UPDATE 1-US Air Force closely guards tanker winner news
(Adds details on timing, EADS concerns)
WASHINGTON, Feb 26 (Reuters) - In a city where few secrets survive thanks to lobbyists, lawmakers and career bureaucrats, the U.S. Air Force has so far managed to keep under wraps its decision in a high-stakes aerial tanker competition.
Only a select few know whether top acquisition officials picked Boeing Co (BA.N) or a team led by Northrop Grumman Corp (NOC.N) and its European partner, Airbus parent EADS (EAD.PA), to build 179 new refueling aircraft. The deal is valued at $30 billion to $40 billion over the next 10 to 15 years.
Most analysts expect Boeing to win the contract, but Northrop insists it still has a fighting chance.
Air Force officials had hoped to announce the news as early as Monday after a key Pentagon meeting, but two defense officials said an announcement was unlikely before Wednesday, and might not come until Friday.
The news was expected to begin leaking out after Monday's meeting of the Pentagon's Defense Acquisition Board (DAB). However, chief arms buyer John Young has not yet signed a memorandum approving the acquisition program, a critical step before the Air Force can announce the coveted contract award.
In fact, only a small number of those who attended that meeting were even briefed on the Air Force selection, said one source familiar with the program, who asked not to be named.
Lt. Col. Jennifer Cassidy, an Air Force spokeswoman, declined comment on how many officials know which company won, but said the service was at pains to prevent a news leak.
"We're very conscious of the stakes, so we're keeping this as 'close hold' as we can so as not to jeopardize the process," she said, noting that Young must approve a formal kick-off of the tanker program before the Air Force unveils the winner.
On whatever day Young does sign a formal acquisition decision memorandum, the Air Force plans to begin briefing key lawmakers, the companies, and finally the media, but only after U.S. financial markets close at 4 p.m. (2100 GMT), the officials said.
"Given the history, Mr. Young wants to be incredibly careful with this program. He does not want anyone saying that he did something wrong," said one defense official, who asked not to be named.
PROCUREMENT SCANDAL
Congress killed an earlier $23.5 billion Air Force plan to lease 100 Boeing 767 tankers amid a procurement scandal that sent two former Boeing officials to prison on conflict-of-interest charges and prompted the resignation of two senior Air Force officials.
Air Force officials have sought to keep the current competition as transparent and scandal-free as possible, meeting repeatedly with the rival bidders to explain the strengths and weaknesses of their respective proposals.
But defense officials still expect the losing side to protest the award, given its sheer size and a spate of recent decisions faulting the Air Force on other arms programs.
In fact, EADS has already raised "substantial concerns" about the tanker acquisition process and changes in how the KC-30 offer was being evaluated, according to two sources briefed about the discussions.
Spokesmen for Northrop and EADS each declined comment, but analysts said the move could lay the groundwork for a contract protest or later congressional review.
Meanwhile, the few Air Force and Pentagon officials briefed on the outcome of last week's contract decision meetings at Wright-Patterson Air Force Base are keeping quiet.
"They all have their poker faces on," said one senior Air Force official, frustrated by his inability to get the news.
For his part, Young managed to stay tight-lipped through an entire meeting with Sen. Jeff Sessions after the Monday DAB meeting.
The Alabama Republican backs the Northrop bid because it promised to build its A330-based tanker in his state if it won the multibillion-dollar contract.
"He's a very cool character," said one Republican source, describing Young's demeanor during the meeting with Sessions.
Air Force Secretary Michael Wynne and Air Force Chief of Staff Gen. Michael Moseley may face a tougher challenge on Wednesday when they are scheduled to testify about the Air Force budget before the House Armed Services Committee.
The panel has 62 member lawmakers, many of whom also have a vested interest in the outcome of the tanker competition.
Wynne and Moseley will testify regardless of whether the tanker contract has been awarded, said spokeswoman Lt. Col. Brenda Campbell. "That's not going to change," she said. (Editing by Brian Moss and Tim Dobbyn)
