Boeing wins Air Force tanker contract appeal

A US congressional watchdog group said Wednesday that the Air Force erred when it awarded a $35 billion contract – one of the Pentagon's biggest ever – to a partnership of Northrop Grumman and Airbus parent Aeronautic Defence and Space Co,. to build its next generation refueling plane known as the KC-X.

In its review of the contract decision, the Government Accountability Office (GAO) recommended that the Air Force reopen the bidding process, which is likely to slow progress towards replacing the service's aging fleet of planes.

When the contract was awarded in February, Seattle-based Boeing, the other principal bidder on the contract, protested, saying the service had changed the rules midway through the process.

"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," wrote Michael Golden, a GAO attorney, noting the GAO also rejected some of Boeing's challenges.

The GAO ruling favoring Boeing's protest was welcomed by lawmakers who were outraged by the Air Force award. "I am not surprised that the GAO identified significant errors in the selection process," said Sen. Patty Murray (D) of Washington, who has called the air service's decision "fundamentally flawed" and says the Pentagon "stonewalled" efforts to get more information about how the decision was made.

"The Air Force bought a tanker that doesn't meet their needs and has been waging a PR campaign ever since," she said in a statement issued immediately after the decision.

Boeing issued a statement Wednesday "welcoming and supporting" the GAO ruling. Northrop Grumman issued a statement defending its plane. "We continue to believe that Northrop Grumman offered the most modern and capable tanker for our men and women in uniform," the statement said.

It is not yet clear what the ruling, which is nonbinding, will mean for the Air Force or its effort to buy new tankers to replace its aging fleet. The new tanker can refuel other aircraft in midair and is considered a workhorse of the military's flying stock.

Replacing the old fleet with a new one is Defense Secretary Robert Gates's chief acquisition priority for the Air Force. He has said the replacement is a decade overdue. Boeing's protest had held up production of the new planes.

On Tuesday, Geoff Morrell, Gates's spokesman, reiterated his boss's position. "These planes desperately need to be replaced, not yesterday, not the year before, but 10 years ago," he said. "Any further delay would be a real problem."

Air Force officials, who abruptly canceled a previously scheduled briefing at the Pentagon on an unrelated tanker issue, were scrambling to respond to the decision released early Wednesday afternoon.

The decision is another hit for the Air Force, which has been in a public tailspin for months. Earlier this month, Mr. Gates abruptly fired both the civilian and uniformed heads of the service following a report that showed they had failed to oversee shipments of nuclear-related material. Nuclear cruise missiles were inadvertently flown across the US last August and earlier this year, nuclear nose-cone fuses were discovered to have been sent mistakenly instead of helicopter batteries to Taiwan.

There have been other controversies including a $50 million contract award relating to the Air Force's ceremonial unit called the Thunderbirds, which was found to have been improperly awarded.

Meanwhile, the service has been losing a public relations battle inside the Pentagon while angling for as much as $20 billion more to fund its controversial F-22 Raptor stealth fighter.

The entire Air Force acquisition process may need overhauling, says Sen. Carl Levin (D) of Michigan and chairman of the powerful Senate Armed Services Committee.

"We now need not only a new, full, fair and open competition in compliance with the GAO recommendations, but also a thorough review of – and accountability for – the process that produced such a flawed result," he said.