Nov. 22 (Bloomberg) — The pentagon will open to new bidders a contract to provide aerial-refueling tankers to the U.S. Air Force after Congress withdrew an earlier proposal worth $23 billion to Boeing Co., Deputy Defense Secretary Paul Wolfowitz said.
“After we have selected an appropriate alternative, we intend to require competition,” Wolfowitz wrote late Nov. 19 to John Warner, the Virginia Republican who chairs the Senate Armed Services Committee.
The European Aeronautic Defense & Space Co., the parent of Airbus SAS, has said it would bid in the event of a new competition. Lockheed Martin Corp. and Northrop Grumman Corp. have both said they would consider working with EADS. The Air Force rejected an EADS proposal in early 2002.
Congress killed the agreement with Boeing after officials on both sides were convicted of fraud. Air Force negotiator Darleen Druyun, who was simultaneously discussing a job offer at Boeing, said in her guilty plea that she had given the company favorable terms. In the $422 billion fiscal 2005 defense bill, Congress eliminated the Boeing proposal and directed the Pentagon to complete as soon as possible a review of alternatives.
“If the Department of Defense decides to have a competition, as we have said, we will compete,” said Guy Hicks, an EADS spokesman. Boeing spokesman Doug Kennett didn’t immediately return a call seeking comment.
The Air Force would have leased 20 aircraft and purchased 80 from Boeing. The bill, which has not yet been signed by President George W. Bush, didn’t require the Pentagon to open the bidding to competition.
Warner and Arizona Republican Senator John McCain, the most outspoken critics of the Boeing proposal, said it was Congress’s intent to require competition. Republican lawmakers in the House, including Armed Services Committee Chairman Duncan Hunter of California, have argued that the contract should remain with Boeing.
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November 23, 2004 at 7:43 am