Elaine Thompson/AP
Boeing President and CEO Jim McNerney

GAO Presses Air Force to Rerun Contract Bid

June 20, 2008 11:28 AM
by Anne Szustek
The U.S. government auditor is upholding Seattle-based Boeing’s protest against the Defense Department for awarding a $35 billion deal to the foreign parent of a competitor.

30-Second Summary

The Government Accounting Office said that it determined that the U.S. Air Force made “a number of significant errors that could have affected the outcome of what was a close competition” in a contract bid that was awarded to EADS, the parent company of U.S. aircraft manufacturer Northrop Grumman.

The GAO gave seven reasons why the Air Force needs to recast the bidding tender, including “misleading and unequal discussions with Boeing.”

The Air Force badly needs to replace its current Boeing KC-135 Stratotankers, which date from the Eisenhower era. But after the deal was announced Feb. 29, Congress rebuked the Air Force for awarding such a lucrative contract to a foreign supplier. EADS and Northrop Grumman pointed out that the deal would create thousands of jobs for American workers and that “58 percent of the value of the tanker aircraft will come from US companies.”

Many circles remained unconvinced, particularly in Seattle, which is home to much of Boeing’s production. The Seattle Times welcomed the GAO ruling: “American taxpayers want some competition for these multibillion-dollar contracts,” but “if we invite the Europeans, we should treat them fairly.”

Boeing may be back in the game, but the aircraft manufacturer still has black marks on its record; namely, a series of four no-bid deals with the Air Force for 100 Boeing 767s. Darleen Druyun, the contracting official behind the plan, served a nine-month prison sentence for fraud charges in connection with the scheme.

See Wall Street Journal coverage

Headline Link: ‘U.S. Auditors Flay Air Force over Refueling Tankers’

Background: Boeing and Congress fight the EADS contract

Reactions: Boeing, Northrop Grumman, Air Force statements on GAO ruling

Related Topic: ‘Air Force Shakeup Underlines Row With Gates’

Historical Context: Recent squabbles between Boeing and the U.S. government

Opinion & Analysis: Ball back in Boeing’s court


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