Pentagon Continues Fight to Get Tanker Deal Off the Ground

WASHINGTON (AP) — Seven years and two jail convictions later, the Pentagon on Wednesday unveiled its latest attempt to get a $35 billion contract for refueling planes off the ground.
But within moments, the proposal was at risk of a crash and burn after a major contractor considered withholding its bid because it believed the terms unfairly favored its competitor.
And with thousands of jobs possibly at stake for Alabama, the state’s two senators weighed in as well, saying the latest proposal appeared to do little to satisfy Northrop Grumman Corp.’s concerns that the terms were skewed against its larger, more expensive plane.
“It is an illusion of a fair competition in which the warfighter and the taxpayer lose,” said Sen. Richard Shelby, R-Ala.
The Pentagon’s quest to buy its own fleet of tanker planes is a tale of political wrangling, corporate food-fights and unethical backdoor dealings that seems never-ending.
Since 2003, the Pentagon has tried twice, and failed twice, to award a contract to replace its Eisenhower-era fleet of tankers that refuel military planes in-flight. Most recently, a deal awarded to Northrop Grumman was overturned on appeal.
In 2004, a Boeing victory was nixed after an ethics scandal resulted in prison terms for a former company executive and a former Air Force official. The two were accused of discussing a job for the Air Force official while she was still overseeing billions of dollars of Boeing’s business for the service.
On Wednesday, the Pentagon tried again and publicly released its final bid request for the job. The bid involves building 179 tankers, but the job could be expanded. A final contract is to be awarded in September.
Northrop said in a statement it would review the complex proposal before commenting. A Northrop pullout would leave Boeing Co. as the lone bidder on one of the most protracted and expensive contracts in Pentagon history.
Sen. Jeff Sessions, R-Ala., said: “At this point I can only say that I’m disappointed.”
The Pentagon’s senior leaders on Wednesday defended the proposal.
“We believe that both offers are in a position to win this competition,” Air Force Secretary Michael Donley said.
Added Deputy Defense Secretary Bill Lynn: “We think we’ve put forward a balanced and fair competition.”
Politics has factored in heavily into the debate because the outcome will mean thousands of jobs. Shelby and Sessions support a win by Northrop because it would translate into as many as 5,000 jobs in their home state, including 1,500 in Mobile, where the tanker would be assembled.
While Shelby and Sessions said they were pessimistic that Northrop would bid for the contract, Boeing supporters cheered.
“I’m pleased with what I heard,” said Democratic Rep. Jay Inslee of Washington state, where Boeing plans to build its tankers. “As far as the specifics of the proposal, we’re very much in the game.”
Lynn declined to say what the Pentagon would do if it’s faced with only one contract bid for the program.
“When we get to that point we’ll address that question,” he told reporters. “I don’t want to go beyond the statement that we have. … We are hoping that we don’t have to.”
Last fall, Northrop said it would drop out without significant changes to the criteria. It has teamed with the European maker of Airbus to compete with Boeing. That partner, Paris-based European Aeronautic Defence & Space Co., has seen the deal as essential to breaking into the lucrative U.S. defense contracting market.

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