Tanker deal may end up delayed again

08/11/2010 12:00 AM

08/08/2014 9:58 AM

Aerospace analysts differ on whether the Air Force will miss its November deadline in awarding a contract to replace aerial refueling tankers.

At the same time, the competition continues to be embroiled in controversy after California-based U.S. Aerospace filed a protest with the Government Accountability Office questioning the actions of some Air Force officials.

The company is considered a long shot in the race with Boeing and EADS, Airbus' parent company, in vying for the $35 billion contract to replace 179 tankers.

Morgan Stanley aerospace analyst Heidi Wood wrote recently that she thinks the Air Force will miss its November deadline in awarding the contract. She wrote that it "looks like it slips to 2011 decision," but gave no reason for her speculation.

Leeham Co. analyst Scott Hamilton agrees with Wood.

"We all know how well they've stuck to their deadlines in the past," Hamilton said.

The final decision is likely to be protested by the loser of the contest, Hamilton said. And that could push the process into 2012.

The November deadline is 10 days after the midterm elections, where Republicans are expected to narrow the gap they have as minority party in the House and Senate, Hamilton wrote.

"A closely divided Congress means more politicking will rule as opposed to letting the USAF do its job," he wrote.

Lexington Institute defense analyst Loren Thompson has a different view.

"I think the Air Force is going to try to stick as close as possible to its schedule," Thompson said.

Still, "if it has any political sense at all, it will wait until the election until it will announce the outcome."

In the meantime, U.S. Aerospace has filed a protest alleging Air Force personnel "may have intentionally delayed" its messenger from delivering its proposal on time in order to create a reason to refuse to consider it, the company said in a filing with the Securities and Exchange Commission.

"They have political issues with our Eastern European supplier, thus violating the requirement that the program be a fair and equal competition, open to all qualified bidders," the filing said.

U.S. Aerospace said last month that it planned to work with state-owned Ukrainian aircraft maker Antonov.

The protest will not force the Defense Department into delaying a contract decision scheduled for this fall, Department of Defense spokesman Geoff Morrell told Defense News.

In its SEC filing, U.S. Aerospace said its messenger arrived at Wright-Patterson Air Force Base in Ohio with its proposal more than half an hour before the 2 p.m. deadline on July 9.

The messenger first was denied entry to the base, then received incorrect directions to the proper building, it said.

Once there, the messenger was told to wait until Air Force personnel came to get him.

"Although the proposal was arbitrarily marked received at 2:05 p.m., it was under Air Force control before the bid deadline," the company said.

The protest also questions the actions of some Air Force personnel, saying that they repeatedly leaked information to the media and granted EADS a 60-day filing extension while refusing an extension for U.S. Aerospace.

Boeing first won the contract in 2003, but the deal was scuttled amid an ethics scandal involving a government procurement officer and Boeing.

In early 2008, a contract was awarded to EADS and Northrop Grumman, but it was overturned after the Government Accountability Office said the rules had been changed to favor the EADS/Northrop team.

Northrop dropped out of the bidding in this round, saying the Air Force favors Boeing's smaller tanker. EADS decided to bid alone.

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