Pentagon meets Boeing, Northrop on tanker contract

Aug 12, 2008, 15:34 GMT

Washington - The Pentagon began meetings on Tuesday with representatives from Boeing and the rival Northrop Grumman-EADS partnership on the disputed contract to build the next generation of aerial refuellers, Pentagon and defence industry officials confirmed.

Pentagon officials are expected to clarify and answer questions from the defence firms about the draft criteria for submitting bids to win the 35-billion-dollar contract to build the 179 KC-X tankers, said Cheryl Irwin, a Pentagon spokeswoman.

The Pentagon sent the draft request to the firms last week and expects to issue a final request to Boeing and Northrop-EADS to submit final proposals later this month, Irwin said. Pentagon officials met with Boeing Tuesday morning and were expected to meet with Northrop later in the day.

The contract was initially won by the Northrop-EADS team but a congressional oversight agency upheld a protest by Boeing, effectively forcing the Pentagon to rehold the competition.

Aviation Week, a leading aerospace publication, reported Monday that Boeing might drop out of the competition. Citing 'multiple sources,' Aviation Week said Boeing was 'strongly considering' the option of not submitting a proposal.

Dan Beck, a Boeing spokesman, played down the article, saying 'we don't know who the Aviation Week sources were, but Boeing has not been talking about our internal deliberations.'

'No decisions have been made. All options remain on the table,' Beck said.

Some members of Congress who support Boeing have said the criteria in the new proposal request by the Pentagon is tilted to the advantage of Northrop-EADS. If Boeing pulls out of the competition, it would leave the Pentagon in the uncomfortable position of having a single bidder for the contract.

The Government Accountability Office (GAO), an investigative arm of Congress, ruled in a June 18 report that the Air Force made critical errors in awarding the contract to Northrop and the European Aeronautic Defence and Space Company.

Defence Secretary Robert Gates announced July 9 that he had accepted GAO's findings and planned to restage the competition under an expedited process, citing the need to quickly replace the Air Force's aging fleet of KC-135 tankers.