GAO Questions Tanker Deal

The Government Accountability Office Wednesday upheld Boeing's protest of a $35 billion Air Force tanker contract awarded to Airbus and Northrop Grumman. The decision is not binding but there may now be pressure on the Air Force to re-examine the deal.

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MELISSA BLOCK, Host:

From NPR News, this is ALL THINGS CONSIDERED.

I'm Melissa Block.

ROBERT SIEGEL, Host:

And I'm Robert Siegel.

The Air Force should reopen the bidding on one of its largest contracts ever. That's the recommendation today from government auditors. They found what they called significant errors in the process that awarded a contract worth tens of billions of dollars to Northrop-Grumman and its European partner Airbus over Boeing. The contract is to build a new fleet of air refueling tankers.

And to discuss this latest twist in the fight to win one of the most lucrative defense contracts is NPR's Pentagon correspondent Tom Bowman.

Tom, was this decision, this recommendation from the Government Accountability Office, a surprise?

TOM BOWMAN: It was a great surprise, Robert. I think most people thought there would be minor problems with the award of the contract but this GAO report was devastating. Again, it said serious mistakes here, that the Air Force inflated the Boeing cost over the life of the contract, misleading in unequal discussions with Boeing, telling Boeing, for example, that it satisfied a key performance goal and later determined Boeing had not met that goal, only partially met it, but without telling Boeing. Also, improperly increased Boeing's engineering cost. So it's really a hard-hitting report and it took everybody by surprise.

SIEGEL: And does the GAO report mean that the contract will now be re-bid?

BOWMAN: Well, it's funny. The GAO says it recommends the Air Force re-bid the contract and make a new decision on who gets it. I talked to a senior defense official today and this official said its unlikely the Air Force would fight this and will likely re-bid it and they'll move quickly to do so.

SIEGEL: Yeah, quickly is an interesting word here. The Air Force says that it very desperately needs this new fleet of air refueling tankers. What happens to the timetable for actually making them if they restart the bidding?

BOWMAN: Well, this official said it will add at least a year to the process now. They had hoped to get the first of these tankers around 2013. And the Pentagon and the Air Force say they desperately need new ones. The average age of the current fleet of a plane is 47 years old. And of course the older they are, the more maintenance cost. They're down for longer periods of time. So they really need these pretty quickly.

SIEGEL: Now, put this GAO report in the context that the other problems facing the Air Force. They've new leadership at the Air Force.

BOWMAN: That's right. Defense Secretary Gates essentially fired the secretary of the Air Force, Michael Wynn, and the chief of staff, General Michael Buzz Moseley over other problems concerning their nuclear weapons arsenal. So the new leadership coming in will clearly be looking at their procurement problems here.

SIEGEL: Okay, Thank you very much, Tom.

BOWMAN: Your welcome, Robert.

SIEGEL: That's NPR's Tom Bowman speaking to us from the Pentagon.

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