By Jen DiMascio

Boeing [BA] and Northrop Grumman [NOC], the two companies vying to make the Air Force’s next aerial refueling tanker, are rumored to have agreed not to protest the service’s award late this month, Air Force Secretary Michael Wynne said yesterday.

“I will tell you that our two competitors have come to what we believe is an agreement that whoever is not the winner will not effectively protest. I think we have a responsibility to make sure that they feel like it’s an investment–ok decision to make. Because I will tell you, you feel a lot different while you’re still a half-winner than when you’re a sure loser. So we’ve got to watch that very closely,” Wynne said during the Aviation Week Defense Technology and Requirements conference.

But he stressed that no written agreement exists. “There’s just one that I’ve heard about, and I don’t want to commit the chairmen or CEOs in any way, shape or form,” Wynne said.

He said the Air Force is on track for its scheduled Defense Acquisition Board meeting Feb. 25. “It’s now about convincing everyone else that we’ve done it in the most reasonable and rational way,” Wynne told reporters.

The contract award, expected to be worth up to $40 billion, should follow soon after.

“These kind of big things, you have such a harsh light on them, you really want to do it quick. You want to do it quick because otherwise, it’s like a fish, you better eat it fresh.” Wynne said.

An agreement regarding protests like the one Wynne described would be big news in the hard-fought competition. With continuing consolidation within the defense industry, and a reduction in the overall number of defense purchasing programs, winning becomes essential. After two companies protested the Combat Search and Rescue helicopter award last year, a protest on the tanker was seen as nearly inevitable.

According to Boeing, no promises have been made or requested.

“A competitor always has the right to protest when valid concerns need to be addressed,” a Boeing spokesman wrote in a statement.

Northrop Grumman did not respond to a request for comment by press time.

Wynne’s comments sharply contrasted ones made earlier in the day by Gen. Bruce Carlson, commander of Air Force Materiel Command. Carlson said he was confident that many protests–as in the case of the KC-X tanker competition–had already been written.

Those protests are such a drain on the time and resources of program offices that a fix is required, he said. For instance, the Air Force wound up reprogramming $800 million initially set aside for its Combat Search and Rescue helicopter program because of delays due to protests of the initial award to Boeing by competitors Lockheed Martin [LMT] and Sikorsky [UTX], Carlson said.

Speaking with reporters, Carlson suggested establishing a penalty for protests–especially frivolous ones, and he added that he is beginning to build consensus for the idea on Capitol Hill and has support within industry. He predicted significant debate about the details, however.

Wynne acknowledged he could be wrong and that the companies may file protests. “I’m an optimist,” he said.

Then again, the self-described optimist also colorfully described the service’s top acquisition priority.

“Giving birth to the KC-X is like birthing an elephant,” Wynne said. “I predict that it actually will come, and yet when it does, it’ll probably fall on me and hurt me.”