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Wednesday, January 19, 2011

Air Force KC-X Tanker Aircraft Program: Background and Issues for Congress

Jeremiah Gertler
Specialist in Military Aviation

On February 24, 2010, the Department of Defense (DOD) released its Request for Proposals for a program to build 179 new KC-X aerial refueling tankers for the Air Force, a contract valued at roughly $35 billion. The contract award is expected in January 2011.

The KC-X acquisition program is a subject of intense interest because of the dollar value of the contract, the number of jobs it would create, the importance of tanker aircraft to U.S. military operations, and because DOD’s attempts to acquire a new tanker over the past several years have ultimately failed.

Bidding closed on July 9, 2010, with three offerors submitting bids. The European Aeronautic Defense and Space Company (EADS) offered a KC-X design based on the Airbus A330 airliner, to be built in Mobile, AL. Boeing offered a KC-X design based on its 767 airliner, to be built in Seattle, WA, and Wichita, KS. A team of the Ukranian airframe maker Antonov and U.S. Aerospace offered a variant of the An-124 freighter, with production location uncertain; this bid was excluded for arriving after the deadline, and the GAO denied U.S. Aerospace’s protest of the exclusion.

DOD’s KC-X acquisition competition strategy poses several potential oversight issues for Congress, including the following: Has DOD adequately defined the required capabilities for the KC-X and established a fair and adequate framework for scoring and evaluating bids against those required capabilities? Should World Trade Organization (WTO) rulings on commercial aircraft subsidies be taken into account in evaluating the KC-X bids? How should the Air Force take into account the premature disclosure of partial results to the two teams? 

FY2011 defense authorization bill:
The House Armed Services Committee, in its report on H.R. 5136 (H.Rept. 111-491 of May 26, 2010) recommends approving the Administration’s request for $863.9 million in research and development funding for the KC-X program. During its subsequent consideration of the bill, the full House voted to accept an amendment offered by Representative Inslee that would require the Defense Department to consider any “unfair competitive advantage that an offeror may possess” in evaluating bids on major weapons systems. The Senate Armed Services Committee report accompanying S. 3454 (S.Rept. 111-201 of June 4, 2010) makes no change to the Administration’s requested funding level for KC-X. 

FY2011 DOD appropriations bill:
The Senate Appropriations Committee, in its report (S.Rept. 111-295 of September 16, 2010) on S. 3800, recommends $538.9 million for the Next Generation Aerial Refueling Aircraft, a reduction of $325 million from the Administration request. The House Appropriations Committee did not report a separate defense bill for FY2011.

Date of Report: January 5, 2011
Number of Pages: 37
Order Number: RL34398
Price: $29.95

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