GAO Sides With Boeing in Tanker Deal
The Government Accountability Office's decision to side with Boeing over a $40 billion contract with rival Northrop Grumman to build new aerial refueling tankers for the Air Force represents an abrupt about-face in the government's dealings with the Chicago-based aerospace company.
The contract to supply the tankers had originally been awarded to Boeing, but was withdrawn in 2004 over a procurement scandal that resulted in Boeing and Air Force officers being sent to prison.
After Boeing snagged a $20 billion contract to lease tankers, the Air Force's former procurement chief, Darleen A. Druyun, admitted that she favored Boeing while negotiating for a job with the company.
Druyun and Boeing's former chief financial officer went to prison, and Boeing agreed with the Justice Department to pay $615 million -- the biggest penalty ever paid by a defense contractor -- to settle allegations of misconduct on the tanker deal and others.
Years later, in 2007, the Air Force's top procurement officer came under fire again
While he awaited appointment by the White House to the No. 2 job in Air Force procurement, a political position, Lt. Col. Charles Riechers went to work for Commonwealth Research Institute, a nonprofit defense contractor in Johnstown, Pa., for two months and was paid $26,800.
About two weeks after an Oct. 1 Post story about the arrangement ran, Riechers committed suicide.
The controversies allowed Northrop Grumman and Airbus's parent company, European Aeronautic Defence and Space (EADS), to reap the rewards when in March, the Pentagon passed over Boeing's proposal.
One defense consultant, Loren B. Thompson of the Arlington-based think tank, the Lexington Institute, called the decision to give Northrop Grumman the contract a "stunning upset," adding that "Boeing has been doing this for half a century, and it was simply assumed they knew what the Air Force wanted better than other companies."
And Sue C. Payton, assistant secretary of the Air Force for acquisition, said officials from the GAO and the Defense Department inspector general's office helped ensure the selection process was fair and open. "We've got it nailed," she said of the process.
But accountability investigators apparently felt differently, The Post's Dana Hedgpeth reports. While the full 69-page report has yet to be released (auditors are redacting a copy to remove trade secret information), government auditors cited "a number of significant errors" had been made in the evaluations of the heated competition.
Among the findings was that the Air Force failed to evaluate several key components of the bids, including accurate numbers of how much each bid would cost, and engaged in "misleading and unequal discussions with Boeing," by telling the Chicago-based company that it had fully satisfied a key performance objective when it reality it was only partially achieved.
Boeing, which built the Air Force's existing tankers, filed a protest with the agency on March 11 after it lost the deal.
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