dollar contract to build aircraft-refueling tankers.

"This acquisition will be a full and open, best value competition," the Air Force said in a pre-solicitation notice posted on Monday on the federal business opportunities website.

Northrop Grumman Corp (NOC.N) and its European partner EADS (EAD.PA) won a projected $35 billion contract in February 2008 to build the mid-air refueling tankers for the Air Force, but the Pentagon canceled the contract after government auditors upheld a protest by losing bidder Boeing Co (BA.N).

Northrop has said it will not bid in the current competition unless the Air Force makes significant changes to a draft request for proposals (RFP) released last September that Northrop says is skewed to favor Boeing's smaller 767 tanker.

On Monday, the Air Force said it planned to issue a fixed-price type contract for development of a new aerial refueling tanker, including four developmental aircraft and options for up to 175 production planes, based on existing commercial designs, at a rate of about 15 planes per year.

It said proposals would be due 75 days from the date of the final request for proposals, and a winner would be chosen in the fourth quarter of fiscal 2010, which ends Sept. 30.

"The Air Force anticipates a single award but reserves the right to award multiple contracts or not to award a contract at all," the notice said.

It said the competition would exclude an award to a foreign prime contractor, "based on the required access to restricted information during contract performance."

Northrop said its position had not changed.

"Northrop Grumman feels that the current draft RFP, as structured, fails the test of true competition and, without meaningful changes, is not an RFP to which Northrop Grumman can respond," said spokesman Randy Belote.

He said the company would examine the final RFP when it was released in the coming weeks, and hoped it would be structured in such a way that allowed "both competitors to believe they can compete fairly and win." (Reporting by Andrea Shalal-Esa; Editing by Gary Hill)