Governor Rell Hails GAO Decision Sustaining

Protest of Air Force KC-X Tanker Contract

            Governor M. Jodi Rell today cheered the U.S. Government Accountability Office’s decision to sustain Boeing Co.’s protest of the U.S. Air Force choice of an overseas conglomerate to build the KC-X next-generation aerial refueling tanker.

            The Boeing design would be powered by jet engines from Connecticut-based Pratt & Whitney, part of United Technologies Corp.

            The Air Force announced February 29 that it had selected a consortium of Northrup Grumman and the European Aeronautic Defence & Space Corp. (NG/EADS) to build the KC-X. Boeing appealed to the GAO, saying the decision violated a number of requirements spelled out by the Air Force.

            The GAO recommended the Air Force re-bid the contract. The GAO ruling is not binding on the Air Force but carries considerable weight. The Air Force has 60 days to inform the GAO of its plans.

            “The GAO decision today is right for so many reasons,” Governor Rell said. “As I have repeatedly pointed out to Congress and the GAO, the Air Force failed to adhere to the criteria it outlined for choosing a design for the KC-X. Just yesterday, four other governors joined me in writing the GAO to point our serious flaws in the decision-making process – points that, in its ruling today, the agency determined were significant enough to warrant re-bidding the entire contract.

            “Equally important, this is a decision that has implications for both the national economy and the national defense,” the Governor said. “Certainly, Connecticut will benefit from having the engines for the Boeing aircraft built in our state. But even more important is the need to keep our global lead in aerospace engineering and manufacturing. Just as we argued in pressing for additional submarine construction, the aerospace industry is a national asset we cannot afford to see diminished. Sending the majority of the KC-X work overseas would have far-reaching negative effects.”

            In its announcement, the GAO said it found seven separate reasons for sustaining the Boeing protest. Among the most significant was the Air Force’s admission that it had made a number of errors in calculating the likely life-cycle costs for the competing designs – a key point made in letters Governor Rell and other governors wrote in support of the protest.

            The GAO also said the Air Force had awarded extra value to the NG/EADS design for exceeding requirements on a key performance parameter despite saying in its request for bids there would be no “extra credit” for doing so.

            The review also found that the Air Force had failed to consider that Boeing’s design satisfied more non-mandatory specifications than the NG/EADS aircraft, even though the request for bids said asked each bidder to do so.

            In addition, the GAO said the Air Force conducted unequal discussions with the two companies. The Air Force initially told Boeing it had met the objectives regarding operational utility, but later decided Boeing had only partially met the objectives – without advising Boeing of the new finding. At the same time, the Air Force was having continued discussions with NG/EADS about meeting the same objectives.

            “These and the other findings of the GAO strongly support our contention that the Air Force did not conduct its bid review properly,” Governor Rell said. “We are not seeking favorable treatment for one supplier or another – but we do insist that all suppliers compete on a level playing field. The GAO is absolutely correct in recommending the Air Force re-bid this important project, so that public faith in the contracting process is sustained.”