- The Washington Times - Thursday, July 10, 2008

Boeing Co. and Northrop Grumman Corp. will submit new offers for a disputed $35 billion Air Force tanker contract, and the Pentagon will choose a winner by the end of the year.

Department of Defense Secretary Robert M. Gates said Wednesday that his office — not the Air Force — will oversee the competition between Boeing and the team of Northrop and Airbus parent European Aeronautic Defense and Space Co.

The plan, which hands control to Pentagon acquisition chief John Young and sets up a dedicated source-selection committee, is the latest illustration of senior Defense Department civilians lack of confidence in the Air Force’s ability to manage the contract.

“I think it’s better,” said Rep. Norm Dicks, Washington Democrat. “No one has any faith in the Air Force.”

The Government Accountability Office last month detailed “significant errors” the Air Force made in the original award to the Northrop team. The GAO said Boeing, which protested the deal, might have won the contract had the service not made mistakes in evaluating the bids.

The Pentagon now will conduct a limited rebid that looks only at eight issues with which government auditors found problems in the initial process, Mr. Gates said.

Sen. Richard C. Shelby, a Republican from Alabama, where the Northrop Grumman team would assemble its plane, called it “the best of all options” that would address the “minor procedural flaws” the GAO cited.

During a Pentagon news conference, Mr. Young said the government will not award deals to both companies, a compromise some have suggested, because it would result in higher costs, as well as complex logistics, training and operations.

Lawmakers from Washington state and Kansas, where Boeing employs thousands of workers, have put considerable pressure on the Air Force to reopen the bidding process and cancel the contract with the Northrop team.

“The GAO report made it impossible for Secretary Gates to make any other decision,” said Sen. Maria Cantwell, Washington Democrat. “The American people and the American warfighter cannot afford the same defense procurement team to make the same mistakes.”

The Air Force in February selected the Northrop team to replace 179 Eisenhower-era aerial refueling planes. Boeing filed its protest in March.

In a letter to lawmakers, Mr. Gates conceded there were “deficiencies in the process” of awarding the contract, but called some of the criticism of the department’s handling of it “inaccurate and misleading.”

Mr. Gates said he still had confidence in the Air Force’s acquisition team, and that the new plan “does not represent the first step in the process.”

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