Contract To Be Re-Awarded In the Fall

The US Air Force released draft requests for bids Monday to three companies battling to win a disputed $15 billion helicopter contract originally awarded to Boeing Co.

The USAF revised its bid, after receiving a non-binding Government Accountability Office recommendation February 26 to re-evaluate operation and support costs sections for a contract to replace 141 Sikorsky helicopters.

As ANN reported, the GAO recommended the Air Force reopen bidding on the deal -- which was awarded to Boeing in November 2006 -- in February, following protests from rival bidders Lockheed Martin and Sikorsky. On March 22, Air Force Secretary Michael W. Wynne told a Senate committee the USAF would not reopen bidding.

Wynne did agree to hear further arguments from both parties, however, and abide by GAO recommendations on those protests.

Ever the government watchdog, the GAO backed protests from Lockheed Martin Corp. and United Technologies Corp. when they originally lost out to Boeing.

The agency agreed the USAF's evaluation of the bids was "inconsistent" with what had been asked for, according to the Associated Press. The GAO tossed out other protests, however, due to lack of supporting evidence.

For its part, Boeing -- which had offered a search-and-rescue variant of its HH-47 Chinook twin rotor helo for the CSAR-X deal -- said it would not protest or appeal the Air Force decision to reopen bidding... and at least one analyst believes things will still work out for the Chicago-based defense contractor in the end.

"This is positive for Boeing," said Cowen & Co. analyst Cai Von Rumohr. "Any justification to limit protest grounds to one issue makes it easier for the service. The GAO legitimized the rest of the decision by throwing out the other grounds." (Bloomberg notes Cowen & Co. holds shares in Boeing, and United Technologies.)

Sikorsky has proposed its HH-92 Super Hawk for the CSAR-X role; Lockheed is pitching a variant of the three-engined US101 helicopter.

The contract will be awarded this fall, according to the USAF, and Boeing, Lockheed Martin and UTX are expected to submit revised bids in early June.

FMI: www.af.mil, www.gao.gov