Pentagon cancels air firms’ competition for tanker contract

September 10th, 2008 - 10:57 pm ICT by IANS  

Washington, Sep 10 (DPA) The Pentagon announced Wednesday it was cancelling the competition between Boeing and the Northrop Grumman-EADS partnership for the $35-billion contract to build the next generation of Air Force tanker refuellers.The defence department Wednesday notified the Congress of the plans to cancel the competition after Defence Secretary Robert Gates determined it cannot be completed by January, when US President George W. Bush leaves office.

The issue will now be in the hands of the next administration to handle, Gates said.

Gates issued a statement acknowledging the Pentagon’s mistakes in managing the lengthy competition that was thrown into disarray in June, when a congressional oversight agency upheld a Boeing protest and ruled the US Air Force erred in awarding the contract to Northrop-EADS.

“Over the past seven years the process has become enormously complex and emotional - in no small part because of mistakes and missteps along the way by the department of defence,” Gates said.

The congressional Government Accountability Office (GAO) in June concluded the Pentagon should start a new competition after determining the Boeing proposal was not given fair consideration when the contract was awarded to Northrop and the European Aeronautic Defence and Space Company in February.

In July, Gates announced he had accepted GAO’s findings and would rehold the competition to build the 179 KC-X tankers. The contract was the first of three that when combined could reach a value of $100 billion over 30 years.

The contract was the focus of intense political scrutiny from members of Congress who opposed handing the contract to a European firm at a time when the US economy was struggling. Congressional battle lines were drawn between members whose district would have benefited from a Boeing award and those aligned with Northrop-EADS.

EADS planned on building a factory in Alabama to assemble the aircraft from components manufactured in Europe.

“It is my judgment that in the time remaining to us, we can no longer complete a competition that would be viewed as fair and objective in this highly charged environment,” Gates said.

“The resulting ‘cooling off’ period will allow the next administration to review objectively the military requirements and craft a new acquisition strategy for the KC-X,” Gates said.

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