U.S. Defense Department To Reopen Bidding For $35 Billion Tanker Aircraft Contract

Washington, D.C. (AHN) - The Pentagon is reopening the bidding for a controversial $35 billion contract to build refueling tankers for the U.S. Air Force. The decision follows the recommendation made by the Government Accountability Office (GAO) last month.

Defense Secretary Robert Gates is scheduled to announce the decision late Wednesday, according to a written statement from Sen. Richard Shelby (R-AL).

"It is important to remember that out of Boeing's 111 complaints, the GAO concurred with a mere seven," Shelby said. "The plan the Department of Defense has come up with is an appropriate solution to remedy the minor procedural flaws the GAO found in the initial award."

The Pentagon awarded its contract to build 179 KC-45A planes to Northrop Grumman and the European Aeronautic Defence and Space Co. (EADS) in February. Defense officials said the company's bid offered the best value because of its mission capability and past performance. But Boeing, which was originally awarded the contract in 2004, protested about "serious flaws in the process that we believe warrant appeal."

The contract is one of the biggest in U.S. history, and is part of a series contracts totaling $100 billion that aims to replace 600 tanker aircraft over the next three decades.

The GAO issued a 69-page report in June saying the bidding process had been filled with a number of errors, such as "conduct[ing] misleading and unequal discussions with Boeing, by informing Boeing that it had fully satisfied a key performance parameter objective relating to operational utility, but later determined that Boeing had only partially met this objective, without advising Boeing of this change in the agency's assessment."

The Defense Department, and not the Air Force, will make the decision about the results of the new bidding process on Dec. 31, Rep. Todd Tiahrt (R-KS), who sponsored a tanker re-compete bill last month, told Bizjournals on Wednesday.