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Senate Tough Hump for Boeing Tanker Language

Rep. Norm Dicks (D-Wash.) and the panoply of Boeing supporters must have been whooping it up as they read the upbeat news stories about language inserted into the 2009 defense spending bill to give Boeing a better chance of winning the tanker contract.

I checked with some staff and a few other sources on the Hill and the early gouge is this: the Senate is unlikely to support language redrawing the rules of the competition or doing anything -- like a split buy -- that would probably lead to a substantial cost increase.

One knowledgeable source pointed out that the tanker's "back-stop" supporters in the Senate were to be Sens. Daniel Inouye (D-Hawaii) and Ted Stevens (R-Ala.). Stevens has dropped his position as ranking member of the Senate Appropriations defense subcommittee until his seven charges are settled one way or another, in compliance with Senate Republican Conference rules. And I understand Inouye, chairman of the defense subcommittee, has indicated he would prefer to stay out of this fight. Also, Sen. Richard Shelby (R-Ala.), a member of the defense subcommittee, would fight tooth and claw to keep any such language out of the Senate bill. Should such language get in somehow, Sens. John Warner (R-Va.) and John McCain (R-Ariz.) are likely to oppose it as the bill moves to the Senate floor.

Of course, the average taxpayer would never know about the tanker language in the bill. Rep. John Murtha (D-Penn.), chairman of the House Appropriations defense subcommittee, issued a press release yesterday simply stating that the bill:

"Provides full funding ($893 million) for the aerial refueling tanker program. The Committee directs the DoD to comply with the GAO findings concerning the tanker award protest, and directs that industrial base concerns be included in the evaluation of the tanker contract award."

The language requires that the Defense Secretary meet several requirements specified in the bill before any money can be released. It says that The Pentagon could not give extra credit to proposals that exceed the Air Force's minimum requirements for the tanker and require the Pentagon to calculate "life cycle" costs for the proposed aircraft over 40 years, something Dicks has pushed hard for. The original competition calculated the costs for 25 years. Dicks and other Boeing supporters say the Northrop Grumman tanker could cost as much as $35 billion more than the Boeing tanker. However, several OSD sources have ridiculed the consultant's study on which this estimate is based.

For those who haven't seen it, here is the actual language from the bill:

SEC. 8099. In addition to funds made available elsewhere in this Act, there is hereby appropriated $893,419,000, to remain available until transferred: Provided, That these funds are appropriated to the "Tanker Replacement Transfer Fund" (referred to as "the Fund" elsewhere in this section): Provided further, That the Secretary of the Air Force may transfer amounts in the Fund to "Operation and Maintenance, Air Force", "Aircraft Procurement, Air Force", and "Research, Development, Test and Evaluation, Air Force", only for the purposes of proceeding with a tanker acquisition program: Provided ,further, That funds transferred shall be merged with and be available for the same purposes and for the same time period as the appropriation or fund to which transferred: Provided further, That this transfer authority is in addition to any other transfer authority available to the Department of Defense: Provided further, That the Secretary of Defense shall follow normal prior approval reprogramming procedures in order to transfer funds from the fund to the appropriate accounts for execution.

SEC. 8100. None of the funds in this Act or any Department of Defense Appropriation Act for fiscal year 2009 or ally prior fiscal year may be obligated for the KC-X aerial refueling tankers unless, in conducting a new competitive source selection using the original request for proposal, the Secretary of Defense complies with the following: (1) The Secretary shall assess the relative merits of the proposals in accordance with the evaluation criteria identified in the solicitation, including the relative order of importance for the various technical requirements, and shall take into account the fact that one of the proposals offered satisfies more technical requirements relating to trade space than the other proposal. (2) The Secretary shall follow the guidelines in the evaluation criteria that no consideration will be provided for exceeding key performance parameter objectives. (3) The Secretary shall provide documentation showing how the Secretary determined that the awardee meets the requirement in the solicitation that the proposed aerial refueling tanker can refuel all current Air Force fixed-wing tanker-compatible receiver aircraft in accordance with current Air Force procedures. (4) The Secretary shall conduct equal discussions with each offeror. (5) The Secretary shall demonstrate that each offeror meets the requirement that it plan and support the Air Force to achieve initial organic depot-level maintenance within two years after delivery of the first full-rate production aircraft. (6) The Secretary shall include military construction, fuel, personnel and maintenance costs over a 40-year life cycle in calculating the offerors' most probable life-cycle costs for their proposed aircraft accounting for the offerors' specific proposals shall not use a hypothetical plan for calculations and shall include an independent cost estimate conducted by a Federally Funded Research and Development Center. (7) The Secretary shall not improperly add costs to an element of cost (non-recurring engineering costs) in calculating most probable life-cycle costs to account for risk associated with an offeror's failure to satisfactorily explain the basis of how it priced this cost element where the Air Force had not found that the proposed costs for that element were unrealistically low. (8) The Secretary shall develop a more thorough method than currently used to determine the most probable cost of non-recurring engineering costs associated with the system demonstration and development portion of the acquisition

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