(Adds byline, Air Force, company and analyst comments)
By Andrea Shalal-Esa
WASHINGTON, July 1 The U.S. Air Force said on
Tuesday it had not asked the Government Accountability Office
to reconsider its June 18 decision upholding Boeing Co's (BA.N)
protest against a $35 billion contract awarded to Northrop
Grumman Corp (NOC.N) and EADS EAD.PA.
"The Air Force has not requested reconsideration by the
GAO," said Air Force spokesman Lt. Col. Karen Platt.
Under federal rules, the service has 10 days to ask the GAO
to reconsider its decision "after the basis of reconsideration
is known or should have been known, whichever is earlier."
The Air Force did not file any request during the initial
10-day period after the decision, but Platt said its lawyers
were continuing to review the ruling and could still request
reconsideration within 10 days of discovering the basis for
such a request.
"We are still reviewing the GAO decision ... and we are
still identifying the best way forward," she said. "Just
because we have not gone to the GAO doesn't mean we don't have
that right in the future. It's not a done deal."
The Air Force technically has 60 days to respond to the GAO
ruling, although defense officials and analysts say they expect
a decision much sooner -- possibly within two weeks.
Virginia-based defense analyst Jim McAleese said the Air
Force's failure to file an initial appeal made it likely that
it would follow the GAO's recommendation to seek new proposals
and rerun the competition for new aerial refueling aircraft.
"As a practical matter, they have waived their right to
appeal," McAleese said. He said the Air Force would have
immediately expressed its outrage if the GAO ruling had
"egregiously misapplied the facts or the law."
"They have fundamentally committed to at least taking the
minimal corrective action recommended by the GAO," he said,
noting the service could always still seek clarification from
the GAO on what corrective actions would be acceptable.
The Air Force surprised the defense community in February
when it chose Northrop and EADS, a European aerospace giant, to
build 179 tanker aircraft used to refuel warplanes in mid-air.
The 15-year contract is the first of three acquisition phases
for what the Air Force calls its number-one purchase priority.
The GAO upheld Boeing's protest on June 18, and said it
believed Boeing would have had a "substantial chance of being
selected" if not for flaws in the evaluation process.
It said it found "a number of prejudicial errors" linked to
the technical advantages of the Northrop proposal, as well as
errors in the cost evaluations of the rival bids. But it also
said that it denied many of Boeing's challenges to the award.
Northrop declined to comment on the Air Force decision, but
said it hoped the matter was resolved soon. "We hope that the
Air Force can move quickly through this phase so that we can
get badly needed tankers into the fleet as soon as possible,"
said spokesman Randy Belote.
Boeing also declined to comment, and said it was awaiting a
decision on the Air Force's next steps. "We're looking forward
to seeing how our customer decides to move and then we'll
support them in that effort," said Boeing spokesman Walt Rice.
U.S. Defense Secretary Robert Gates last week indicated he
was taking a strong personal interest in the case, but had not
yet decided whether to reopen the botched competition.
Gates, Deputy Defense Secretary Gordon England and the
Pentagon's chief weapons buyer, John Young, have met several
times to discuss the issue, a Pentagon spokesman said.
Young was briefed by Air Force officials on Monday about
several specific options for resolving the issue, according to
one source briefed on the matter, who asked not to be named.
McAleese said the Pentagon, in consultation with the Air
Force, now had four options:
-- asking both companies to submit new "best and final
offers" and then reevaluating them;
-- signing a system development contract with Boeing as
well, and then asking Congress to provide additional funding;
-- giving both companies money to build tanker prototypes,
delaying a final contract award for at least a year;
-- or going back to reevaluate and possibly revise the
requirements and key performance parameters for the tankers,
which would delay a contract award for at least 18 months.
The Air Force did appeal the GAO's decision in a separate
protest case involving a $15 billion contract for search and
rescue helicopters that was also won by protesting parties.
In that case, the GAO denied the Air Force's request and
the service ultimately agreed to redo the competition.
(Editing by Brian Moss and Braden Reddall)