End to tanker saga may be inching closer – or not

WASHINGTON - When the Air Force formally requests bids as early as this week for a $35 billion contract for new aerial refueling tankers, it may be the beginning of the end in the nearly decade-long effort to replace the current fleet of Cold War-era planes.

Then again, it may not. When it comes to tankers, nothing is certain.

So far, the search for a new tanker has been marred by scandal, political intrigue, lobbying by the leaders of France, Germany and Great Britain, and the nearly cutthroat competition between two of the world’s major aerospace companies – Boeing and Airbus.

In the latest twist, an Alabama senator has blocked confirmation of three nominees to top Pentagon posts in a last-ditch effort to pressure the White House into restarting the competition.

Sen. Richard Shelby, R-Ala., placed the hold on the appointees even as Boeing’s European rival has said it won’t bid unless the “request for proposals” was changed.

If the Europeans don’t bid, Pentagon officials have signaled that the Air Force might “sole source” the contract and give it to Boeing outright.

The contract could be one of the Pentagon’s largest – ultimately worth an estimated $100 billion.

There are no signs that the Air Force has made major changes in a competition that appears to favor the medium-size tanker offered by Boeing over the larger tanker from the team of Northrop Grumman and the European Aeronautic Defense and Space Co. EADS is the parent company of Airbus, Boeing’s chief rival in the commercial airliner market.

“Both companies have been told there will be only minor adjustments,” said Loren Thompson, a defense analyst for the Lexington Institute, a national security think tank based in northern Virginia.

If the Air Force won’t give the Northrop-EADS tanker extra credit for flying farther and carrying more fuel, then it will come down to price, and a smaller plane is usually cheaper than a bigger one, Thompson said.

“They can’t win,” said Thompson, adding that Northrop-EADS already has spent $200 million on its effort to secure the contract and probably would be unwilling to spend more on a losing cause.

The decision by Shelby to put a hold on three Pentagon nominees was “outrageous but emblematic of how the walls are closing in on Northrop,” Thompson said.

Boeing plans on using its 767 model for the tankers’ airframe. The 767s are assembled at the company’s Everett plant and would be converted into tankers at a facility in Wichita, Kan. At stake are about 9,000 jobs in Washington state and 1,000 in Kansas.

The Northrop-EADS tankers would use an Airbus A-330 airframe. The initial handful of the Northrop-EADS tankers would be assembled at the Airbus factory in Toulouse, France. After that, the EADS tankers would be built at an assembly plant in Mobile, Ala. Several years after EADS announced it would build the Mobile plant, construction has not begun.

By placing holds on the Pentagon appointees, Shelby spokesman Jonathan Graffeo said the senator was trying to emphasize that the Pentagon must understand the need for “significant and substantive” changes in the competition.

Shelby’s action was criticized by Democrats and Republicans with Boeing plants in their states.

“I am surprised at his willingness to go so far in blocking these important appointees,” said Sen. Patty Murray, D-Wash., who has worked with Shelby on the Senate Appropriations Committee.

Sen. Sam Brownback, R-Kan., said every senator has the right to put holds on nominees, though it’s appropriate in some circumstance and not in others.

“I am happy to allow the Air Force to write its own aircraft specifications without political pressure, and the process should not be held up if someone chooses not to participate,” Brownback said.

Rep. Todd Tiahrt, R-Kan., said he didn’t begrudge Shelby for doing what his constituents elected him to do.

“But the Air Force shouldn’t listen,” Tiahrt said. “If there is any undue pressure, I want to know about it.”

Originally, Congress had approved a deal in which the Air Force would lease Boeing tankers. But that deal fell apart amid a Pentagon procurement scandal in which a top Air Force official and Boeing’s chief financial officer received jail time. Boeing’s chief executive resigned weeks later.

The Air Force then decided on a formal competition for the tanker contract.

Northrop-EADS won the initial tanker competition in 2008, but Boeing challenged the award. Government auditors overturned the decision, saying the Air Force had made changes in the contract criteria without giving Boeing a chance to adjust its bid.

Two other recent developments could make it more difficult for Northrop-EADS to win the tanker contract, Thompson said. A new team at the White House knows it would be roundly criticized if the tanker contract were awarded to a European company in the midst of an economic recovery. And the powerful congressman who favored a split buy between Boeing and Northrop-EADS has died.

Rep. John Murtha, D-Pa., likely will be replaced as chairman of the House Appropriations Committee’s defense subcommittee by Rep. Norm Dicks, D-Belfair, a strong supporter of the Boeing tanker.

Northrop-EADS has repeatedly said it wouldn’t bid without “meaningful changes” in the competition, though the team made the same threat in the earlier competition and then went ahead and bid.

“They have threatened to take their ball and go home before,” Murray said.

If Boeing was the only bidder, the Pentagon could just negotiate a tanker contract directly with the company.

“Obviously we would like a competition for it and we hope that both companies will agree to participate,” Defense Secretary Robert Gates told the House Armed Services Committee earlier this month. “But should that not prove to be the case, we … have to move forward. It’s been delayed too long. We need to get this thing started.”

Les Blumenthal: 202-383-0008