Groundhog Day (Air Force Tanker Edition)

The Air Force's effort to field its next-generation air tanker has come full circle, in a sense.

Once again, the service has received bids for a new air refueling platform, which will replace aging KC-135s that have been in service since the Eisenhower Administration. The effort to buy new tankers has been going on for more than a decade.

And, once again, the tanker competition will pit the same aerospace giants. On one side is Boeing, which has built most of the USAF tanker fleet since the early 1950s. On the other side is European defense giant EADS, which is "going solo," after its original American partner, Northrop-Grumman dropped out.

Now, the Air Force will review their respective proposals and if all goes well, a winner will be announced sometime early next year. And, assuming there are no further "complications," the first new jets will begin arriving at USAF tanker units in 2014 or 2015, more than 10 years behind the original timeline.

Readers of this blog are familiar with the problems that have plagued the tanker program. The original proposal to lease KC-767s from Boeing was scuttled, after it was revealed that the Air Force's senior civilian procurement official, Darlene Druyan, had arranged jobs for herself (and two other family members) with the defense contractor. Ms. Druyan eventually went to prison, and the tanker effort was delayed by more than five years.

When the procurement process resumed, the Air Force received two bids, one from Boeing and the other from the EADS/Northrop-Grumman team. In February 2008, USAF officials studded the aerospace industry by announcing that Northrop-Grumman and its European partner had won the competition. Boeing quickly filed a protest with the Government Accountability Office, which was subsequently upheld. That sent the service--and the contractors--back to the drawing board.

And not surprisingly, there were a few more wrinkles in the convoluted process. Not only did Northrop-Grumman drop out of the race, a third team actually entered the competition. U.S. Aerospace, a small California firm, offered three potential tanker platforms, all based on Russian-built Antonov airframes. The surprise submission immediately raised questions about the company and its ability to actually compete for the contract. Financial records showed U.S. Aerospace had only 30 employees, substantial debt on its balance sheet, and inadequate facilities for handling and storing classified information.

Still, U.S. Aerospace vowed to soldier on, claiming its price would be the lowest--if the bidding process was "fair." Well, the deadline for bids arrived on 9 July, and the California company came up short--because its proposal wasn't received by the 2 p.m. EDT deadline. As Aviation Week reports:

If you thought the latest KC-X competition couldn't get weirder once the obscure U.S. Aerospace/Antonov bid surfaced last month, you were wrong.

Despite crowing by the U.S. Aerospace advisor, Chuck Arnold, about a KC-X bid, it seems the company didn't dot its i's and cross its t's -- at least not in time.

Bids to compete for the program -- 179 KC-135 replacements estimated to be worth $35 billion -- were due at 2 p.m. EST at Wright-Patterson AFB, Ohio. Apparently, the U.S. Aerospace/Antonov bid didn't make it in time.

Pentagon spokesmen wouldn't say if the U.S. Aerospace/Antonov proposal was merely late, or not submitted at all. By comparison, the required paperwork from EADS and Boeing were received ahead of schedule, allowing their bids to move forward in the competition.

But don't expect the American-Russian team to simply fade away. Taking a cue from Boeing (in the last round of bidding), U.S. Aerospace/Antonov consortium has filed a protest with the GAO, claiming it was treated unfairly by the Air Force. According to U.S. Aerospace, its messenger was initially denied entry to Wright-Patterson AFB, Ohio (where the bids would be formally submitted). He was then given "bad" directions to the required delivery point, then told to "wait" for Air Force personnel to escort him. U.S. Aerospace also claims that its bid was in the service's possession before the required deadline, but the firms documents were stamped "received" at 2:05 p.m.--five minutes late.

Under defense contracting rules, U.S. Aerospace will receive a hearing from the GAO. And, if the accountability office sides with the firm, then the tanker program will grind to a halt once more. Many analysts don't believe that will happen, given the firm's past problems and questions about whether the bid was actually submitted. But if decades of frustration and false starts in the KC-X program have taught us anything, it's this: with billions of defense dollars at stake, contractors will go to any length to gain an advantage--and deny it to their competitors.

Judging by this latest development, the Air Force is still a long, long way from getting the new tanker it so desperately needs.