Says USAF Once Again Failed To Run Fair Bidding Process

To Darleen Druyun, wherever you are now... your name may soon no longer be tied to the most egregious procurement process in the history of the US Air Force's incredibly protracted bid for a new aerial tanker. It seems the latest attempt may just have surpassed your 2003 scandal.

According to the unedited Government Accountability Office report on the USAF's recent KC-X bid, released this week, the Air Force took its level of bungling to new heights in awarding an initial $40 billion contract to a partnership comprised of EADS and Northrop Grumman.

Overall, the GAO said, the Air Force selection process was "undermined by a number of prejudicial errors that call into question the Air Force's decision," reports The Washington Post.

As ANN reported, the Northrop/EADS KC-45A was awarded the KC-X contract February 29, over Boeing's KC-767. Boeing launched a formal protest with the GAO of that decision; last week, the government watchdog group sided with the American planemaker, and recommended the Air Force once again throw open the tanker contract for rebid.

That recommendation is just that, however -- it's not binding. The Air Force may still decide to stay with the KC-45A, based on the Airbus A330-200 commercial airliner. The GAO report indicates the USAF will face days of reckoning if it fails to rebid the contract, though. 

In the 67-page review -- which was released in full Wednesday, one week after a heavily-redacted version was made public -- the GAO took Air Force officials to task for miscalculating maintenance costs, failing to follow their own evaluation process, and failing to adhere to their own self-aggrandizing statements that KC-X was an "incredibly open and transparent" process.

Among its findings is the revelation the Air Force may have held Northrop's hand in dealing with some shortcomings of its bid. In one case, USAF officials told Boeing it had met a set of objectives... but later said it had not, after discussions had already closed. Conversely, the Air Force told Northrop about areas its bid had fallen short on, then gave the company time to alter its proposal.

"It is a fundamental precept of negotiated procurements that discussions, when conducted, must be meaningful, equitable, and not misleading," the GAO said, adding the USAF "treated the firms unequally" when discussing their proposals.

David Berteau, a senior defense analyst at the Center for Strategic and International Studies, called the study "a damning report.

"It is baffling to me: how did so many smart people at high levels at the Pentagon come to the conclusion that the process was so well done and announce a winner, and then we see a GAO report that gives them a black eye in running a smooth, fair procurement process," he added.

Both companies involved took predictable tacks in their statements on the full report Wednesday. Mark McGraw, vice president of Tanker Programs at Boeing, said "Our initial review of the full redacted GAO sustainment further validates Boeing's decision to protest this contract award. It is clear the award was the result of a flawed process."

"The document makes clear that the GAO's issues with the contract do not reflect on the tankers' capabilities. In fact, in several areas key to the selection decision the GAO found no basis to object to the Air Force evaluation," replied Paul Meyer, Northrop Grumman vice president of Air Mobility Systems and KC-45 program manager. "We look forward to a prompt assessment from the Air Force concerning what happens next."

FMI: Read The Full, Unedited, GAO Decision (.pdf)