Gates will decide 'very soon' on tanker contract

Jul 9, 2008, 4:57 GMT

Washington - A decision will be made 'very soon' on whether to reopen bidding for the contract to build the next generation of Air Force refueller tankers originally awarded to the European defence firm EADS, US Defence Secretary Robert Gates said Tuesday.

EADS and its American partner Northrop Grumman won the 35- billion-dollar contract to build 179 of tankers over rival Boeing in March. But that decision was thrown into doubt after a congressional agency upheld a formal Boeing protest, ruling June 18 that the Air Force made critical errors in awarding the contract.

'I take the report from the Government Accountability Office very seriously, and particularly their identification of some deficiencies in the contract process,' Gates told reporters at Fort Lewis, an Army base in Washington state. 'And I expect to announce the way forward very soon.'

The Government Accountability Office, or GAO, ruled the Air Force overlooked key aspects of the Boeing proposal that could have tilted the contract in the aerospace giant's direction, and failed to inform Boeing it was interested in a larger plane before selecting the Northrop-EADS bid.

GAO urged the Air Force to stage a new competition for the KC-Xs designed to replace the Pentagon's aging fleet of air tankers. While the GAO decision is not binding, a Pentagon failure to embrace the decision could bring new scrutiny from lawmakers who control the defence budget.

The contract was the first of three that when combined could reach a value of 100 billion dollars over 30 years. Dozens of members of Congress criticized the Air Force for shipping defence jobs abroad at a time when the US economy is struggling.