WASHINGTON The Defense Department has again delayed plans to award a $35 billion contract for Air Force refueling planes, handing a victory to defense contractor Boeing Co. and leaving the politically charged decision for the next president.
Defense Secretary Robert Gates told lawmakers Wednesday that he ended the current round of bidding on the tankers because the Pentagon's plan to pick a winner by the end of the year no longer seemed possible, given the complexity of the project and the rancor between Boeing and rival Northrop Grumman Corp. He said a delay would provide a "cooling-off" period.
The decision represents a major win for Boeing in its lengthy and bitter struggle with Northrop for the lucrative contract for 179 planes that could eventually include the right to build many more. Boeing recently threatened to back out of the bidding, saying the Pentagon's timeline and terms unfairly favored the larger plane proposed by Northrop.
Boeing welcomed the Pentagon's decision, saying it will allow "the appropriate time for this important and complex procurement to be conducted in a thorough and open competition."
The decision delays the goal to replace the military's aging KC-135 tanker.
Senate Tanker Caucus co-chairman Sen. Orrin Hatch, R-Utah, said Wednesday that he was disappointed with the department's decision. The "mainstay" KC-135 tanker is old and not getting any younger, and it is "unreasonable" to expect that it will hold up forever, Hatch said. "It is also unfair to our brave men and women in uniform, who should be able to count on having the best, safest and most advanced equipment we can deliver."
The Pentagon has tried and failed for seven years to award a contract to replace its aging fleet of current tankers that refuel military planes in flight. Some of the planes are nearly 50 years old, and senior defense officials have said they need to be replaced soon.
In 2004, Boeing lost the contract amid an ethics scandal that resulted in prison terms for a former senior company official and a former high-ranking Air Force official. A team of Northrop and Airbus parent European Aeronautic Defense and Space Co. was awarded the contract earlier this year, but bidding was reopened after a Government Accountability Office report found serious flaws with the Air Force's decision. The Pentagon had hoped to make a new contract decision by Dec. 31.
But Boeing and its congressional supporters exerted heavy pressure on the Defense Department to defer its decision, with company officials saying they needed at least six months to come up with a new bid. Top Boeing officials met several times with the Air Force and Pentagon after the release last month of a draft version of the latest contract guidelines.
In those discussions it became clear that "one of the competitors would not or could not conform to the timeframes" laid out by the guidelines, according to Pentagon spokesman Chris Isleib. That meant a contract award this year was not possible.
The struggle between the two major defense contractors has been especially bitter, with each waging sharp-edged public relations and lobbying campaigns in Washington. Capitol Hill support also is divided, with lawmakers from Boeing's industrial base in Washington state and Kansas battling their counterparts from Alabama who back Northrop's plans to build a manufacturing plant in Mobile, Ala., that will employ 1,500 people.
Northrop which has 1,228 Utah employees has said 220 jobs would be added in Utah with the contract, both in Northrop's operations and with four supplier companies.
Boeing has 739 employees and 236 suppliers and vendors in Utah.