August 26, 2008 / 9:30 PM / 11 years ago

Pentagon may delay guidelines on aerial tanker

WASHINGTON (Reuters) - The Pentagon said it may wait until next week before issuing a final request for proposals in its rerun of a $35 billion aerial tanker competition between Boeing Co and Northrop Grumman Corp.

Asked about the timing of the new guidelines, Pentagon spokesman Bryan Whitman said the announcement was not likely on Tuesday and could “certainly” lapse into next week.

Another defense official, who asked not to be named, said the announcement could come next week after Pentagon acquisition chief John Young returns from a business trip to Europe. The official gave no details about Young’s itinerary.

Boeing has argued that the Pentagon’s draft request for proposals had changed the requirements for the competition, and said last week it may withdraw from the bidding unless the Pentagon agrees to give it six months to submit a new proposal.

Boeing spokesman Dan Beck said Tuesday the company had not been approached about any additional meetings with Pentagon or Air Force officials, nor did Boeing request a meeting.

He said Boeing was not challenging the Pentagon’s revised rules for the competition, but concluded the 767-200 variant it proposed in the initial go-round would not be able to win this competition, given the Pentagon’s decision to give credit for hauling more fuel than required.

Boeing has said only that it is studying other configurations, and analysts say it may offer the larger 400-version of the 767 since the 777 airliner may be too big.

Northrop and its European subcontractor EADS countered the Boeing request with a full-page advertisement in The Washington Post on Monday, saying Boeing was “asking to be rewarded for finally abandoning a bad business decision.”

Northrop said a further delay would boost programs costs and increase risks for U.S. troops flying the current aging fleet of KC-135s, which are 45 years old on average.

“The new tanker is needed now and Northrop Grumman is ready now to provide it,” said the ad.

In February, the Air Force awarded the $35 billion contract for 179 refueling aircraft to Northrop and EADS, but the Pentagon decided to redo the competition after government auditors said in June they found significant errors in the original process and upheld a protest filed by Boeing.

Pentagon officials had hoped to issued a final request for proposals for the new competition by mid-August, a timetable even Young has acknowledged was ambitious.

Now it seems likely that any contract award will be delayed into next year, said defense analyst Loren Thompson of the Virginia-based Lexington Institute.

He said Young and Deputy defense Secretary Gordon England had wanted to move quickly toward a new contract award before the change in administration, but that was proving difficult.

“In reality they have made a mess of it, and it’s probably too late to fix it,” said Thompson.

Additional reporting by David Morgan; editing by Jeffrey Benkoe

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