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Pentagon to Rebid $40 Billion Air Force Contract
The Pentagon said today that it will rebid one of its largest programs -- a $40 billion contract to build a fleet of new aerial refueling tankers for the Air Force, essentially starting from scratch on a years-delayed deal to replace the service's aging aircraft.

Defense Secretary Robert M. Gates announced today that John J. Young Jr., defense undersecretary for acquisition, technology and logistics, will oversee the competition and he wants it done quickly. The Air Force earlier this year awarded the contract to a partnership of Northrop Grumman and European Aeronautic Defence and Space, the parent of Airbus, but rival Boeing protested the decision as unfair.

Some defense analysts said they are skeptical that the Pentagon could rebid the complicated contract before year's end, and many anticipated that it would likely get kicked to the next administration, especially given that Gates recently fired the Air Force secretary and his chief of staff after questioning their leadership.
Suggestion: when they re-bid, specify that the winner gets to build 75% of the aircraft, and the second-place finisher gets to build 25%, each at whatever price was bid. That way there's a strong incentive to win but also reason to stay in the game. The Air Force has said previously that they were going to do the tankers in three lots, so even if you lose in the first bid, you have reason to build some planes and hope to do better next time.

This would force Boeing to stay honest and allow Airbus a shot of winning.

Posted by: Fred 2008-07-10
http://www.rantburg.com/poparticle.php?ID=243835