Business

Wed Aug 20 18:41:24 PDT 2008

By Andrea Shalal-Esa

WASHINGTON, Aug 20 (Reuters) – Pentagon officials met for a third time with Boeing Co and Northrop Grumman Corp executives on Wednesday to discuss a rerun of a $35 billion battle to build 179 new refueling aircraft, and a spokesman said a final request for proposals was expected next week.

"We are still talking to the companies about the draft RFP and the current projection is that we would expect the (final) RFP to be out next week," Pentagon spokesman Bryan Whitman told reporters.

U.S. defense officials met with executives from Boeing and Northrop on Wednesday, the third set of in-person meetings since they released a draft request for proposals in the revised competition on Aug. 6.

Northrop and its European partner EADS beat out Boeing to win the lucrative contract in February, but the Pentagon relaunched the competition after the Government Accountability Office upheld a Boeing protest, saying the Air Force made significant errors in the first round.

Northrop spokesman Randy Belote said his company had not requested the latest meetings, but would use every opportunity to further understand the tanker acquisition process.

"Clearly, with this level of openness and communication on the part of (the Department of Defense), competitors will be hard-pressed to say that they did not fully understand the amendments to the KC-X RFP or the evaluation criteria that DOD will use to select the tanker that best meets its requirements," Belote said.

He said the Pentagon had clarified its guidelines, but had not changed the requirements for the 179 new aircraft that will be used to refuel fighter jets and other planes in mid-flight.

Boeing supporters say the draft RFP, which says bidders will get credit for greater fuel delivery, is skewed to favor Northrop’s larger tanker based on the Airbus A330, and that the Pentagon’s current timetable would not give Boeing enough time to offer a larger aircraft.

The Pentagon also said it would measure government ownership costs over 40 years instead of 25, which analysts say should favor the smaller Boeing 767-based tanker.

Boeing spokesman Dan Beck said his company welcomed the opportunity for further discussions about the draft request on Wednesday and was open to additional meetings, although he said no further in-person meetings were planned at this point.

Asked about speculation that Boeing could offer a larger tanker based on its 777 airliner or the 767-400, Beck said the Boeing team was looking at different configurations, but would not make any decisions until it had seen the final request.

"We need to fully understand what the requirements of our customer area, particularly as they’re reflected in the final RFP," he said.

(Reporting by Andrea Shalal-Esa; editing by Carol Bishopric)

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