Lawrence Jackson/AP
Defense Secretary Robert Gates

Defense Department to Rerun Air Force Contract Bid

July 10, 2008 04:28 PM
by Anne Szustek

The Pentagon is relaunching bidding for a $35 billion equipment contract, following the GAO’s ruling last month that the original decision process was flawed.

30-Second Summary

Secretary of Defense Robert Gates said the Air Force is running a fast-track bid process to fulfill a $35 billion contract to replace its aging fleet of Stratotankers.

The Pentagon established a year-end deadline for the awarding of the deal—a date some find ambitious.

“A December award would be a pretty fast reponse, but then they have been fast responding to the Government Accounting Office,” said Oppenheimer analyst Myles Walton.

The GAO said last month that it determined that the U.S. Air Force made “a number of significant errors that could have affected the outcome of what was a close competition” in a contract bid that was awarded to EADS, the parent company of U.S. aircraft manufacturer Northrop Grumman.

The GAO gave seven reasons why the Air Force needs to recast the bidding tender, including “misleading and unequal discussions with Boeing.”

Gates appointed Defense Acquisitions Undersecretary John Young to administer the new bidding process, in an apparent move to stave off complaints from interested parties.

The Air Force badly needs to replace its current Boeing KC-135 Stratotankers, which date from the Eisenhower era. But after the deal was announced Feb. 29, Congress rebuked the Air Force for awarding such a lucrative contract to a foreign supplier.

Boeing may be back in the game, but the aircraft manufacturer still has black marks on its record; namely, a series of four no-bid deals with the Air Force for 100 Boeing 767s. Darleen Druyun, the contracting official behind the plan, served a nine-month prison sentence for fraud charges in connection with the scheme.

See Reuters coverage

Headline Links: Boeing’s second chance could delay Air Force acquisitions until 2009

Background: Boeing and Congress fight the EADS contract, GAO recommends new round of bidding

Related Topic: ‘Air Force Shakeup Underlines Row With Gates’

Historical Context: Recent squabbles between Boeing and the U.S. government

Opinion & Analysis: Bid process was flawed


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