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Congress upholds Boeing complaint

Jun 19 2008

Congress upholds Boeing complaint

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By Agencies

The decision to award the contract to Northrop Grumman and EADS sparked US anger [AFP]

US congressional investigators have upheld Boeing's complaint against the awarding of a $35 billion contract to rival Northrop Grumman and its European partner.

The Government Accountability Office said it had found "significant errors" in the decision to award the contract and recommended the US Air Force review the decision.

Although the decision is not binding, analysts say it puts pressure on the air force to reopen the contract and possibly help the American aviation company win part or all of the award.

The air force said it was aware of the report and would review it.

The contract for 179 aerial refuelling tankers is the first of three deals worth up to $100bn to replace the air force's entire tanker fleet over the next 30 years.

Political controversy

Boeing lost the contract to Northrop Grumman and its European partner, the European Aeronautic Defence and Space Company (EADS), parent of Boeing's competitor Airbus, in February this year.

But the US Air Force's decision to award the contract to a European aircraft maker, at a time of economic upheaval and job losses in the US, caused anger within the US government.

The GAO said in its report that the air force did not respect the evaluation criteria and conducted "misleading" discussions with Boeing about its compliance with requirements.

It also said the air force made "unreasonable" cost calculations that, when corrected, fixed Boeing as the lower bidder for the duration of the contract.

Computation mistakes

Northrop Grumman and Boeing said last week the air force had made errors in awarding the contract, but Northrop said the minor "computation" mistakes should have "no impact" on the GAO's
review.

Geoff Morrell, a Pentagon spokesman, said on Tuesday that the replacement of the fleet was a "number one" priority and it stood by its decision to award the contract to Northrop Grumman and EADS.

"[The process] was fair, transparent [and] provided our war fighters with the most capable aircraft and the taxpayers the most cost-effective solution," he said.