* Pentagon will move forward, even if only one bidder
* Gates underscores need for new tankers
Defense News ~ WASHINGTON, Feb 3 (Reuters) - The Pentagon wants Boeing Co (BA.N) and Northrop Grumman Corp (NOC.N) to compete for billions of dollars of orders for a new aerial refueling plane, but will press ahead even if there is only one bidder, U.S. Defense Secretary Robert Gates said on Wednesday.
"Obviously, we would like to have a competition for it and we hope that both companies will agree to participate," Gates told the House Armed Services Committee.
"But should that not prove to be the case, we ... have to move forward," Gates said, when pressed on how the Pentagon would respond if one of the companies dropped out. "It's been delayed too long. We need to get this thing started."
Northrop and its European partner, EADS (EAD.PA), have told the Pentagon they will not submit a bid unless the Air Force makes significant changes to its final request for proposals (RFP) for the competition, which is valued at more than $35 billion and could be worth up to $100 billion in the long run.
The Air Force plans to issue final rules for the competition later this month and award a contract this summer.
Air Force Chief of Staff General Norton Schwartz last month said the service could change some "financial arrangements" for the competition, but was sticking to its requirements for the planes, which will deliver fuel to fighter jets and other aircraft in mid-air.
Industry executives had expected the terms around Feb. 12, but now say they are more likely to be released the week of Feb. 22, or possibly the following week.
Northrop said it was looking forward to the release of the final terms for the competition and hoped it would be structured in a way that allowed the company to compete.
"Northrop Grumman feels that the current draft RFP, as structured, fails the test of true competition and, without meaningful changes, is not an RFP to which Northrop Grumman can respond," spokesman Randy Belote said.
This is the Air Force's third attempt to replace its aging fleet of KC-135 aircraft, which are 49 years old on average.
Northrop and EADS won a projected $35 billion contract for 179 tanker planes in February 2008, but the Pentagon canceled it after government auditors upheld a protest filed by Boeing.
Congress killed an earlier Air Force plan to buy 100 767-based tankers under a sole-source deal with Boeing, because of a procurement scandal that sent a former top Air Force official and Boeing's former chief financial officer to prison for violating federal conflict of interest rules. (Reporting by Andrea Shalal-Esa; Editing by Steve Orlofsky, Leslie Gevirtz)
"Obviously, we would like to have a competition for it and we hope that both companies will agree to participate," Gates told the House Armed Services Committee.
"But should that not prove to be the case, we ... have to move forward," Gates said, when pressed on how the Pentagon would respond if one of the companies dropped out. "It's been delayed too long. We need to get this thing started."
Northrop and its European partner, EADS (EAD.PA), have told the Pentagon they will not submit a bid unless the Air Force makes significant changes to its final request for proposals (RFP) for the competition, which is valued at more than $35 billion and could be worth up to $100 billion in the long run.
The Air Force plans to issue final rules for the competition later this month and award a contract this summer.
Air Force Chief of Staff General Norton Schwartz last month said the service could change some "financial arrangements" for the competition, but was sticking to its requirements for the planes, which will deliver fuel to fighter jets and other aircraft in mid-air.
Industry executives had expected the terms around Feb. 12, but now say they are more likely to be released the week of Feb. 22, or possibly the following week.
Northrop said it was looking forward to the release of the final terms for the competition and hoped it would be structured in a way that allowed the company to compete.
"Northrop Grumman feels that the current draft RFP, as structured, fails the test of true competition and, without meaningful changes, is not an RFP to which Northrop Grumman can respond," spokesman Randy Belote said.
This is the Air Force's third attempt to replace its aging fleet of KC-135 aircraft, which are 49 years old on average.
Northrop and EADS won a projected $35 billion contract for 179 tanker planes in February 2008, but the Pentagon canceled it after government auditors upheld a protest filed by Boeing.
Congress killed an earlier Air Force plan to buy 100 767-based tankers under a sole-source deal with Boeing, because of a procurement scandal that sent a former top Air Force official and Boeing's former chief financial officer to prison for violating federal conflict of interest rules. (Reporting by Andrea Shalal-Esa; Editing by Steve Orlofsky, Leslie Gevirtz)
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