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The Government Accountability Office (GAO) announced on June 18 that it has sustained the Boeing Company's protest of the Department of the Air Force's award of a contract to Northrop Grumman Systems Corporation for KC-X aerial refueling tankers. Northrup Grumman with EADS (European parent of Airbus) as partner was awarded the record $40 billion contract to supply the tankers in February 2008. Boeing challenged the Air Force's technical and cost evaluations, conduct of discussions, and source selection decision.

“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. We therefore sustained Boeing’s protest,” said Michael R. Golden, the GAO’s managing associate general counsel for procurement law. “We also denied a number of Boeing’s challenges to the award to Northrop Grumman, because we found that the record did not provide us with a basis to conclude that the agency had violated the legal requirements with respect to those challenges.”

The GAO has recommended that the Air Force reopen discussions with the offerors, obtain revised proposals, re-evaluate the revised proposals, and make a new source selection decision, consistent with the GAO’s decision. The agency also made a number of other recommendations including that, if the Air Force believed that the solicitation, as reasonably interpreted, does not adequately state its needs, the Air Force should amend the solicitation prior to conducting further discussions with the offerors; that if Boeing’s proposal is ultimately selected for award, the Air Force should terminate the contract awarded to Northrop Grumman; and that the Air Force reimburse Boeing the costs of filing and pursuing the protest, including reasonable attorneys’ fees.

By statute, the Air Force is given 60 days to inform the GAO of the Air Force’s actions in response to GAO’s recommendations. The GAO decision should not be read to reflect a view as to the merits of the firms’ respective aircraft. Judgments about which offeror will most successfully meet governmental needs are largely reserved for the procuring agencies, subject only to such statutory and regulatory requirements as full and open competition and fairness to potential offerors. The GAO bid protest process examines whether procuring agencies have complied with those requirements.

The 69-page GAO decision was issued under a protective order, because it contains proprietary and source selection sensitive information. The GAO has directed counsel for the parties to promptly identify information that cannot be publicly released so that GAO can expeditiously prepare and release, as soon as possible, a public version of the decision.

Although the Air Force intends to ultimately procure up to 179 KC-X aircraft, the solicitation (No. FA8625-07-R-6470) provided for an initial contract for system development and demonstration of the KC-X aircraft and procurement of up to 80 aircraft. The solicitation provided that award of the contract would be on a “best value” basis, and stated a detailed evaluation scheme that identified technical and cost factors and their relative weights.

The agency received proposals and conducted numerous rounds of negotiations with Boeing and Northrop Grumman. The Air Force selected Northrop Grumman’s proposal for award on February 29, 2008, and Boeing filed its protest with the GAO on March 11, supplementing it numerous times thereafter. In accordance with GAO’s Bid Protest Regulations, GAO obtained a report from the agency and comments on that report from Boeing and Northrop Grumman. The documentary record produced by the Air Force in this protest is voluminous and complex. The GAO also conducted a hearing, at which testimony was received from a number of Air Force witnesses to and explain the record.

Following the hearing, GAO received further comments from the parties, addressing the hearing testimony as well as other aspects of the record. Information about GAO’s bid protest process can be found at http://www.gao.gov/legal/aboutbid.html. A copy of the GAO’s press release can be seen at

The U.S. Government Accountability Office (GAO) is an independent, nonpartisan agency that works for the US Congress. Often called the "congressional watchdog," GAO investigates how the federal government spends taxpayer dollars. The head of GAO, the Comptroller General of the United States, is appointed to a 15-year term by the President from a slate of candidates Congress proposes. Gene L. Dodaro became Acting Comptroller General of the U.S. Government Accountability Office on March 13, 2008, succeeding David M. Walker, who appointed him upon resigning. Mr. Dodaro will serve in this position until the President nominates and the Senate confirms a successor from a list of candidates proposed by the Congress. The GAO’s mission is to support the Congress in meeting its constitutional responsibilities and to help improve the performance and ensure the accountability of the federal government for the benefit of the American people. We provide Congress with timely information that is objective, fact-based, nonpartisan, non-ideological, fair, and balanced. For more about the GAO, visit http://www.gao.gov/about/index.html.