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July 11, 2008—Pentagon acquisition boss John Young told members of the House Armed Services AirLand panel July 10 that he could not guarantee a contract award in the Air Force’s reopened KC-X tanker competition by year’s end, despite the best efforts of his office and heavy pressure from some lawmakers.

“The air is charged around this competition,” said Young, who has supplanted the Air Force’s acquisition executive as the person in charge of the reopened competition and will pick the winner. “I cannot guarantee you we will make that schedule. ... There’s probably an infinite number of obstacles.”

Indeed Young’s office faces the conundrum of how to conduct a thorough, fair, and transparent evaluation of revised tanker bids from Boeing and Northrop Grumman, select a winner based on a process that can withstand additional legal scrutiny, and complete the task by year’s end. Failure to meet that date would put the issue in the hands of a new Congress and Administration, adding further schedule setbacks to an already long-delayed tanker recapitalization.

“If you aren’t finished by the end of the year, then this thing is going to start all over again and it’s going to take a heck of a lot longer,” Neil Abercrombie (D-Hawaii), the panel’s chairman, told Young in reiterating the time urgency and urging Young to complete the process sooner rather than later. The Air Force hoped to field the first squadron of new tankers in Fiscal 2013, but the chances of meeting this goal appear to be dwindling.

While Young emphasized his “personal obligation” to service members to deliver the new tanker as quickly as possible to replace the Air Force’s Eisenhower-era KC-135s and pointed out that his office has laid out an aggressive schedule to do that, he added that he “cannot anticipate all the roadblocks” that could arise in the process. For example, should Boeing opt to bid its KC-777 tanker concept based on the revised request for proposal, “I expect it will take more time than we have allotted on the schedule to evaluate,” Young admitted.

The KC-777 is much larger than the KC-767 that Boeing offered against the Northrop Grumman/EADS KC-30 in the original contest. The KC-30 is larger than the KC-767 but smaller than the KC-777. Boeing has never built a KC-777 tanker before so this likely would be a higher risk endeavor than the more mature KC-767 and KC-30 models.

Based on current planning, Young told the panel that his office anticipates releasing the draft revised request for proposals to industry for comment by late July or early August, followed by the final version by mid August. He forecasts the submission deadline for early October. OSD would like to complete the proposal evaluation and reach a source selection decision by late 2008 or even early 2009, he said.

Young said that he rejected the notion that DOD is in a “drift period” now during the final days of the Bush Administration. Rather, he said the next few months are critical. He stated repeatedly that he would amend the RFP as little as possible and adhere strictly to the eight points that the Government Accountability Office highlighted in its findings on June 18 that upheld Boeing’s legal protest of the Air Force’s award of the KC-X contract to Northrop Grumman in February.

“To the extent we need to change it, it'll be based on the findings that GAO had and then how well those findings are grounded in our requirements document, because we're going to give that the greatest weight,” said Young. “I think in every case, though, we're going to seek to have as robust a record as possible, because I have to anticipate another protest.”

Compared to the original RFP, the revised document will do a better job of mirroring the requirements established for the KC-X, Young said. “The RFP will work to make that clear so that both the industry teams can understand what we value,” he said.

One likely change will be to ask the offerors to estimate costs to operate the KC-X fleet for 40 years instead of the 25 years laid out in the original RFP, Young said. “The [KC-X] capability development document does require a 40-year life of this aircraft,” he said. “That would lead me to conclude that we should at least consider a life cycle estimate through 40 years.”

The revised solicitation will also more clearly articulate the prioritization of requirements, Young said. “There were some 808 specific requirements,” in the original solicitation, he said. “What we need to do—and I believe consistent with the GAO findings—is ... to make clear which of those requirements we may place greater or lesser value on.”

Young said he will also have an independent review team observing his office’s work and advising him throughout the entire reopened competition. OSD reviewed the Air Force’s work in the original KC-X source selection, but Young said one of his “only regrets” was that his office did not become involved until late in the game and was thus unable to scrutinize every detail of the incredibly complex evaluation and the multiple reams of documentation that go with it.

“We needed to start from the very beginning,” he said. “We now have the opportunity to start at the very beginning and have ... an independent team observe this process and try to make sure we have multiple eyes looking at all angles of the competition.”

Young also said his office is mulling whether it will be necessary to convene a meeting of the defense acquisition board to review the KC-X program again before the winner is selected. The DAB met in late February and granted the Air Force milestone B authority at that time to move the program into its system development and demonstration phase and award the development contract to Northrop.

“I haven't made a decision yet about whether it's proper to revoke the milestone B—that would be my inclination—and have a new milestone B process,” he said.

Young acknowledged that this would create an awkward and “extremely unusual” situation at the review in which he would be representing both the KC-X program as the source-selection authority and OSD as the milestone decision authority.

Young also pointed out that OSD had considered moving ahead by awarding a contract to both competitors, but found this would be “a mistake” because it would “result in an extraordinarily higher cost, as well as complicated logistics, training, and operations.”

Ultimately, Young said he wants the process to identify the best tanker and that he has no bias. “I do not care which tanker we buy,” he said. “I want to get the best deal for the taxpayer.  ... I want to meet the war fighter's requirements. I could care less which airplane does that.”

During the hearing several House members questioned Young pointedly about the path ahead. For example, Rep. Todd Tiahrt (R-Kan.), a guest of the panel at the hearing and Boeing supporter, inquired about what the criteria will be in the revised RFP for scoring fuel-carry capacity that goes beyond the threshold requirement, which is to carry more fuel than the KC-135R model can.

“More fuel offload capability means one more pound,” Tiahrt told Young. “So, technically, if that’s still in the RFP, then both parties would be scored equally by having one more pound of fuel than a KC-135R. Is that correct?”

Tiahrt contends that, if carrying more fuel is an advantage, then a larger sized aircraft would have an edge—perhaps a decisive one—right from the outset. This would seemingly place Boeing’s KC-767 at a disadvantage.

Young responded, saying the objective, as rooted in the requirements, is to carry additional fuel. However, that would have to be balanced against the other 800 some requirements and the costs to attain that capability. “I do not believe the requirements document nor the American people believe that one gallon more is the same as 1,000 gallons more,” Young replied to Tiahrt’s consternation.

Rep. Norm Dicks (D-Wash.), also firmly in Boeing’s camp, said that the new RFP is already changing beyond the scope of GAO’s findings. Dicks claimed that he learned from Sen. Carl Levin (D-Mich.), chairman of the Senate Armed Services Committee, that “extra credit” would be given for a larger-sized aircraft, based on a conversation Levin told Dicks that he had with Secretary of Defense Robert Gates.

“This means that you’re predisposed here,” Dicks said. “There’s been no consultation with Congress up until today. You’re going to say that the bigger tanker gets more credit.” 

Young refuted this, saying there has been “no decision” about how to score any part of the proposals, essentially disputing Dicks’ characterization of what Gates may have said.

Young also reiterated that DOD considers both the KC-767 and Airbus 330, upon which the Northrop KC-30 is based, to be medium-class aircraft.