Pentagon Issues New Tanker Bid Parameters

Pentagon Issues New Tanker Bid Parameters

(NSI News Source Info) August 6, 2008: The Pentagon plans to take extra capabilities - including added fuel offload capacity - into account as it scores revised proposals from Boeing and Northrop Grumman/EADS that could lead to $35 billion in work replacing aging KC-135 tankers. The Defense Department will consider "value over threshold" when reviewing the revised offers, said Shay Assad, director of defense procurement and acquisitions policy, during an Aug. 6 briefing at the Pentagon. This could put Boeing's 767-200LRF-based proposal at a disadvantage as its cargo, passenger and fuel offload abilities are hampered by its size compared to the larger Airbus A330-200 design proposed by Northrop. Today, a revised draft request for proposals (RFP) for the KC-X refueling tanker was provided to both teams, kicking off the recompetition of the controversial program. The new draft RFP is intended to provide "clear and unambiguous insight into the relative order of importance" of various capabilities, including fuel offload, cargo and passenger capacity and survivability, among other aspects. Assad did not identify the capabilities in order of importance, and DOD officials did not publicly release the draft RFP, breaking with typical protocol, which calls for solicitations to be posted publicly online. The draft was, however, sent to Congress and is already drawing criticism because it may favor the larger A330 offering. (Click here (6.1-meg pdf) and here (1.2-meg pdf) for the documents). For instance, an aide to Rep. Norm Dicks (D-Wash.) argued there is an obvious change inserted into the system requirements document in the revised tanker RFP that "clearly" favors the larger Airbus aircraft "even though it is not necessarily connected to any real-world use of tanker." The congressional Government Accountability Office found that in the earlier competition the Air Force did not clearly articulate how it would score attributes that surpassed the threshold requirements for the system. This, among other irregularities, called into question the Northrop Grumman/EADS North America win of a $1.5 billion development contract for the new refueler Feb. 29. Both teams will have about one week to discuss the draft RFP with the Office of the Secretary of Defense. By mid-month, a final RFP will be released and contractors will have about 45 days to submit their revised proposals. Source selection should be finished by the end of the year with a final winner announced by New Year's Eve, Assad said. The existing contract with Northrop Grumman will remain in stop-work status until a winner is selected. If Northrop Grumman again prevails, its contract will be revised and restarted. If, however, Boeing wins this new competition, Northrop's contract will be terminated, he said. The Pentagon does plan to shift the life-cycle cost estimates from an expected useful life of 25 years to 40 years on the aircraft, Assad says. And, it will take into consideration the cost of fuel and anticipated fuel burn rates of each aircraft throughout those years.