Senior defense officials told lawmakers Wednesday they will keep the scheme proposed in September to evaluate industry bids for a 179-plane, $35 billion aerial tanker contract, while adding that they have made hundreds of changes to the requirements and contract structure that will guide the KC-X competition.

In a morning briefing to lawmakers, Deputy Defense Secretary William Lynn, Pentagon acquisition executive Ashton Carter and Air Force Secretary Michael Donley “stressed that the changes made to the draft were primarily technical,” a congressional source with knowledge of the session said.

The presentation, obtained by Air Force Times, summarizes what was briefed to lawmakers. The RFP is scheduled to be made public later Wednesday. A draft solicitation has been on the streets since late September.

Boeing is expected to enter its KC-767 aircraft. Northrop Grumman and partner EADS won the last KC-X race, but Boeing successfully protested. The trans-Atlantic partners have expressed major reservations about the Pentagon’s approach for this round, going so far as threatening to skip the race.

In the Hill briefing, Lynn said “we favor a competition,” adding the final RFP is “structured to be fair to both sides, and, above all, to the taxpayer and war fighter.” The Pentagon expects a contract award in the “fourth quarter, FY10,” according to the briefing.

The final RFP will keep in place an evaluation framework under which all proposals will be judged against 372 “mandatory requirements” set by Air Mobility Command. As the Air Force determines if the proposed planes can do those things “on day one,” the briefing states, it also will run other analyses on issues such as the planes’ fuel burn rates and all needed military construction to accommodate the planes.

At the end of this phase, the Air Force will calculate a “total estimated price” for each entry. If the costs are within 1 percent of one another, both aircraft would remain in the running and enter a second stage during which the planes would be judged on whether they can perform 93 nonmandatory requirements.

Some critics, including Northrop Grumman-EADS and defense analysts, have said the evaluation structure essentially sets up a cost shootout because, as the DoD briefing acknowledges, it is anticipated that both the KC-767 and the A330 can meet the 372 mandatory specs.

But in a section of the briefing attributed to Lynn, the deputy secretary told lawmakers “a bidder could actually have a higher proposed price and still win.

“This is a best-value competition,” Lynn said, according to the briefing. “The factors include war-fighting effectiveness, cost of ownership over the 40-year life of these aircraft, and possibly other features than those mandatory requirements needed by the war fighter on Day 1.”

The Air Force and Pentagon brass also elected to keep in place another aspect of the September draft solicitation that called for a fixed-price development stage of the KC-X program. As the officials said in Wednesday’s briefing, this is because the department feels little “high-risk” development is needed on either tanker.

Both industry teams — and industry advocate groups — have expressed concern about this aspect of the Pentagon’s approach.

Change of Plans

DoD did, however, change its plans for the fixed-price contracts it will seek for various lots of the KC-X buy. Lots 1 and 2, for instance, will remain as planned under a firm fixed-price contract, “based on the experience of the competitors,” according to the briefing. For Lots 3 through 13, however, the Pentagon will insert certain tools designed to protect “both taxpayers and industry” from “economic fluctuations” that may occur in coming years.

As for the slate of KC-X requirements, Donley is quoted in the briefing as saying, “over 230 changes have been incorporated into the [final] RFP; ... the vast majority were as a result of industry’s concerns.”

One spec was scrapped: the need for a microwave landing system.

Other changes, according to the briefing:

— “Large Aircraft Infrared Countermeasures: changed to government-furnished equipment.”

— A section on an alert quick-start requirement was altered to specify temperature range and power-cart usage.

— A requirement for “non-ozone depleting fire suppression” was tweaked to clarify “emerging commercial standards.”

A Northrop Grumman spokesman declined to comment on whether the changes will be enough to compel the Northrop-EADS team to compete.

‘A more finite competition’

Following the session with the Pentagon officials, Rep. Todd Tiahrt, R-Kan., told reporters he thinks “the Alabama delegation won’t be happy.”

If they capture the contract, Northrop and EADS would assemble the flying gas stations in Mobile, Ala.

Tiahrt, a member of the House Appropriations defense subcommittee, described the final RFP — with its 372 mandatory specs — as “building a more finite competition.”

Boeing does KC-767 work in several states, including Kansas.

The Air Force and Pentagon will not “give extra credit for additional capabilities that are not needed” for a medium-sized tanker, he said, referring to the ability to conduct missions like aerial medical evacuation and cargo hauling.

In the briefing, Lynn is quoted as telling lawmakers extra credit would be given to proposed airframes in certain instances, such as fuel offload.

“Now, some have suggested that we are aiming low or have set requirements that are less than that of today’s KC-135s. Let me point out that only one of the nine key performance parameters regarding the fuel offload is the same as today’s KC-135s,” Lynn said, according to the briefing.

“In the case of fuel offload, the mandatory requirement meets the capability of the KC-135. Exceeding the mandatory fuel offload requirement is given credit in the non-mandatory evaluation.”

Further, the final RFP keeps in place the Pentagon’s plans to exclude a preliminary ruling by the World Trade Organization that EADS gets subsidies from European nations that give it an unfair leg up in the world market. DoD contends that initial ruling is only the first stage in an internal WTO process that will take years to resolve.

“This is a time to make a stand on that,” Tiahrt said.

Added Tiahrt: “I’m not happy ... because of DoD’s failure to account for the WTO decision and the numerous waived requirements for Airbus.”

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Staff writer John Reed contributed to this story.

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