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The United States Air Force KC-135 replacement effort refers to the attempts by the United States Air Force (USAF) between 2003 and the present time to replace its aging fleet of KC-135 aerial refueling tankers with new aircraft.

The effort to award a contract for new tankers has been marked by controversy, criminal wrongdoing, and intense public scrutiny.

Contents 1 History 1.1 Round 1, Lease Contract 1.2 Round 2, KC-X program 1.3 Round 3, Reopened Bid 2 See also 3 Notes 4 References

History

The USAF initially issued the program to replace approximately 100 of its oldest KC-135E planes. The recently upgraded KC-135R variants are not part of the initial replacement, but eventually will be phased out in favor of the newer tanker.

Round 1, Lease Contract

The initial plan was to lease Boeing KC-767 tankers on a sole-source basis (Boeing being the only American company with the requisite industrial capability to manufacture large-body aircraft). As such, the KC-767 was initially selected in 2002¹ and in 2003 was awarded a US$20 billion contract to lease KC-767 tankers to replace the KC-135.

Led by Senator John McCain, several US government leaders protested the lease contract as wasteful and problematic. In response to the protests, the Air Force struck a compromise in November 2003, whereby it would purchase 80 KC-767 aircraft and lease 20 more.²

Yet only one month later in December 2003, the Pentagon announced the project was to be frozen while an investigation of allegations of corruption by one if its former procurement staffers, Darleen Druyun (who had moved to Boeing in January) was begun. Druyun pled guilty of criminal wrongdoing and was sentenced to nine months in jail for "negotiating a job with Boeing at the same time she was involved in contracts with the company".³ Additional fallout included the termination of CFO Michael M. Sears (who was later sentenced to four months in prison in 2005)⁴, the resignation of Boeing CEO Philip M. Condit, and Boeing paid a $615 million fine in recompense for their actions related to the contract.

In January 2006, the lease contract was formally cancelled.

Round 2, KC-X program

Main article: KC-X

The USAF then reopened the contract for competition under the title KC-X. Boeing bid on the contract, again proposing a variant of its KC-767 aircraft. The only other bidder was Northrop Grumman, another large American defense contractor. However, NG had never manufactured a tanker aircraft and its last venture into the large plane business was the billion-dollar B-2 Spirit. Thus, it announced a teaming arrangement with European aircraft manufacturer EADS, offering a variant of the Airbus A330 MRTT, used in several European countries. NG and EADS also announced plans to build two new aircraft manufacturing facilities, both at Brookley Field in Mobile, Alabama, whereby EADS would assemble the final unmodified tankers, then deliver them to NG for military customization. EADS also announced plans to move its A330 freighter assembly line to the Mobile plant as well.

On February 29, 2008, in a surprise move, the USAF awarded the new tanker contract to Northrop Grumman.

Boeing immediately protested the contract award to the Government Accountability Office (GAO). Meanwhile, several key supporters in Congress decried the decision, claiming numerous American jobs would be "outsourced", and announced plans to introduce legislation which would force the USAF to purchase the Boeing plane.

On June 18, 2008 the GAO decided the protest in favor of Boeing.⁵ The GAO decision criticized the contract award, stating that that the USAF failed repeatedly to follow procedures designed to ensure a fair and open competition and good value for taxpayers. The GAO recommended that the Air Force should renew discussions with both teams and obtain revised proposals, and effectively stage a new competition.⁶

Former USAF Secretary Michael W. Wynne was asked by the Military Times "How did the Air Force botch the tanker selection process so badly?" Wynne replied that,

I think the Air Force overcomplicated it. They really wanted both competitors to be almost even so everybody had the best chance of [winning]. ...I think here is one of those cases where Boeing had probably assessed that their prospects were dimming. ... I would say they systematically began to build a case [for a protest], and I’m not sure that they shared everything that they could have shared with the Air Force along the way and essentially were building ... a “Pearl Harbor” file that could be used later [in a protest]. ... There’s a feeling in the Air Force that maybe we were as transparent as we could be and maybe Boeing wasn’t.⁷

John Young, the DoD's undersecretary for acquisition, technology and logistics, stated on September 17, 2008 that Northrop's proposal had been $3 billion less than Boeing's, $12.5 to $15.4 billion. "Frankly", Young said, "Boeing's tanker was smaller and should have been cheaper... A member of the American public might conclude that Boeing sought to charge more than the Defense Department reasonably expected to pay".⁸

Round 3, Reopened Bid

On July 9, 2008 Gates announced that the Pentagon would hold a new, "fast-tracked" competition for the tanker contract, limited to Boeing and Northrop Grumman/EADS and concentrating on the eight (out of nearly 110) areas where Boeing's protest was sustained. Gates said that he expected a new winner of the contract would be announced by the end of the year. Furthermore, given the USAF's poor track record in managing the competition, Gates announced that John Young (the DoD's Undersecretary for Acquisition, Technology and Logistics) would oversee the contract competition.⁹

On July 28, 2008, the USAF's Chief of Logistics, William Anderson, resigned, stating in a memo that the recent leadership shake-up by Defense Secretary Robert M. Gates had hurt his ability to do his job and that the changes limited his ability to take care of the USAF's members and their families with the vigor they deserved.¹⁰ Kevin Miller, the special assistant for acquisition governance and transparency to the secretary of the Air Force and the USAF's point person to Congress on the KC-X program retired on July 31, 2008.¹¹

The new competition between Boeing and Northrop Grumman for the tanker contract restarted on August 6, 2008 with the release of a draft of new request for proposal. The new proposals will be due on October 1. The request contained new criteria, including credit for aircraft that could carry more fuel and cargo, and that the entire life-cycle cost of the aircraft would be a selection factor.¹²¹³¹⁴ On August 21, 2008 Boeing asked the DoD for an additional four months to submit a proposal centered on a larger aircraft.¹⁵ However, General Arthur Lichte, who runs the Air Force Air Mobility Command, recently stated that given the age of the current tanker fleet, he strongly opposed further delay. Speaking at a reporter breakfast, General Lichte said, "For every year or two that we delay up front that means that we fly these things past 2040 and that means the 135 is over 80 years old," adding, "It's unconscionable that we're asking people to fly in combat in 50-year-old airframes."¹⁶

On September 10, 2008, Defense Secretary Robert Gates decided that the new competition could not be fairly completed before the end of 2008. The DoD canceled the request for contract proposal and delayed the decision on when to issue another request until the new presidential administration was in office.¹⁷ The new target for award of the contract is March 2010. Deputy DoD Secretary Gordon England has directed the USAF to shift $3.3 billion committed for tanker aircraft purchases through fiscal 2012 to other programs.¹⁸

See also

• Northrop Grumman KC-45
• History of the United States Air Force
• List of active United States military aircraft

Notes

References

• Cole, August, and John R. Wilke (June 20, 2008). "Democrats Press McCain On Defense Deal", Wall Street Journal. 
• Epstein, Keith, and Carol Matlack (June 19, 2008). "How Big Is Boeing's Big Win?". Business Week. Retrieved on 2008-06-23.
• Cahlink, George (February 15, 2004). "Fallen Star". Government Executive. Retrieved on 2008-06-20.
• Cahlink, George (October 1, 2004). "Ex-Pentagon procurement executive gets jail time". Government Executive. Retrieved on 2008-06-20.
• CBS (January 5, 2005). "Cashing In For Profit? Who Cost Taxpayers Billions In Biggest Pentagon Scandal In Years?". CBS News. Retrieved on 2008-06-20.
• Colarusso, Laura M. (May 24, 2006). "Druyun still gets pension". Federal Times. Retrieved on 2008-06-20.
• Government Executive (February 15, 2004). "The Rise And Fall of A Maverick". Government Executive. Retrieved on 2008-06-20.
• Hedgpeth, Dana, and Robert O'Harrow, Jr. (June 19, 2008). "Air Force Faulted Over Handling Of Tanker Deal". Washington Post. Retrieved on 2008-06-20.
• Hedgpeth, Dana, and Robert O'Harrow, Jr. (June 26, 2008). "Government Cites Litany of Errors in Tanker Award". Washington Post. Retrieved on 2008-06-30.
• Hedgpeth (July 10, 2008). "Tanker Bidding To Be Reopened". Washington Post. Retrieved on 2008-07-11.
• Hedgpeth (August 29, 2008). "Tanker Bid Moves Toward Endgame". Washington Post. Retrieved on 2008-09-02.
• Holmes, Stanley (December 15, 2003). "Boeing: What Really Happened". Business Week Online. Retrieved on 2008-06-20.
• Isikoff, Michael (June 30, 2008). "McCain’s Boeing Battle Boomerangs". Newsweek. Retrieved on 2008-06-24.
• McNulty, Paul J. (February 18, 2005). "News Release". United States Department of Justice. Retrieved on 2008-06-20.
• Palmer, Kimberly (October 3, 2005). "Former Air Force acquisition official released from jail". Government Executive. Retrieved on 2008-06-20.
• Sevastopulo, Demetri, John Thornhill and Peggy Hollinger (June 19, 2008). "US tanker review gives boost for Boeing". Financial Times. Retrieved on 2008-06-20.
• Tirpak, John A. (February 2004). "Tanker Twilight Zone". Air Force Magazine. Retrieved on 2008-06-20.
• Wayne, Leslie (June 19, 2008). "Audit Says Tanker Deal Is Flawed". New York Times. Retrieved on 2008-06-20.
• Wayne, Leslie (July 10, 2008). "Pentagon Gives Boeing New Chance At Contract". New York Times. Retrieved on 2008-07-11.

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