U.S. Dept. of Defense suspends tanker contract competition

The decision puts the contract criteria and award process in the lap of the next presidential administration.

The U.S. Department of Defense (DoD) announced on Sept. 10 that it has notified the U.S. Congress and the two competing contractors, Boeing and Northrop Grumman, that it is terminating the current competition for a U.S. Air Force KC-X airborne tanker replacement.
Defense Secretary Robert Gates, in consultation with senior Defense and Air Force officials, has determined that the solicitation and award cannot be accomplished by January 2009 when the next presidential administration takes office. Rather than hand the next administration an incomplete and possibly contested process, Secretary Gates decided that the best course of action is to provide the next administration with full flexibility regarding the requirements, evaluation criteria and the appropriate allocation of defense budget to this mission.
Secretary Gates stated, “Over the past seven years the process has become enormously complex and emotional – in no small part because of mistakes and missteps along the way by the Department of Defense. It is my judgment that in the time remaining to us, we can no longer complete a competition that would be viewed as fair and objective in this highly charged environment. The resulting “cooling off” period will allow the next administration to review objectively the military requirements and craft a new acquisition strategy for the KC-X."

In making this decision, it was concluded that the current KC-135 fleet can be adequately maintained to satisfy U.S. Air Force missions for the near future. Sufficient funds will be recommended in the FY09 and follow-on budgets to maintain the KC-135 at high-mission capable rates. In addition, the Department will recommend to the Congress the disposition of the pending FY09 funding for the tanker program and plans to continue funding the KC-X program in the FY10 to FY15 budget presently under review.

The U.S. Air Force, in early 2008, awarded the $40 billion KC-X contract to a consortium led by Northrop Grumman and EADS. However, following protest by Boeing, the U.S. Government Accountability Office (GAO) found discrepancies in the award process and ordered the contract be reissued. The DoD originally planned to make a final decision, but Boeing, citing the short timeline, suggested in early September that it might pull out of the competition altogether.