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Tanker Bid Goes Fixed Price, Kinda


UPDATED: Here Is the Draft RFP. Click Here for Pentagon Tanker Briefing The Pentagon sent a very clear message to Boeing, Northrop Grumman and their affiliated companies in the Thursday briefings to Congress -- play nice now that the draft Request for Proposal is due out Friday.

"...We will be expecting civility, objectivity, and a focus on the warfighter and the taxpayer from all parties," says the briefing delivered by Deputy Defense Secretary Bill Lynn.

One phrase in the briefing will echo throughout the selection process: "KC-X should be ready to go to war on day 1." Both companies will doubtless point to the aircraft they have sold over the last few years to international customers and say, "we're ready!" The first planes are to be ready by 2015, with initial operating capability set for 2017.

The briefing also says there will be "a fixed price for both development of the winning design and follow-on production lots," according to defense analyst and consultant Loren Thompson. We asked Thompson to decipher some of the fixed price language in the briefing. He said it also includes "incentive fees and other adjustments to reflect variability of the offerings with regard to life-cycle costs, construction costs and various operational features. In other words, it is fixed price, but with some flexility allowed for factors of interest to the government customer." So it is fixed price, with goodies if you do a good job.

The briefing notes that the "warfighter requirements" are "unchanged" from the last competition. However, "this time we will be crystal clear about what we want and what the bidders need to do to win." The department has added "capabilities that would provide additional value" but are not mandatory, it says. And the selection criteria are more "precise, less subjective."

The number of planes remains the same -- 179.

Congressional reaction was swift and, largely, predictable. Perhaps the most interesting comment came from Rep. Jack Murtha, chairman of the House Appropriations defense subcommittee, who wants the Pentagon to build double the number of planes per year called for in the latest proposal.

"The Committee believes that it is in the best interest of the taxpayer to build 36 aircraft per year, versus the 15 per year as planned by the latest proposal. This quantity will allow for a rapid retirement of the aging fleet, avoidance of billions of dollars in maintenance and modernization costs, and will provide our airmen with a safe and modern aircraft that is essential to current and future operations," Murtha said in a statement. He also said he believed the Pentagon appeared to have done a better job of making the latest offer "both open and less subjective."

One of the Washington delegation -- keenly supportive of Boeing -- noted the absence of any mention of "illegal trade subsidies was left out," a clear reference to the World Trade Organization's preliminary ruling finding.

"I will be looking specifically at how this RFP was constructed, how clearly it lays out what the Air Force wants, how requirements will be weighted, and why the consideration of I have observed the Pentagon’s decision-making process for long enough to know that details matter," Sen. Patty Murray said in a statement.

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