EADS executive confident in tanker bidding process despite clerical snafu

The chief executive officer of EADS North America says he has confidence in the Air Force’s selection process for a lucrative tanker contract despite a clerical error that briefly left some of his company’s proprietary information in the hands of rival Boeing.

EADS CEO Sean O’Keefe called the competitive process for the Air Force’s $35 billion tanker contract “above-board,” “open” and “fair,” despite the service’s disclosure on Friday that it transmitted information on EADS’ bidding to Boeing, its rival for the contract, and sent Boeing’s information to EADS.

The two-way blunder is the latest twist in the Air Force’s decade-long effort to replace its aging fleet of tankers. Boeing and EADS are competing for the contract, which will be one of the biggest at the Pentagon for years to come. 

The Air Force had been expected to select the winner of the contract by Dec. 20, but the selection has now been pushed into next year. The Air Force said the delay was not related to the clerical snafu, but said some parts of the bidding process were taking longer than expected. 

The Air Force’s mistake could provide an opening for either EADS or Boeing to challenge the service’s decision. 

Despite his expression of confidence in the contracting process, O’Keefe left the door open to protesting the Air Force’s decision in light of the mistake.

“I never rule out any action,” said O’Keefe, who spoke to reporters for the first time since surviving an Aug. 9 airplane crash in Alaska that killed former Sen. Ted Stevens (R-Alaska) and four others. He returned to work for the first time three weeks ago.

O’Keefe stressed that the Air Force’s handling of the letter mishap was “absolutely” by the book.

“This is human error,” O’Keefe said. “We will see what transpires in the time to come.” 

The Air Force said it is looking into the accidental transmission but did not provide the companies with a timeline for when the investigation would be completed. 

Both companies alerted the Air Force to the mix-up and promptly sent back the information. O’Keefe said that nobody at his company read the letters, which contained Boeing’s proprietary information, and Defense Department officials assured him Boeing did the same with his company’s information. 

Boeing declined to comment on the matter when contacted by The Hill on Monday. 

EADS partnered with Northrop Grumman to win the tanker contract in 2008, but Boeing successfully protested that award with the Government Accountability Office. 

Once Defense Secretary Robert Gates decided to start the competition from scratch, Northrop Grumman pulled out of the competition, leaving EADS, the parent company of Airbus, to submit a solo bid against Boeing. Boeing builds the KC-135 tankers that need to be replaced. 

The data snafu is throwing another wrench into an already complicated process — Boeing and EADS have been locked in an intense lobbying and public relations fight over the contract. 

Boeing’s congressional supporters seized on the data mix-up to blast the Air Force’s bidding process.

“I am deeply concerned by the Air Force’s mishandling of proprietary information in the competition to replace our nation’s aerial refueling tankers,” Sen. Patty Murray (D-Wash.), a defense appropriator, said in a statement. 

Rep. Todd Tiahrt (R-Kan.), also a defense appropriator, said that the Air Force is setting itself up to “botch” the tanker competition “again.” 

“The inability of the Air Force to meet yet another deadline speaks volumes about the lack of leadership in the tanker competition,” said Tiahrt. “The additional delays, combined with careless handling of sensitive data, cannot be tolerated. We have thousands of American workers standing by who are ready to build the next generation air refueling tankers, but the Air Force continues to act without a sense of urgency.”

Boeing would build the tanker in Kansas and Washington state, while EADS would build the tankers in Mobile, Ala.