Team Infidel
Forum Spin Doctor
Wall Street Journal
June 26, 2008
Pg. B3
By August Cole
Northrop Grumman Corp.'s fight to hold on to a $40 billion Air Force jet contract just got tougher.
The Government Accountability Office issued a report Wednesday alleging that Northrop's bid may have been ineligible because it missed key Defense Department parameters. It also said the Air Force had penalized Northrop's rival -- Boeing Corp. -- in the bidding process.
The 67-page report explains the details of the GAO's surprise ruling last week that the bidding may need to be reopened because of numerous flaws in how the Defense Department contract was awarded.
The GAO said the Air Force's decision to go with an aerial tanker jet made by European Aeronautic Defence & Space Co.'s Airbus unit and sold to the U.S. by Northrop Grumman was "undermined by a number of prejudicial errors that call into question the Air Force's decision that Northrop Grumman's proposal was technically acceptable and its judgment concerning the comparative technical advantages accorded Northrop Grumman's proposal."
The report comes at a difficult moment for the Air Force, whose top brass was removed this month after security lapses. Criticisms of its handling of the contract raise questions about the Air Force's ability to manage its massive weapons-buying budget. The GAO, the investigative arm of Congress, found earlier problems with a rescue-helicopter contract valued at more than $10 billion that is now almost two years late.
Wednesday's report points to major flaws that plagued the bidding for the tanker jet. The Air Force was wrong in saying Northrop's plane was cheaper to operate, the GAO said. The Air Force had maintained that Northrop's Airbus A330-based offering was a better value for taxpayers than Boeing's 767-based design. If the Air Force had stuck to its contracting guidelines, held equal discussions with both companies and handled cost calculations better, the GAO wrote, "Boeing would have had a substantial chance of being selected for award."
The report gives Boeing's supporters ample ammunition to renew their assault on the Air Force's contracting body and make a political case for running a new competition and reversing the award. The Air Force wants to buy 179 tanker jets capable of hauling cargo and refueling other airplanes in the air.
A Boeing spokesman said the full GAO report validated the company's protest. "It is clear the award was the result of a flawed process," the spokesman said.
"The document makes clear that the GAO's issues with the contract do not reflect on the tankers' capabilities," Paul Meyer, Northrop Grumman tanker program manager, said in a statement.
Northrop now faces a difficult choice about how to handle the next phase of the contract. After three months of intense media campaigns and lobbying from Boeing and Northrop, a sort of cease-fire is in place in Washington.
Northrop has stopped sending out its daily email alert, known as "Tanker Truths." Ads on local radio endorsing the Northrop plane, known as the KC-30 after the Airbus A330 on which it is based, are no longer aired.
The GAO ruling last week is likely to force a new round of competition between the two companies. Ousted Air Force Secretary Michael Wynne said last Friday that he expected the bidding to be reopened. The contract, which is the Air Force's top acquisition priority, also has moved to the front burner for top Defense Department officials.
After Air Force Secretary Wynne and Chief of Staff Gen. Michael Moseley were fired this month over a nuclear-security issue, the expectation grew that Defense Secretary Robert Gates would have to step in to guide the service through one of its rockier periods.
June 26, 2008
Pg. B3
By August Cole
Northrop Grumman Corp.'s fight to hold on to a $40 billion Air Force jet contract just got tougher.
The Government Accountability Office issued a report Wednesday alleging that Northrop's bid may have been ineligible because it missed key Defense Department parameters. It also said the Air Force had penalized Northrop's rival -- Boeing Corp. -- in the bidding process.
The 67-page report explains the details of the GAO's surprise ruling last week that the bidding may need to be reopened because of numerous flaws in how the Defense Department contract was awarded.
The GAO said the Air Force's decision to go with an aerial tanker jet made by European Aeronautic Defence & Space Co.'s Airbus unit and sold to the U.S. by Northrop Grumman was "undermined by a number of prejudicial errors that call into question the Air Force's decision that Northrop Grumman's proposal was technically acceptable and its judgment concerning the comparative technical advantages accorded Northrop Grumman's proposal."
The report comes at a difficult moment for the Air Force, whose top brass was removed this month after security lapses. Criticisms of its handling of the contract raise questions about the Air Force's ability to manage its massive weapons-buying budget. The GAO, the investigative arm of Congress, found earlier problems with a rescue-helicopter contract valued at more than $10 billion that is now almost two years late.
Wednesday's report points to major flaws that plagued the bidding for the tanker jet. The Air Force was wrong in saying Northrop's plane was cheaper to operate, the GAO said. The Air Force had maintained that Northrop's Airbus A330-based offering was a better value for taxpayers than Boeing's 767-based design. If the Air Force had stuck to its contracting guidelines, held equal discussions with both companies and handled cost calculations better, the GAO wrote, "Boeing would have had a substantial chance of being selected for award."
The report gives Boeing's supporters ample ammunition to renew their assault on the Air Force's contracting body and make a political case for running a new competition and reversing the award. The Air Force wants to buy 179 tanker jets capable of hauling cargo and refueling other airplanes in the air.
A Boeing spokesman said the full GAO report validated the company's protest. "It is clear the award was the result of a flawed process," the spokesman said.
"The document makes clear that the GAO's issues with the contract do not reflect on the tankers' capabilities," Paul Meyer, Northrop Grumman tanker program manager, said in a statement.
Northrop now faces a difficult choice about how to handle the next phase of the contract. After three months of intense media campaigns and lobbying from Boeing and Northrop, a sort of cease-fire is in place in Washington.
Northrop has stopped sending out its daily email alert, known as "Tanker Truths." Ads on local radio endorsing the Northrop plane, known as the KC-30 after the Airbus A330 on which it is based, are no longer aired.
The GAO ruling last week is likely to force a new round of competition between the two companies. Ousted Air Force Secretary Michael Wynne said last Friday that he expected the bidding to be reopened. The contract, which is the Air Force's top acquisition priority, also has moved to the front burner for top Defense Department officials.
After Air Force Secretary Wynne and Chief of Staff Gen. Michael Moseley were fired this month over a nuclear-security issue, the expectation grew that Defense Secretary Robert Gates would have to step in to guide the service through one of its rockier periods.