In a post on BNET Industries, Matthew Potter notes that the Department of Defense is willing to go ahead with only Boeing bidding on the KC-X:

The Secretary of Defense Robert Gates in testimony to the House Armed Services Committee made it clear that the Defense Department and U.S. Air Force will release the Request for Proposal (RFP) for the new KC-X tanker and award a contract even if only Boeing (BA) submits a proposal. The Department hopes that the Northrop Grumman (NOC) and EADS (EADS:P) will submit a bid but will go forward with the planned contract even if they don’t.

In early December Northrop Grumman’s CEO sent a letter to the Air Force stating that due to the terms of the draft RFP they felt that it so favored Boeing that they and their partner EADS, parent of Airbus, would not submit a proposal. Northrop had won the contract in 2008 only to lose it on protest by Boeing with the Government Accountability Office (GAO) saying that the Air Force changed the requirements and was not completely fair to Boeing. An earlier attempt to award Boeing a lease for KC-767 aircraft collapsed amid scandals and Congressional desire to have contest.

Read the entire post Defense Department Willing To Do KC-X With Only Boeing Bid for more.

Jason Lean, the Executive Director of the Labor Council for Latin American Advancement (LCLAA) has sent a letter to the Tallahasee Democrat opposing the award of the KC-X contract to Airbus on the grounds that “taxpayers shouldn’t pay for foreign jobs.” The letter reads:

“Nearly all Americans know how dire the unemployment picture is today. Unfortunately, the recent job loss numbers show that even harder times are on the horizon (“Jobless rate inches higher statewide but drops slightly in Leon County,” news article, Jan. 23).

But what most Americans don’t know is that the Department of Defense is considering awarding to the Europeans a major defense contract that outsources an additional 50,000 jobs abroad.

Even worse, the European defense contractor in question — EADS/Airbus — is a pariah company that was just found by the World Trade Organization to have thieved tens of thousands of American jobs in an illegal subsidy scheme that allowed it to steal market share from the U.S. aerospace company, Boeing.

There may be controversy about whether we need another federal stimulus plan to create American jobs. But there should be no controversy over the view that American taxpayers should not fund a European jobs stimulus plan for an outlaw company.”

You can read the letter at Tallahasee Democrate.

The Federal Business Operations “FedBizOps” website posted a presolicitation notice yesterday stating that the final RFP for the KC-X will be posted no earlier than 23 February. The draft RFP had been released in September last year. Since then it has been updated and modified several times.

Most recently the latest set of questions and answers were posted on January 27th. The two big issues are how much the final RFP has changed from the draft one and whether Northrop Grumman (NOC) and its partner EADS will bid on the contract. The turn around time for a proposal may be fairly quick as this is the second competition in three years and the draft RFP has been out for six months.

Congressman John Murtha (D-PA) a senior Democratic Representative and the Chair of the Defense Appropriations Subcommittee died yesterday from surgery complications. Murtha had at one time pushed the idea of awarding KC-X contracts to both Boeing (BA) and the Northrop Grumman (NOC) and EADS (EADS:P) teams as a way to rapidly replace the aging KC-135 aircraft. He eventually gave up on the idea.

The rationale for the split buy is that it builds the aircraft quicker while also removing the uncertainty of a protest over a single award. The U.S. Air Force and Department of Defense have made it clear that they do not want to do this due to the increased logistical cost associated with operating two different aircraft. The systems might complement each other with the bigger, longer range KC-30 being based further back in the U.S. and its more permanent bases overseas with the KC-767 flying forward and supporting operations in-and-around South West Asia.

The dual award would also mean that Northrop and EADS will be guaranteed work so their threat not to participate in the latest round would not need to be carried out. That is why organizations like the Aerospace Alliance representing Mississippi, Alabama and Florida support they idea. Some work in Mobile, AL is better then none.

The chances of a split buy are fairly remote but there are still those who want it.

It has been reported that Senator Shelby (R-AL) has placed a hold on every nomination made by President Obama that must be confirmed by the Senate. This means that without a vote of over 60 Senators the nominations cannot be considered. Putting a hold on specific individuals is not uncommon but the use of the “blanket hold” is. Reportedly Shelby is upset about progress on the KC-X RFP as well as plans to build a new national Explosive Ordnance Disposal (EOD) school at Redstone Arsenal in Huntsville, AL.

Shelby had been a Democrat until the election of Bill Clinton when he switched parties. It would be hard to believe that this broad attack will force any changes to the RFP to make it more attractive to Northrop Grumman (NOC) and EADS (EADS:P). It will also be hard for Shelby to sustain this kind of action for long.

President Obama sent his 2011 budget to Congress yesterday. It contains as part of its record defense spending $12 billion for the development and initial production of the new KC-X tanker. The Administration and the Air Force have a goal of awarding a contract this Summer and beginning the development of the new aircraft fairly fast.

This plan is fraught with difficulties based on the history of the program. The two main competitors, Boeing (BA) and the Northrop Grumman (NOC) team, have their own supporters in Congress and their own issues with the approach the Air Force is taking. It can be expected that the source selection will be difficult and the chances for a protest fairly high if both groups do submit bids.

Northrop Grumman and its partner EADS threatened a few weeks ago not to participate in the next attempt at buying a new tanker for U.S.A.F. Many feel that this is just a negotiating ploy to have the terms of the RFP changed to make it easier for Northrop to win. The company has expressed concern that the way the RFP is written now it will favor Boeing to the point that Northrop sees no reason to bid.

The U.S.A.F. and DoD need to attract multiple bids. They cannot go through with the program without some sort of competition. Now it has been made clear that both the Board of Directors of Northrop, stock analysts are shareholders are supportive of the plan not to propose. One would think that there should be an attempt to win $35 billion of work but the goal of Mr. Bush, the new CEO, and his supporters is to increase the margin and profitability of the company. This means he and his supporters want to concentrate on getting work and getting it done.

The KC-X program in its third iteration faces some problems. The chance of a protest by either losing side is high. Both teams have supporter in Congress. The program may be hard to get up-and-running with so much politics involved. If Northrop feels there is little chance of them winning this contract again or quickly making money off of it then they should not proceed.