Air Force Exaggerated Boeing Costs, GAO Finds
In February, the Air Force based much of its decision to give defense contractor Northrop Grumman a multi-billion contract to build tankers because it was the low bidder.
But it turns out that Northrop Grumman's "low bid" was only .03 percent off the price of its nearest competitor, Chicago-based aerospace company Boeing, according to a Government Accountability Office report released today. And Boeing's costs were exaggerated, auditors said.
The GAO decided last week to side with Boeing over a $40 billion contract with rival Northrop Grumman to build new aerial refueling tankers for the Air Force.
The watchdog agency released its 67-page report this afternoon, explaining that while the Air Force said it choose Northrop's proposal because it was the "best value" for the government, the decision "was undermined by a number of prejudicial errors that call into question the Air Force's decision that Northrop Grumman's proposal was technically acceptable," The Post's Dana Hedgpeth reports.
One of the key components of the protest was the idea that the Air Force miscalculated Northrop Grumman as the low bidder for the contract: Government officials calculated Boeing's estimated costs at $108.044 billion and Northrop Grumman's costs at $108.010 billion -- a difference of $34 million, "which reflected Boeing's more complex design, development and integration activities," according to the report.
But audit investigators concluded that the Air Force incorrectly added on costs to Boeing's proposal, in which the government said it did not accept the company's "estimating methodology."
Boeing, the biggest U.S. manufacturer of airplanes, had originally been awarded the contract, but the bid was withdrawn in 2004 over a procurement scandal that resulted in Boeing and Air Force officers being sent to prison.
After Boeing lost the contract to Northrop Grumman in February, it filed a protest, saying it had been treated unfairly in the acquisition process. The GAO said it found 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."
Top Air Force acquisition officials were expected to meet with Defense Secretary Robert M. Gates today to discuss how the service will deal with the GAO's recommendations.
Please email us to report offensive comments.
Posted by: RD | June 26, 2008 11:25 AM
Posted by: Frank | June 27, 2008 7:26 AM