Military to Review Embattled $40B Tanker Deal

Defense Secretary Robert Gates on Wednesday announced an expedited, modified review process to decide which company will win a $40 billion deal to build mid-air refueling tanker planes following heavy criticism of the selection process.

In a report last month by the Government Accountability Office, a non-partisan congressional agency, investigators said the bidding process was flawed that led to the February announcement to give the contract to a partnership between U.S.-based Northrup Grumman and the European parent company to Airbus. The competing bid was put up by Boeing.

GAO recommended that the Air Force reopen the bidding process.

At a news conference at the Pentagon, Gates said the department will address the eight problems GAO identified in its new solicitation, but expects to have a completed process by December. To do so, he said he has tapped Defense Undersecretary John Young to oversee completion of the contract.

Gates recognized pressure from Congress and the competing companies to make sure the process is fair and cost-effective, but said the changes are aimed to be completed as quickly as possible.

"This decision does not represent a return to the first step of a process that has already gone on far too long. On the contrary, given the amount of work that has been done, we believe that we can complete all of this and award a contract by December," Gates said.

"Industry, the Congress and the American people all must have confidence in the integrity of this acquisitions process. I believe the revised process will result in the best tanker for the Air Force, at the best price for the American taxpayer," Gates said.

Sen. Richard Shelby, R-Ala., issued a statement applauding Gates' decision.

This is the best of all options," Shelby said. "It is important to remember that out of Boeing's 111 complaints, the GAO concurred with a mere seven. The plan the Department of Defense has come up with is an appropriate solution to remedy the minor procedural flaws the GAO found in the initial award."

"It is vitally important that members of Congress support this expeditious path forward that not only satisfies the recommendations offered by GAO, but also ensures that the Air Force's urgent and compelling need to field a tanker is met as quickly as possible," Shelby said.

Rep. Rick Larsen, D-Wash., called the decision "good news for American taxpayers, Boeing workers and the men and women who serve in our military." He also promised to furhter look into the Air Force's bidding process to "find out what went wrong."