The U.S. Air Force chief of staff, Gen. Norton Schwartz, says that changes to the much-awaited request for proposals (RFP) for the next-generation aerial refueler will "lessen the financial risk" for bidders.

Boeing and a Northrop Grumman/EADS North America are expected to bid for the work, which could total about $35 billion for the purchase of 179 KC-135 replacements. However, Northrop Grumman CEO Wes Bush has threatened not to offer his team's Airbus A330-based option in part because the fixed-price development contract included in the draft RFP issued last fall exposed the company to too much risk. Northrop Grumman officials say that if the draft RFP stands, about 20 percent of the items needed would be developmental and thus more difficult to price.

Boeing officials have expressed dissatisfaction at the fixed-price approach as well, though the team has not publicly threatened to walk away from the competition. Boeing is expected to propose a tanker based on a 767 platform.

Pentagon acquisition chief Ashton Carter says the rationale behind the fixed-price structure is to shift more of the burden of performance to the contractor.

Schwartz also characterizes the changes to the forthcoming final RFP as "modest," and he adds that the fundamental requirements remain untouched in the forthcoming competition. He made his comments during a press roundtable at the 38th IFPA-Fletcher Conference on National Security, Strategy and Policy in Washington this morning.

Schwartz says the final RFP will be issued within a month of the fiscal 2011 budget release scheduled for Feb. 1. Industry sources say they are expected the document to be out the week of Feb. 8, most likely on Friday, Feb. 12.

Photo: Northrop Grumman