Air Force restarts $35B tanker competition

By DONNA BORAK
AP Business Writer

WASHINGTON -- The Air Force on Friday launched its third attempt to award a $35 billion tanker contract to either Boeing Co. or Northrop Grumman Corp.

The Air Force said it will be "crystal clear" in its requirements for new tankers that refuel military planes in flight in order to avoid errors from previous selection processes. The service also now wants a plane that's war-ready on day one.

Los Angeles-based Northrop, and its partner Airbus parent European Aeronautic Defense and Space Co. N.V., are offering a tanker based on the Airbus A330. Northrop said it will review the draft request for bids and provide comments to the Air Force soon.



Chicago-based Boeing said it will conduct a detailed review of the service's request to assess which plane it will offer - the 767-based tanker, the larger 777-based tanker, or perhaps both.

Both the companies and lawmakers have 60 days to comment on the Air Force's proposal before a final version is released.

The Air Force has failed twice to award a contract to replace its Eisenhower-era fleet of 179 tankers. The last award in early 2008 to the Northrop team was overturned on an appeal by Boeing after congressional investigators found the Air Force failed to evaluate both proposals on the same merits. That led Pentagon leaders to temporarily revoke the service's authority to award a contract.

The 2004 award to Boeing was undone by an ethics scandal that resulted in prison terms for a former company executive and a former Air Force official.

Lawmakers already have started bickering over the exclusion of language that would have required the Air Force to consider the World Trade Organization's interim ruling earlier this month that European loans for Airbus were illegal subsidies. A separate ruling on a European Union counter-complaint against the U.S. is expected in about six months.

States like Washington, Kansas and others who stand to gain jobs if Boeing lands the award want the Air Force to consider the WTO ruling in its tanker selection. Northrop supporters in Alabama, where a new plant would be built in Mobile, disagree.

Some lawmakers also wanted the Air Force to ink deals with both companies, but the service still plans to make a single award next summer.