GAO hits Air Force deal

Congress’ investigative arm Wednesday sharply rebuked the Air Force’s awarding of a $35 billion aircraft contract to a European-American team over U.S.-based Boeing Co., and recommended the deal be re-evaluated and the bidding process reopened.

News of the Government Accountability Office (GAO) report was greeted enthusiastically by Boeing supporters on Capitol Hill, particularly those from Washington state and Kansas, where Boeing had proposed to build its plane.

“The GAO criticisms were a scathing indictment of the Air Force’s process,” said Sen. Maria Cantwell, Washington Democrat. “The Air Force will have no choice but to rebid this project.”

The GAO assessment, requested by Boeing, will not bind the Air Force to cancel its offer for 179 midair refueling tankers it awarded in February to U.S.-based Northrop Grumman and the European Aeronautic Defense and Space Co. (EADS), the parent company of the passenger-jet maker Airbus.

But to Boeing and its backers, the recommendations will serve as significant ammunition to push for a new deal.

“We welcome and support today’s ruling by the GAO fully sustaining the grounds of our protest,” said Mark McGraw, Boeing’s vice president of tanker programs. “We look forward to working with the Air Force on next steps in this critical procurement for our war fighters.”

The GAO said its “review of the record led us to conclude that the Air Force had made a number of significant errors that could have affected the outcome of what was a close competition between Boeing and Northrop Grumman.”

The GAO suggested that the Air Force “reopen discussions with the offerors, obtain revised proposals, re-evaluate the revised proposals, and make a new source selection decision.”

The Air Force said Wednesday that it wouldn’t specifically address the GAO report until it completed a review of the recommendations.

“The Air Force will do everything we can to rapidly move forward so America receives this urgently needed capability,” said Sue C. Payton, assistant secretary of the Air Force’s acquisition division. “The Air Force will select the best value tanker for our nation’s defense, while being good stewards of the taxpayer dollar.”

The Air Force has 60 days to inform the GAO of its actions in response to the recommendations.

The GAO said it sustained Boeing’s protest in part because the Air Force didn’t adhere to its own list of requirements and specifications it requested of the bidders, which may have unfairly affected the outcome of the bidding process.

The GAO added that the Air Force didn’t take into account that Boeing offered more non-mandatory technical “requirements” than Northrop-EADS team, even though the Air Force’s solicitation for bids requested the bidders to satisfy as many as possible.

The agency also said the Air Force conducted “misleading and unequal” discussions with Boeing when it told the company it had fully satisfied a “key performance parameter objective relating to operational utility” of its proposed aircraft, but later determined that Boeing had met this objective only partially without advising them of the change.

The GAO said its review was based on the bidding process, and that its decision “should not be read to reflect a view as to the merits of the firms’ respective aircraft.”

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