Defense official says tanker deal may fall behind schedule

The Pentagon's top acquisition official acknowledged Thursday that the Defense Department may not award a new contract for the Air Force's fleet of aerial refueling tankers by the end of the Bush administration.

Appearing before the House Armed Services Air and Land Subcommittee, John Young, undersecretary of Defense for acquisition, said he will work quickly to select a new contractor for the disputed program by the end of the year.

But he stressed that the competition is on an "event-driven schedule" with an "infinite number of obstacles."

On Wednesday, Defense Secretary Robert Gates announced the reopening of the competition for the tankers, three weeks after the Government Accountability Office sustained a protest filed by the losing bidder Boeing Co. over the Air Force's decision to award the $35 billion deal to Northrop Grumman and EADS, the parent company of Boeing's European rival Airbus.

Gates, emphasizing the Air Force's longstanding need for new tankers, said he hoped to have a new contract awarded by the end of the year.

At the hearing, Young assured lawmakers, "I have a personal obligation to the war-fighter and you to try to deliver this product."

But, he added, "I can't anticipate all the roadblocks that will come up."

For instance, Young said, the bidders on the program have a right to protest a draft request for proposals due out in the next several weeks - a move that would likely prolong the competition.

Meanwhile, if one of the contractors were to propose using a different aircraft than offered during the original competition, the Pentagon would need to take more time to evaluate the proposals, Young said.

Some lawmakers, including House Armed Services ranking member Duncan Hunter, have suggested Boeing consider offering its larger 777 aircraft against the jumbo Airbus A330 the Air Force has preferred. Boeing offered to its 767 model during the original competition.

Young also warned that the next award for the program could spur the losing bidder to file another protest with GAO, further delaying the final contract award for a fleet of tankers that the Air Force has said it urgently needs.

"I have to anticipate another protest," Young said.

A draft request for proposals, which is due out later this month or in early August, will address the eight major issues raised by GAO, which responded to losing bidder Boeing Co.'s protest by recommending the contract be rebid.

In its recommendation, GAO said Air Force mistakes during the selection process might have swayed the contract toward the Northrop Grumman/EADS team. "But for these errors, we believe that Boeing would have had a substantial chance of being selected for [the] award," GAO said.

GAO cited eight specific reasons for siding with Boeing, including its conclusion that the Air Force did not adequately assess the merits of the proposals in line with the criteria service officials established for the program.

Additionally, GAO concluded that the Air Force "conducted misleading and unequal discussions with Boeing" by informing the aerospace giant that it had fully satisfied a requirement on so-called operational utility.

The Air Force later determined that Boeing had only partially met the objective and did not advise the firm of the change in its assessment of the proposal.