Air Force may reopen $40B tanker bid

6/19/2008

WASHINGTON - In a stunning reversal, a federal auditing agency said yesterday that a $40 billion Air Force contract awarded to Northrop Grumman Corp. was flawed and recommended that the Pentagon reopen the competition for what is expected to be the biggest defense procurement for at least a decade.

The decision marks a major victory for Boeing Co., which had challenged the award, saying the Air Force had unfairly favored the Northrop bid to build 179 aerial refueling tanker planes.

"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 between Boeing and Northrop Grumman," said Michael Golden, managing associate general counsel for the U.S. Government Accountability Office.

While the GAO decision is not binding, it puts tremendous pressure on the Air Force to reopen the contract

The Air Force will determine its next steps after completing a review of the GAO ruling within 60 days.