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06/20/2008: "Get Ready For Round Three ..."
And so once again the worm turns ...
I talked back in March about the Air Force's decision to award a $200 billion tanker contract to Northrop Grumman and their Airbus partners over Boeing, Boeing's surprise at the decision, and their subsequent action to protest the selection. At the time, I thought the protest had no chance, as only 1 in 4 protests are upheld, and Boeing had never before protested a contract.
Well, what do you know - the GAO agreed, and on Wednesday released a report that blistered the Air Force for significant errors in the bidding process.
The GAO found the Air Force did not judge the competing bids according to its own published standards. It also concluded that Air Force officials held "misleading and unequal discussions with Boeing" by failing to tell the company that it had changed its assessment of a key objective, even as they continued talks with Northrop Grumman about the same part of the proposal.
And, after the protest, the Air Force acknowledged that it had misjudged the expected construction and lifetime operating costs of the competing designs, the GAO announced.
Now things will really get interesting. EADS, Northrop's European partner that provides the Airbus airframes, is urging the 4 governments that subsidize it to remain silent on the decision, fearing that negative comments would only stir additional protectionist sentiment here in the US. Northrop, in the mean time, has "delayed indefinitely" this week's groundbreaking ceremony for their new Mobile, Alabama, plant where the tanker final assembly would take place. Politicians are all lining up on one side or the other, based primarily on which company has more business in their home district.
The GAO finding is non-binding, but almost guarantees the Air Force will at least have to scrap this round of bidding. Counting the original 2003 lease/buy contract that was nullified when Boeing admitted certain "improprieties" in the bidding process (amid an investigation led by potential president John McCain), this will now mark the third time the contract has gone to bid.
Want to make it even more interesting? There's a rumor that Congress might try to split the contract between the two companies, throwing each a bone.
Man, is this gonna be a hot summer or what ... 
