The GAO talked today by upholding Boeing's Protest filed on March 11, 2008 against the Air Force's award to Northrop Grumman and EADS for the Aerial Refueling Tanker. The Northrop Grumman and EADS team won the contract to build the KC-X aerial refueling tankers on February 29, 2008, which has a $35 Billion potential ceiling value.
The GAO report claims 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." The GAO recommends that the Air Force reopen discussions with the firms, collect revised proposals, re-evaluate those proposals, and make a new source selection decision.
The Air Force's Course Correction
The GAO's decision does not use light language regarding a number of perceived flaws during the procurement process. Currently, GovWin anticipates the Air Force has three options:
- Allow the two teams to resubmit proposals and enter into the Source Selection phase anew, the most likely per GAO recommendations.
- Re-open competition to all market participants, unlikely given vast delays in requirement fulfillment.
- Re-entering into the source selection phase with the current proposals, yet, considering the number of errors found by the GAO, this is also an unanticipated alternative.
Shortly after the GAO decision, the Air Force Contracting Office stated it would be a few weeks before a final verdict is reached regarding how to proceed. During this time government officials will be evaluating the GAO's recommendations and weighing the various options.
It's no secret this is one of the hottest issues right now, not only for contracting, but also politically. Local politicians have been vocal about the award to Northrop Grumman and EADS, a foreign company. Politicians alluded to an increase in U.S. government funded work shifting abroad, regardless of Northrop's on-going rebuttal that the manufacturing of the plane's bodies will take place in Mobile, AL and generate up to 25,000 jobs at home.
Yet, although few are discussing it, the largest short-term ramification of this decision is an increase delay in obtaining new refueling tankers.