Pentagon could award aerial tanker work sooner

March 9, 2010 7:16 PM EST

The Pentagon may be able to award a multibillion-dollar aerial tanker contract sooner than planned after Northrop Grumman Corp pulled out of the competition, leaving Boeing Co as a likely sole-source bidder, Pentagon spokesman Bryan Whitman said.

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The current plan calls for companies to submit their bids by mid-May, with a contract award expected in September.

Whitman told reporters the Pentagon had anticipated only two bids for the tanker contract, which could be worth up to $50 billion, before Northrop withdrew.

"So we're going to have to take a look at that now -- what that will do to our timeline," he told reporters, referring to the 75-day deadline for bids, and plans for the Pentagon to award a contract 120 days later.

"We may be in a position where we will be able to take a look at reducing some of those milestones," he said, referring to a possible acceleration of the timetable for the deal.

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Whitman said the Defense Department was confident that it could negotiate a reasonable price for the tankers although Boeing appeared to have escaped competition from Northrop and its European partner, EADS .

EADS on Tuesday ruled out a solo bid for the work.

"There is baseline cost data that is associated with these air frames," Whitman said. "There are also measures the department can take to make sure we are controlling the costs." He declined to specify what measures were in mind.

"It's not like developing the Joint Strike Fighter," he said, adding that unlike the new radar-evading fighter being developed by Lockheed Martin Corp , aerial tanker planes already existed today. He said the Pentagon also had ample cost data from the previous competition.

Boeing announced last week that it would offer the U.S. Air Force an updated 767-based refueling plane in this competition, including a new digital flight deck from its 787 Dreamliner and a new fly-by-wire refueling boom.

Boeing's 767 tanker lost out in the last tanker competition to the larger Airbus A330 offered by Northrop and EADS, but the Pentagon canceled the deal after government auditors upheld a Boeing protest.

LONGEST-RUNNING SOAP OPERA

Jim Albaugh, head of commercial airplanes for Boeing, told a JP Morgan investor conference on Tuesday that the next move was up to the Pentagon.

"I've been working this program for nine years. It's the longest-running soap opera since 'Days of our Lives.' I'm not sure that we've seen the last episode," said Albaugh, who ran Boeing's defense business until late 2009.

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