GAO review of protest: KC-X tanker program will start bidding anew

 The U.S. Department of Defense (DoD) announced on July 9 that it has decided to reopen the bidding process for the KC-X multibillion-dollar midair refueling tanker contract. On Aug. 6, DoD issued a draft request for proposals to the competitors in the U.S. Air Force's $35 billion program to acquire new aerial refu

 The U.S. Department of Defense (DoD) announced on July 9 that it has decided to reopen the bidding process for the KC-X multibillion-dollar midair refueling tanker contract. On Aug. 6, DoD issued a draft request for proposals to the competitors in the U.S. Air Force's $35 billion program to acquire new aerial refueling tanker aircraft. The request went to Northrop Grumman (Los Angeles, Calif.) and The Boeing Co. (Chicago, Ill.) and addresses concerns the U.S. Government Accountability Office (GAO) raised about the original award of the contract in February, said Shay Assad, the Defense Department's director of procurement and acquisitions policy. Assad spoke during a Pentagon news conference Aug. 6.

GAO officials in June found improper practices related to the $35 billion contract originally awarded in February to a Northrop Grumman/EADS/Airbus consortium (see "Learn More"). That award prompted a protest from rival bidder Boeing as well as criticism from members of the U.S. Congress and American industrial leaders who objected to, among other things, the prospect of sending U.S. military contracts to "overseas suppliers." DoD officials have ordered Northrop Grumman to stop work on its February contract.

Replacing the Air Force as the source selection authority is John J. Young Jr., undersecretary of defense for acquisition, technology and logistics. He is tasked with appointing an advisory committee to oversee the bidding/selection process, determining which of the two bidders will ultimately supply the modified commercial aircraft fleet that will replace current KC-135 tankers, which are 47 years old, on average. The tanker request will remain in "open competition" until a new contract is awarded, which Secretary of Defense Robert Gates said he expects will happen before the end of this year.

"It is important to remember that this decision does not represent a return to the first step of a process that has already gone on far too long," Gates said, referring to the tanker contract as one of the department's most "time-critical." The process stalled when a Boeing protest (see end note) alleged more than 100 violations of proper contracting practices, eight of which were sustained by the GAO, the investigative arm of the U.S. Congress. After reviewing the GAO's decision, Michael B. Donley, acting secretary of the Air Force, said he concluded that the Air Force's acquisition system is not fatally flawed. "However, the GAO did sustain the protest in eight areas, and this has been sufficient to cast doubt on the Air Force's management of the overall process," he said. While rebidding the contract will add months to the process, Secretary Donley said it offers "the most direct route to complete the competition, achieve a final decision and field the tankers that represent the best value for the warfighter and the taxpayer."

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Northrop Grumman, EADS win coveted tanker contract

In a surprise announcement, the U.S. Air Force has picked a Northrop Grumman/EADS design over Boeing's submission for the KC-X next-generation fuel tanker. The deal is for up to 179 tankers and is worth $35 billion. EADS plans for substantial manufacture in the U.S.