Air Force to seek new tanker bids: outgoing boss

By Jim Wolf

WASHINGTON (Reuters) - The ousted head of the U.S. Air Force said Friday he expected the service to seek new bids for midair refueling aircraft from Boeing Co and Northrop Grumman Corp after federal auditors faulted the selection process for a $35 billion program.

The service probably would miss its 2013 goal for putting the new tankers into use, said Michael Wynne, forced to resign as Air Force secretary by Defense Secretary Robert Gates.

"I would say there's going to be a lot of fear in the system," Wynne, the service's top civilian, told reporters on his last day in office. At issue, he said, would be "can we ever do this right?"

On Wednesday, the Government Accountability Office faulted the contract awarded nearly four months ago to the team of Northrop Grumman (NOC.N) and Airbus parent EADS (EAD.PA), and recommended a new competition be held.

Boeing Co (BA.N), the losing bidder, successfully challenged the award with the GAO, a nonpartisan congressional watchdog. GAO said the Air Force had made "significant errors that could have affected the outcome of what was a close competition."

On February 29, the Air Force announced plans to buy 179 refueling tankers based on the A330 built by Airbus, Boeing's passenger plane-maker rival. Valued at $35 billion over 15 years, this was to be the first of three purchases of a new fleet potentially costing $100 billion or more.

Northrop said Friday it remained under Air Force contract and called for speedy resolution of the issues raised by GAO.

"We respect the GAO process and are confident the Air Force will appropriately address its recommendations," said Paul Meyer, Northrop Grumman's tanker program manager.

Wynne, forced to resign June 5 over nuclear and ballistic missile safety oversights, said the Air Force in effect had leaned over backward to maintain competition after a botched sole-source plan to lease and then buy modified Boeing 767s as tankers.

That deal collapsed four years ago after it emerged that Darleen Druyun, a top Air Force procurement official later imprisoned on conflict-of-interest charges, was simultaneously negotiating a $250,000-a-year missile-defense job at Boeing.

"We wanted to make sure we had competition," Wynne said of the selection process faulted by GAO. "It's very hard now because the industrial base in America is shrinking."

"I think getting a competitor to hang in there was one of our early-on responsibilities because we felt like that was the best way to get the best price for the government and the best value for the taxpayer," he added.

Pressed on what went wrong, Wynne said, "I think we made it overly complex." He said a "flyoff" competition was worth considering.

Richard Aboulafia of Teal Group, a Fairfax, Virginia, aerospace consultancy, said a flyoff involved evaluating the performance of prototypes equal or close to the tankers being built.

Such an approach likely would favor Northrop, he said, because "they're a little closer to having a fully representative plane."