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Report May Give Boeing Another Chance At Contract
Jun 19, 09:11 AM
Hartford Courant
By ERIC GERSHON
Courant Staff Writer
In harsh language that puts the Air Force on the defensive, congressional investigators said Wednesday that Boeing Co. should get a second chance to win a fiercely contested $40 billion aerial tanker program.
The contract was awarded last February to a partnership of Northrop Grumman and EADS, a European aerospace company and parent of Airbus, Boeing’s archrival.
Political allies of Boeing and East Hartford-based Pratt & Whitney, which would provide engines for Boeing’s plane, immediately hailed the Government Accountability Office’s nonbinding recommendations and made clear they will pressure the Air Force to follow them.
“It’s a do-over for the Air Force,” U.S. Rep. Chris Murphy, D-5th District, said in a statement issued jointly by the state’s four Democratic House members.
The eagerly awaited GAO report answers a formal protest made by Boeing in March.
“Our review of the record led us to conclude that the Air Force had made a number of significant errors that could have affected the outcome of what was a close competition,” said Michael R. Golden, the GAO lawyer who supervised the review of the tanker decision.
The GAO criticized the Air Force for failing to follow stated evaluation guidelines, conducting “misleading and unequal discussions with Boeing,” using “unreasonable” methods for calculating costs of the competing bids and improperly inflating certain Boeing costs, as well as for giving Northrop undue credit for certain aspects of its proposal. The GAO said the Air Force should allow Boeing and Northrop to submit revised proposals and make “a new source selection decision.”
A redacted version of the GAO’s full 69-page report is expected to follow Wednesday’s release of a summary.
“ Boeing’s political allies have been handed an atomic bomb,” said aerospace and defense analyst Richard Aboulafia of Teal Group in Virginia, who, like most analysts, thought Boeing would win the original contest.
Boeing offered the Air Force a tanker called the KC-767. Northrop offered the larger KC-45A, derived from Airbus’ A330 commercial aircraft, with engines made by General Electric.
The Air Force’s selection of Los Angeles-based Northrop and Airbus, which is part of the European Aeronautic Defence and Space Co., drew furious criticism from Boeing’s supporters, especially politicians and trade unions. They condemned the selection of a foreign company for a major U.S. military contract and said it would cost U.S. jobs.
Northrop and Airbus said they would build their aircraft in both Europe and Alabama. The number of jobs that Boeing and Northrop would create or sustain is debatable. Boeing has estimated its tanker program would support 44,000 new and existing jobs in the U.S.
Northrop initially said its program would support 25,000 U.S. jobs, but later increased the estimate to 48,000 after applying a different estimation formula. Northrop says 60 percent of the work would be done in the U.S.
The Air Force has 60 days to respond to the GAO report, but gave little indication Wednesday about its timetable.
“As soon as possible we will provide the Air Force’s way ahead,” Assistant Secretary for Acquisitions Sue C. Payton said.
Boeing said it was looking forward to working with the Air Force “on next steps in this critical procurement for our war fighters.”
Pratt & Whitney, which would assemble PW-4000-series engines for Boeing’s KC-767 in Middletown, responded to the news cautiously, saying in a prepared statement merely that it would continue to support Boeing.
“You’ve got to put this in the proper context,” Pratt spokesman Steve Lowry said Wednesday. “First of all, the GAO’s decision, by definition, is non-binding. And the Air Force has 60 days to respond. It’s still going to be speculative which way this is all going to shake out. … There are too many ifs to say this is definitely what’s going to happen. We’re all staying tuned closely.”
Representatives of the machinists’ union, which represents about 4,000 Pratt employees in the state and which rallied politicians behind the Boeing-Pratt cause, were more emphatic and optimistic.
“This is certainly a big victory,” said Jim Parent, assistant directing business representative for District 26 of the International Association of Machinists. “Had the [GAO] come out and said, ‘No, the bidding process was fair,’ it would have been the end of the line.”
A win for Boeing would not only provide billions of dollars in initial engine sales for Pratt, but also years of lucrative service and repair work.
“The aftermarket work is always a big part,” Parent said. “This is work for Pratt for many years to come, which would help stabilize employment in Connecticut.”
The Air Force has said it wants at least 179 new aircraft for its aging tanker fleet, currently numbering 500. The average age of the KC-135, one of two tankers now in use and built by Boeing, is more than 45 years.
The Air Force, whose top two officials were fired earlier this month over sloppy transportation of nuclear weapons, among other issues, will remain on the hot seat as it responds to the GAO report.
“The eyes of the entire country are on them,” said U.S. Rep. John Larson, who represents Connecticut’s 1st District, where Pratt & Whitney is headquartered. Pratt is a unit of United Technologies Corp.
