WASHINGTON — Despite assurances from a top Pentagon official that the new competition for a $35 billion contract for Air Force aerial refueling tankers would be conducted fairly and without bias, congressional supporters of Boeing remain suspicious that the Pentagon is maneuvering to award the contract again to Northrop Grumman and the European Aeronautic Defense and Space Co. (EADS).
"I am very troubled by this whole thing," Rep. Norm Dicks, D-Wash., told John Young, the Pentagon's undersecretary for acquisition, during a five-hour hearing Thursday on the contract. "What bothers me is that Congress has been misled."
Young's appearance before the air and land force subcommittee of the House Armed Services Committee came a day after Defense Secretary Robert Gates announced that the tanker competition would be reopened. Gates' decision followed a scathing report from the Government Accountability Office that found significant errors in the Air Force's award of the tanker contract earlier this year to Northrop-EADS.
Time and again, Young told the subcommittee the latest effort to replace nearly a third of the Air Force fleet of Eisenhower-era tankers would be done without prejudice, and he bristled at suggestions that the earlier competition might have been tainted.
"I can assure you Secretary Gates is indifferent and doesn't care about what tanker we buy and I can assure you I don't care," Young said, adding the decisive factors would be the best plane for the Air Force and the best value for taxpayers.
Gates has stripped the Air Force off its authority to award the tanker contract and handed the chore to Young, who will be aided by an independent oversight board.
"I want to make sure everyone is treated equally and fairly," Young said.
Young's testimony produced more questions than answers.
Though Gates has said he wanted the contract awarded by the end of the year, Young said he could offer "no guarantee" that would happen and the decision may ultimately be made by the next administration. Though the GAO found eight major problems in the earlier award, Young said he couldn't guarantee there wouldn't be any "mistakes" in the current competition.
Young said he didn't want an extensive rewrite of the contract specifications, but said the more than 800 specifications needed to be prioritized. He said the actual cost of the plane might become a higher priority. He suggested changes might be made to consider the competing tankers costs over a 40-year lifecycle rather than the current 25-year lifecycle — a switch that could favor Boeing.
But he refused to rule out the possibility the competition may tilt toward the larger plane offered by Northrop-EADS because it could carry more fuel. Dicks and others insisted the Air Force wanted a medium-sized tanker and the Northrop-EADS plane carried more fuel than needed. They contend its size would force the Air Force to spend billions of additional dollars to build stronger runways and larger hangers.
"If you change this in a way that will be prejudicial, this will lead to another protest," Dicks said.
The Air Force awarded the tanker contract to Northrop-EADS in late February and two weeks later Boeing filed its protest. The GAO recommended the Pentagon reopen the contract competition.
Boeing would use a 767 airframe built at its Everett, Wash., facility and modified at its facility in Wichita, Kan. About 9,000 jobs in Washington state are at stake and nearly 1,000 in Kansas.
Northrop-EADS would use an A330 airframe built by Airbus, Boeing's chief competitor in the commercial airplane market. EADS is Airbus' parent company. The A330s are currently built in France, though Northrop-EADS have announced plans for an assembly plant in Mobile, Ala.
Both Dicks and Rep. Todd Tiahrt, R-Kan. who also attended the hearing, said later the House defense appropriations subcommittee may address the issue when it marks up its Pentagon spending bill next week. Both Dicks and Tiahrt are members of the subcommittee and Rep. John Murtha, D-Pa., the chairman of the subcommittee, has expressed interest in addressing the tanker issue.
In questioning Young, Tiahrt wanted to know whether all the companies bidding, including EADS, would have to abide by such U.S. laws as the Foreign Corrupt Practice Act, the Buy America Act, the International Trafficking in Arms Act and various required accounting standards.
"We are treating each American company equally," Young said.
As Tiahrt pressed whether the laws would apply just to Boeing and Northrop and not to EADS, Young repeated that U.S. companies are covered by those laws.
Rep. Adam Smith, D-Wash., a member of the committee, told Young he was "nervous" about the Pentagon's plans for the new contract competition.
"It just seems coincidental that all the mistakes (in the first competition) were made in favor of one bidder and against the other," Smith said. "That leads to a lack of confidence."
Rep. Rick Larsen, D-Wash., whose district includes the Everett Boeing plant, tried to press Young on just how important the actual cost of the planes would be in the new competition and whether lifecycle costs would be more of a factor. After the hearing, Larsen said Boeing might actually come out ahead if the price per plane was bigger factor.
But Larsen remained skeptical.
"It sounds like the Defense Department is expecting protests that could push this to the next president," he said.