US opens new bidding for $35b Air Force tanker deal

The new bids for the Air Force's refueling tanker contract are due Oct. 1, and a decision is expected by the end of the year. (Joshua Trujillo/Seattle Post-Intelligencer /File 2008)

WASHINGTON - The Pentagon opened a second round of bidding yesterday for a $35 billion Air Force tanker contract following an error-plagued first attempt that featured bitter competition between Northrop Grumman Corp. and Boeing Co.

A revised draft request for proposals was issued to build 179 aerial refueling tankers meant to replace the Air Force's current fleet that dates to the 1950s.

The team of Northrop and Airbus parent European Aeronautic Defence and Space Co. won the original contract, but Boeing protested, saying the Air Force did not conduct the process fairly and favored Northrop. A Government Accountability Office review found "significant errors" in the Air Force's decision, and Defense Secretary Robert Gates later said he would reopen bidding.

The revamped competition will focus on areas where government auditors found problems with the initial process.

Both companies have indicated their bids will be similar to their original plane proposals.

Northrop's version was larger than Boeing's, but the GAO concluded the Air Force unfairly gave Northrop extra credit and did not make it clear that size and the ability to carry more fuel would be a bonus.

Changes in the draft request for proposal make that clearer, saying "additional value" will be given to any proposal that can carry more fuel than required.

Northrop spokesman Randy Belote said the company was reviewing the request and planned a response soon. Boeing was checking to see if it addressed the GAO's criticisms, but company spokesman Dan Beck said it was too early to comment.

Boeing's allies on Capitol Hill, especially those who represent the company's industrial base in Washington state, were not pleased. Senator Patty Murray, a Washington Democrat, said the new draft still seems to favor Northrop's larger aircraft.

But lawmakers from Alabama, where Northrop plans a new plant for the plane, applauded the Pentagon.