- The Washington Times - Thursday, June 19, 2008

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.”

Rep. Duncan Hunter of California, the ranking Republican on the House Armed Services Committee, said the GAO decision “represents a major victory for American workers and taxpayers, and brings us one step closer to ensuring this contract is not sent overseas.”

Boeing said its tanker proposal would support 44,000 new and existing jobs at the company and more than 300 U.S. suppliers. But Northrop-EADS estimates that its deal will support 48,000 U.S. jobs, including more than 1,500 new positions in Mobile, Ala., where the tanker would be assembled.

Sen. Richard C. Shelby, Alabama Republican, expressed incredulity over the GAO’s findings.

“I cannot believe that in the most highly scrutinized procurement in the history of the United States Air Force, the GAO found so many errors,” he said. “The fact that the Air Force will likely have to go back to square one on the war fighter’s No. 1 priority is very disturbing.”

Northrop Grumman spokesman Randy Belote said company officials “respect the GAO’s work in analyzing the Air Force’s tanker acquisition process” but that they “continue to believe that Northrop Grumman offered the most modern and capable tanker for our men and women in uniform.”

“We will review the GAO findings before commenting further.”

The lobbying effort for both proposals has been intense, which each bidder touting their proposals in newspaper and trade publication advertisements nationwide.

Several strategists and fundraisers for Sen. John McCain have lobbied on behalf of the Northrop-EADS proposal, causing the Republican presumptive presidential nominee to spend months defending himself from accusations that he weighed in on behalf of the European-lead bid.

Mr. McCain, who has insisted that he did nothing to influence the outcome of the contract, said yesterday that the Air Force should “carefully consider the GAO’s decision and implement its recommendations as quickly as, and to the fullest extent, possible.”

“My paramount concern on the tanker replacement program has always been that the Air Force buy the most capable aerial refueling tankers at the most reasonable cost,” he said.

Boeing designed a tanker based on its 767, while Northrop-EADS based its plane on the larger Airbus A330.

The Northrop-EADS team said its plan was more technologically advanced than Boeing’s proposed aircraft, was less costly and better fit the Air Force’s list of requirements. Boeing said the Northrop-EADS deal would cost American jobs, had hidden costs and would pose a natural security risk by relying heavily on foreign suppliers.

The Air Force conceded last week that, given that increase in maintenance costs for the Northrop-EADS plane, Boeing’s proposal would be cheaper.

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