June 26, 2009 / 8:28 PM / 10 years ago

U.S. KC-10 tanker upkeep contract delayed to Sept

* Contract award initially due in June 2008

* Value estimated at $2.5 billion

WASHINGTON, June 26 (Reuters) - The U.S. Air Force said on Friday it does not plan to award a major contract for maintenance of its KC-10 refueling tankers until Sept. 30, a further delay of several months.

Industry executives had expected an announcement sometime this month or next in the competition between Boeing Co (BA.N) and Northrop Grumman Corp (NOC.N) (NOC.N) to service the large refueling aircraft.

Analysts value the deal at around $2.5 billion.

The Air Force had initially planned to award a contract in June 2008, after the companies submitted bids in late 2007.

But the contract award was delayed because all contractors submitted “insufficient cost and pricing data,” said Air Force spokeswoman Lieutenant Colonel Linda Pepin.

As a result, the Air Force contracting officer sought help from the Pentagon’s Defense Contract Audit Agency, which recommended a full audit of all vendors, Pepin said.

It was not immediately clear if other companies besides Boeing and Northrop bid for the work.

Pepin said the Air Force issued a contract extension to Boeing, which holds the current contract, in January 2008, to cover maintenance of the planes until a new contract could be awarded. It included several four-month extension options, and the final one would carry the program through January 2010, Pepin said.

Northrop spokesman Randy Belote said his company had not been notified about the rescheduling of the contract award.

“Northrop Grumman submitted a best-value proposal in good faith and we look forward to winning the contract and working closely with the Air Force to supply support for this vital capability,” he said.

Boeing spokesman Scott Day said the company had provided support for the KC-10s for over a decade, achieving a “100-percent, on-time delivery rate.”

“We believe our... proposal is strong and that what sets Boeing apart is customer satisfaction, solid and consistent performance and a proven ability to ensure aircraft availability and readiness to the warfighter,” he said. (Reporting by Andrea Shalal-Esa; Editing by Tim Dobbyn)

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