There are starting to be media reports that indicate the U.S. Air Force will announce the winner of the KC-X aerial tanker contract in February of this year. The decision had been planned before the end of 2010 but due to delays in reviewing the proposals and the inadvertent slip up of sending the competition’s information to the two bidders it has now moved to 2011.

In a recent presenstion the Secretary of the Air Force, Michael Donley, said that Senate hearings into the information mess may be limited due to the current source selection process. To some this indicates the Air Force does not want the hearing near the decision announcement. The award and potential protest would also constrain what information could be given to the Senate and discussed at the hearing.

Sean O’Keefe, EADS North America’s CEO, also recently said that he expects the award soon. He believes best and final offers will be submitted before January 31st and then the Air Force decision in February.

This will be the third attempt to buy a replacement for the KC-135 aircraft since 2001. The Air Force, Boeing (BA) and EADS (EADS:P) all hope that it will be the last and final try.

There is a good chance no matter who wins the award that there will be a protest. The 35 billion plus contract for these aircraft is the biggest military aviation contract right now. It is critical to both companies aircraft production plans and would give them a significant advantage in future tanker competitions world wide.

The well known aerospace analyst writes that based on discussions he has had it looks good for EADS North America to win the current KC-X new aerial tanker competition. He believes that the information accidentally shared by the U.S. Air Force with EADS and its U.S. competitor, Boeing (BA), indicate that the analysis by the source selection board favors EADS A330 MTT based bid.

EADS did win the contest two years ago teamed with Northrop Grumman (NOC) only to have it overturned on protest by Boeing. The Government Accountability Office (GAO) ruled that the Air Force had not applied its own criteria properly in evaluating those bids.

This time around EADS bid by itself and proposed basically the same aircraft. Boeing bid a modified version of their 767 tanker incorporating parts of the new 787 cockpit and other improvements.

Last month the Air Force had to admit it sent information to the two bidders about the others after mixing up the CD’s with data.

In Thompson’s analysis the data showed the Air Force favoring the EADS aircraft. Of course Boeing will have a chance to protest if they really do lose this contract.

In another piece of this very complicated puzzle this latest development may have serious affects on the latest attempt to replace the KC-135 Cold War era tankers.

In the past some analysts and members of Congress floated the idea of using both Boeing (BA) and EADS (EADS:P) as sources for new tankers. This split buy would negate contract protests and also more rapidly replace the aging KC-135 aircraft. The U.S. Air Force had always pushed back saying that the logistical costs of having two very different aircraft would be too expensive. Neither Boeing or EADS really supported the idea publicly either.

One of the leading proponents was Democratic Congressman John Murtha of Pennsylvania who died in the last year. The idea seemed to go away when the Air Force released its latest RFP and Boeing and EADS submitted their proposals.

Now the U.S. Navy’s decision to use two sources for their new small combatant the Littoral Combat Ship (LCS) is raising the issue again.

The original plan was to use two different designs and contractors to make this ship due to the large amount planned to be built. Two years ago because of cost and schedule problems the Navy changed its plan to one where several batches of ships would be awarded in separate contracts. But after receiving the proposals for the first batch the prices from the two bidders were so good the Navy has asked to go back to the dual source plan again.

There are some differences as the Navy planned for multiple providers even with the new acquisition strategy. The KC-X was always going to be one. The LCS despite two radically different hull designs meet the same basic requirements for speed, seakeeping, range and weapon layout. The Airbus 330 and Boeing 767 designs are quite different in fuel loads, range, runway and support requirements so the Air Force would still have two large, dissimilar logistic tails.

Even if Congress or others want the Air Force to copy the Navy in this case it really doesn’t make sense to do so. The original strategy should be stuck too and carried out.

Israeli Aerospace Industries (IAI) has been modifying at least one Boeing (BA) 767 aircraft to be a tanker for the Colombian Air Force. The major difference between this aircraft and the KC-X the U.S. Air Force is buying is that it doesn’t rely on a boom for refueling but just the drogue and hose system.

A photo of the aircraft named “Jupiter” was taken recently and posted at Airliners.net. It may be found here.

The aircraft is painted in the correct national markings and has camouflage. It has a pod under each wing for the drogue to refuel aircraft.

Boeing is proposing a version of their 767 aircraft for the KC-X as well as building tankers for Italy and Japan. IAI’s product demonstrates that the 767 is certainly flexible enough to be modified for the tanker mission. It also raises the question about why the new tanker for the Air Force has taken so long to get off of the ground.

First the contract was going to start in November. Then it was an award in November. Now the U.S. Air Force is saying a winner will be announced in the next few months or so.

Using the argument that it is better to do something right not quick the Air Force chief of staff, General Schwartz, did not commit to the November date or even this year.

This is not surprising considering the complexity of the proposals and the history of this contract. To avoid a protest which will cause further delays to buying the new aerial tanker the source selection must be thorough and done in such a way that the loser cannot feel discriminated against.

A protest by the loser be it Boeing (BA) or EADS (EADS:P) is expected but there is always a chance that they will take the loss graciously and it may be hoped their political supporters as well.

The EADS (EADS:P) subsidiary Airbus built tanker reportedly received its military certification from Spain’s military certification authority, INTA. While the European Aviation Safety Agency (EASA) does certify civil aircraft for many different nations it does not military systems. EADS needed a military certification authority to do that and used Spains.

The A330 MRTT is being built for Australia and the United Kingdom to perform aerial refueling missions. It has also been proposed by EADS for the U.S. Air Force’s KC-X contract as well as some Middle Eastern customers.

Military certification is a step forward in the process of the aircraft being accepted for use by its customers. The program has seen some delays but is moving forward into service with Australia and then Great Britain.

Senator Murray (D-WA) and Senator Brownback (R-KS) attempted to attach an amendment to the Senate’s 2011 Defense Authorization Bill today that would force the Defense Department and U.S. Air Force to take into account the World Trade Organization (WTO) ruling on subsidies to EADS (EADS:P) by European governments. Due to the fact that the bill did not win enough votes to advance mainly due to the attempt by the Democratic leadership to add the repeal of “Don’t Ask/Don’t Tell” policy on gays in the military the amendment wasn’t considered.

The two whose states stand to gain several thousand jobs if Boeing (BA) wins the KC-X contract will have to wait for this bill to be re-considered or add the amendment to another one. Certainly there are Senators from Alabama and other Southern states who favor EADS who might try to work against the amendment.

Currently the U.S. military cannot consider these kind of trade disputes and rulings in their source selection which is why the attempt was made to add the rule.

This continues to show that the fight for this contract will continue in Congress, the media and across the internet.

A few months ago the World Trade Organization (WTO) ruled that EADS (EADS:P) had received illegal subsidies from various European governments in the form of launch aid loans and tax breaks. The decision was quickly seized upon by Boeing (BA) supporters who want the Department of Defense and the U.S. Air Force to take the advantage these subsidies gave EADS into account in their source selection for the KC-X aerial tanker.

At the same time the WTO was considering a complaint by European governments that Boeing’s (BA) many years of contracts from the American government also aided them in developing their products and reducing their costs. The results of that case were leaked today and they indicate that the WTO will provide some criticism of the U.S. support.

This then was quoted by EADS’ American allies to reiterate the need for these not to be considered in the decision of who will win the contract to build over $35 billion of new tankers.

Because the rulings will not be exactly even and cancel each other out the argument will still go on even as the WTO leaves the issue. Unfortunately the decline of the world’s industrial base to where there are only two Western companies able to build this type of aircraft have led to this situation.

There is no easy resolution to the problem and no decision by the U.S.A.F. that will placate everybody. Once again the chance of a protest seems to be a given.

There are now reports that the U.S. Air Force may slip the announcement of a winner of the KC-X contract until the end of the year. The last planned date was the middle of November. This was a slight slip as the original goal was to have work start on that date.

Now it could be as late as just before Christmas that an award will be made. There are potential concerns with the results of the mid-term elections in early November that may have to be reflected on when coming to a decision on whether to award to Boeing (BA) or EADS (EADS:P). No matter what the program may see further delay if the loser protests the decision.

The Government Accountability Office (GAO) is also addressing two protests by the U.S. Aerospace (USAE) and Antonov team over the failure of the Air Force to accept their proposal claiming it was delivered five minutes too late. There is a chance that any upholding of the protests would cause further delays to the source selection and award.

The KC-X is now on its third iteration over the the last nine years and continues to look as if a new tanker won’t be purchased anytime soon.

There has been plenty of expectations that the loser of the latest KC-X competition would file a protest. Boeing (BA) was able to overturn the award to Northrop Grumman (NOC) and EADS (EADS:P) in 2008 when the Government Accountability Office (GAO) upheld its protest of that contract. Now there has already been a protest of this round before the source selection has really got underway. The protester, too, is not one of the usual suspects but U.S. Aerospace (USAE) who announced that they were teaming with Ukrainian aircraft manufacturer Antonov for the multi-billion program to replace the KC-135 in use by the U.S. Air Force.

U.S. Aerospace is protesting the fact that the Air Force said their proposal was received late and will not be considered in the competition. The service has made clear that only the EADS and Boeing ones were received by the deadline of 2:00 PM on 9 July.

The upstart bidder says that their proposal was at the site thirty minutes prior to that time but that Air Force personnel deliberately delayed the courier preventing delivery until five minutes after the deadline. The Air Force is standing by its decision.

The KC-X has been an on-again-off-again program for most of this decade. The initial plan of a lease of 767 based aircraft from Boeing was thrown out amid convictions of U.S. Air Force and Boeing personnel for corruption. The second attempt as mentioned above was lost on protest. This third try looked fairly smooth once EADS committed to bid on their own until late June when the U.S. Aerospace proposal emerged. Now a source selection that is supposed to be complete in early November is facing a potential hiccup depending on how the GAO rules on U.S. Aerospace’s protest. The addition of a third proposal to evaluate may cause delays in the selection and award process.

KC-X just gets more interesting as time passes.