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GAO Sides With Boeing In Air Force Tanker Dispute

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In a major victory for Boeing Co., the Government Accountability Office sustained Boeing's protest of a $40 billion tanker contract award to Northrop Grumman Corp. and its partner European Aeronautic Defence & Space Co.
The ruling could have major implications for Boeing's defense unit, which was facing the prospect of abandoning its tanker business altogether. It will likely add to longstanding tensions between the U.S. and Europe over the difficulties that European companies have had in breaking into the U.S. defense market on major programs.

The GAO said in a statement that "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." Although the GAO doesn't have the authority to require the Air Force to re-open the competition, the agency's recommendations are widely expected to be followed. The GAO urged the Air Force to reopen discussions with the two companies to retain revised proposals and then pick a new winner.
The GAO did not release specific details of its findings, saying it planned to give Boeing and Northrop a chance to review its decision and to identify potentially sensitive proprietary information.
The ruling is another high-profile setback for the Air Force, which has been under intense criticism in recent years for the way it decides which weapons to buy. The GAO has upheld several recent protests from losing bidders, including a more than $10 billion Air Force search and rescue contract initially awarded to Boeing.
On Feb. 29, the Air Force picked Northrop to provide 179 modified Airbus A330s. Boeing, which bid a 767-based design, filed its protest on March 11, and the 100-day GAO review had a June 19 deadline.
The GAO's decision was immediately cheered by Boeing's supporters in Congress who have loudly claimed the Air Force was biased in its award and didn't accurately estimate costs, among other problems. "Today, the GAO sustained Boeing's protest and confirmed what I have been saying for months – the Air Force's tanker decision was fundamentally flawed," said Washington Democrat Sen. Patty Murray in a statement immediately following the announcement.
The GAO said that its review wasn't on whose aircraft was better, but on how the Air Force ran the competition. The GAO found seven problems with how the Air Force picked the Northrop bid, siding with Boeing on most of the key points.
The Air Force's evaluation of the bids included "misleading and unequal discussions" with Boeing in one case, the GAO said, and in another instance the service inaccurately estimated how much it would cost to operate Boeing's 767-based tankers. The GAO also found problems with how the Air Force evaluated the construction expenses associated with bringing the larger Airbus design into service.
The current Air Force tanker fleet is an average age of 47 years old, which led the service to make this its top equipment priority. During the Cold War, aerial tankers functioned as flying gas stations for U.S. strategic bombers targeting the Soviet Union. With these new tankers that can carry a considerable amount of cargo as well as fuel, the Air Force envisions using them to support all kinds of military operations, from combat to relief missions.

[Gort]

Should be interesting to see where this all ends up. It’s inconceivable, though, that the Air Force will pull out of its existing deal with Airbus/Northrop and award the contract to Boeing instead. Is that even possible? Aren't we talking World War III if it even tries?

[Hoverbug]

What a circus! If there was any doubt before that the procurement process was broken before, there isn't any now. Just about every major program competition is now being contested and these reversals are only going to encourage more of the same.

[Raven]

The governement procurement process is just crazy. In some cases, even when one company loses, they really don't.

For example, with jet engines the government usually requires that there be two sources for an engine application (within reason). Even though the P&W F100 was the winner of the F-15/16 programs, GE was awarded contracts for design and development of the F110 (different design) so there could be a dual source and competitive bidding. Pratt & Whitney acutally built GE F404's (per GE's blueprints) for the F-18 for a while. The F107 cruise missle engine was dual sourced to both Williams International (winner) and Teledyne (loser) because the government was not sure WI could meet production commitments. More recently, P&W won the F-35 competition with the F135 but GE/RR will potentially be building the F136 (different design) to fit in the same aircraft and bid each production block.

Supposedly, this dual sourcing on engines for the military gives favorable pricing and productionsecurity but how much does it cost to have two sources, spares, tooling and training?

[Cardinal]

'Pork barrel' politics ...?