Pentagon Unveils New Tanker Rules

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The Pentagon unveiled on Wednesday final terms for what it hopes is a robust and fair $35 billion refueling plane competition between Northrop Grumman Corp. and Boeing Co., but lawmakers said it still may wind up with just one bidder.

Deputy Defense Secretary William Lynn said most of the 230 changes made to draft rules released in September were technical in nature, but the contract pricing structure was also adjusted to make the deal less risky for industry. Lawmakers said the changes were minor and might not amount to the significant changes Northrop and its European partner EADS said they needed to stay in the competition.

Northrop and EADS said they were studying the final competition terms before making any decisions. Northrop and EADS won the last tanker contest in February 2008 but then lost out after government auditors upheld a Boeing protest. Boeing said it was disappointed that some of its key concerns were not addressed, including subsidies received by Airbus from European governments, and how the Air Force would account for fuel costs and the cost of building bigger hangars to account for Northrop’s larger A330-based plane.

• Read the full Reuters story.

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