GAO sides with Boeing in Air Force fueling tanker contract dispute

The U.S. Air Force made significant errors in awarding a $35 billion contract for aerial refueling tankers to a partnership of Northrop Grumman and the parent firm of European airplane maker Airbus a government watchdog agency said in a report released Wednesday.

The Air Force chose the Northrop partnership over Chicago-based Boeing after a fierce bidding competition that ended with Boeing filing a protest over the decision.

The Government Accountability Office report, which affirmed claims made in Boeing's protest, recommends that the Air Force reopen the competition after rewriting the contract specifications.

Our 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 said. We therefore sustain the Boeing protest. The Air Force has 60 days to respond to the GAO recommendations, which are not binding on Air Force officials.

Following the awarding of the contract in February, the Air Force said the Northrop bid surpassed the Boeing submission in almost every specification category.

The Boeing protest, filed two weeks after the Air Force decision, alleged that the contract specifications were changed at the last minute to guarantee at least two bidders for the contract. The Air Force originally sought a medium-sized tanker, such as Boeing's 767-based tanker, but later switched the request to a larger tanker that Boeing claims favored the proposed Northrop plane. Boeing also said the Air Force judges were incorrect in their findings that the proposed Northrop tanker was better than the Boeing plane in mission capability, risk, past performance and cost.

While the contract calls for the replacement of nearly 180 aging KC-135 tankers, the Air Force eventually plans to spend more than $100 billion to replace its entire fleet of 600 tankers.

Lawmakers from Washington state, where the Boeing plane would be built, and from Kansas, where the 767s would be converted to tankers, also blasted the Air Force's decision to use a European air frame that would result in the loss of American jobs. 

Source: American Shipper