June 20, 2008 / 3:03 PM / 11 years ago

Air Force to seek new tanker bids: outgoing boss

WASHINGTON (Reuters) - The ousted head of the U.S. Air Force said Friday he expected the service to seek new bids for mid-air refueling aircraft from Boeing Co and Northrop Grumman Corp, and predicted delays in fielding them.

A Boeing KC-135R tanker (L) is seen in an undated handout photo. REUTERS/U.S. Air Force/Handout

“I would say there’s going to be a lot of fear in the system that, ‘can we ever do this right,’” said Michael Wynne, forced to resign June 5 as the Air Force’s top civilian by Defense Secretary Robert Gates.

On Wednesday, federal auditors faulted the February 29 tanker contract award 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 Government Accountability Office, or GAO, a nonpartisan congressional watchdog.

The Air Force planned 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 phases for acquiring a new tanker fleet potentially costing $100 billion or more.

Wynne, on his last day in office, said the Air Force in effect had leaned over backward to maintain competition after an abortive 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 error-studded selection process cited 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 overly complex and we need to make the decision process simpler.” He said a “flyoff” competition was worth considering.

Wynne also said the Air Force would seek GAO clarification on what he called certain “subjective” criticism.

The service then “hopefully” would put out a quick, fresh request for proposal “that will allow them (the bidders) to use all the information they’ve already produced,” he said.

Although Wynne said the Air Force would strive to meet a 2013 goal for starting to fly new tankers, which are used to refuel warplanes in mid-air, he added: “There’s almost no way to do that in the face of a straightforward delay in the start date.”

Northrop Grumman said Thursday it had put off indefinitely a planned June 28 groundbreaking for facilities in Mobile, Alabama, designed to produce tankers from the Airbus A330.

After setting up the assembly plant in Mobile, EADS had planned to shift some A330 cargo assembly to the United States.

Separately, an Air Force spokeswoman said on Friday the service was continuing to impose a “stop-work” order on the Northrop program while it mulls GAO recommendations. The Air Force has 60 days from Wednesday to respond.

Northrop Chief Executive Ronald Sugar told a May 30 Wall Street conference the company was “looking forward to resuming work on this very important program on June 19th,” the deadline for the GAO ruling.

Wynne was ousted after nuclear-safety and ballistic-missile parts-handling oversights. He said though that he had been increasingly “strident” in clashes in the past year with Gates, his boss as defense secretary.

“We advised the secretary — I did — that I was not with him on the F-22 budget, for example,” Wynne said, referring to the top-of-the-line Lockheed Martin Corp (LMT.N) fighter aircraft. The Air Force has pushed to extend the production line. Gates had left the decision to the next administration.

Editing by Phil Berlowitz and Steve Orlofsky

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