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Tue, Feb 19, 2008

Air Force Could Split Tanker Deal, Says Official

Notes Upcoming Decision Is Only For Phase One Of KC-X

In the heated competition between Boeing and a Northrop Grumman/EADS venture for the US Air Force's new aerial tanker contract, both sides -- and the analysts who watch the industry -- have talked about the contract being worth up to $40 billion to the winner, by the time all three phases of acquisition are complete.

Contrary to past reports, however, some Air Force officials now say that's not a sure bet -- and that phases two and three of the KC-X tanker competition may be split between the two designs.

As ANN has reported, the Air Force is considering the Boeing KC-767 and the Northrop/EADS KC-30 for the first phase of a contract to replace the Air Force's KC-135 Stratotanker fleet -- which averages 44 years old. The service may announce as soon as February 25 which design will be selected.

Both aircraft are based heavily on commercial planes -- Boeing's 767 and the Airbus A330, respectively -- and each has its strengths. The KC-767 is cheaper, though smaller; the KC-30 offers more cargo room and fuel capacity, but at a price premium.

Air Force Lieutenant General Donald Hoffman is the Air Force's top uniformed acquisitions official. He told Bloomberg the phase 1 winner won't necessarily have an advantage in phases 2 and 3, contrary to past indications of the Air Force's reluctance to split the deal.

"They can say whatever they want, but we have three separate buys as our acquisition strategy at this point," he said.

That runs contrary to statements made just last year by Sue Payton, the Assistant Secretary of the Air Force for Acquisition... who said splitting the deal would prove too costly, at a time when the service is having to keep close eye on its budgets.

"Because we are trying to do so much, we don't have the money upfront that it would take to carry two or three [tankers] through development and then into procurement," she said in August 2007.

Hoffman begs to differ. He told reporters at the Pentagon the service won't even have specifications for the second phase until at least 2010.

FMI: www.af.mil, www.globaltanker.com, www.boeing.com, www.eadsnorthamerica.com, www.northropgrumman.com/kc30/

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