GovernmentExecutive.com

Conferees on the fiscal 2008 defense authorization bill are divided over a Senate provision that would require the Air Force to create a pilot program to lease commercial aerial refueling services, with both sides of the debate finding little room for compromise.

Several aides said the Senate's "fee-for-service" language has emerged as one of the most contentious issues in the conference deliberations on the massive bill, which recommends funding levels and sets Pentagon policy.

The Senate provision, which has the strong backing of Armed Services ranking member John McCain, R-Ariz., and other members in both chambers, says the intent of the pilot program is to examine the "feasibility and advisability" of using contractors to provide aerial refueling services.

Leasing commercial services have been part of the Air Force's multipronged effort to upgrade its aerial refueling capabilities, which are vital to support long-range aircraft. But the Air Force has dragged its feet on the issue, delaying drafting a request for proposals for such services.

A congressional aide supportive of the language said the Air Force would release the RFP next month -- nearly a year later than originally planned. The provision's supporters "just want to make sure the program goes forward and the Senate felt it had to be put in statute," the aide said.

Supporters emphasize that a services contract for refueling could ultimately save money as the service gradually buys the next-generation aircraft, dubbed the KC-X. The Air Force is expected to award a $40 billion contract at the end of this year or early next year for 179 tankers to replace its oldest KC-135s, but the entire modernization effort should take decades.

Several House aides, however, questioned whether the provision is overly prescriptive. It requires a minimum of 1,200 flying hours each year for at least the next five years.

They also raised concerns that the bill does not specifically authorize funding for the potential services contracts, which would be paid for out of the service's operations and maintenance accounts.

During a hearing before the House Armed Services Committee Wednesday, Air Force leaders expressed some reservations about leasing refueling services and their effects on plans to buy new tankers, which officials tout as their top procurement priority.

"We worry on a couple of levels," Air Force Secretary Michael Wynne said. "We worry that it may be used as a tool to delay the KC-X program."

But Air Force Chief of Staff Michael Moseley said the service supports running a "proof of concept" study on leasing refueling services -- provided they are not pushed to use the commercial planes and crews operationally before they thoroughly evaluate the concept. Moseley said there still are several unanswered questions, including its effect on existing squadrons and the service's operations and maintenance accounts.

"The first step is a proof-of-concept to see what this looks like and to see how we would apply this," Moseley said. "I welcome that, but I'm hesitant to buy into an operational construct immediately without the proof-of-concept. I don't know what that does to us until we can see the details."

Only a handful of companies are capable of providing the Air Force with refueling services, including Washington, D.C.-based Omega Air, New York-based Atlas Air and Oregon-based Evergreen International Aviation. The Navy, whose aerial refueling needs are only a fraction of those of the Air Force, has used Omega Air for refueling services.