Northrop vs. Boeing

The Government Accountability Office is due out next Thursday with its review of the Air Force awarding that huge contract for refueling tanker aircraft to Airbus-Northrop instead of highly favored Boeing. There's no way of knowing whether the GAO will find problems with the way the selection was determined - or at least enough problems for Boeing to get back in the game. GAO sustains only about one in every four protests. As reported yesterday, the Air Force discovered errors in its calculation of the operating costs of the competing aircraft, but not necessarily enough to make any difference in the final outcome. If that's the case, Boeing CEO Jim McNerny might need to pull an Al Gore - that is, deciding whether further protests are in the company's best interest. Seattle Times reporter Dominic Gates writes that "only a strong GAO ruling for Boeing gets McNerney off the hook. One with something for both sides, finding some errors in the procurement process but not enough to demand a redo, would still force McNerney to fight if he wants anything."

If Boeing prevails in its first protest of a U.S. government contract in 30 years, the Air Force could redo the contest. If not, McNerney must decide whether to push Boeing's expensive and aggressive lobbying campaign further into the political realm during a presidential-election season — or whether to reluctantly accept the result and call off the political-attack dogs. The stakes for Boeing go beyond the lucrative defense contract. A victorious Airbus would set up an assembly plant in Alabama to build not only the tankers but also A330 commercial wide-body jets. For the past three months, Boeing has spent millions of dollars on full-page ads in newspapers and trade magazines arguing the 767 should have won.

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Boeing's lawyers have requested internal Air Force memos and e-mails and used them to file seven supplementary amendments supporting the company's claim that the contest was skewed to favor Northrop/EADS. But only a small group of lawyers inside Boeing is allowed to see all that material. A GAO order protecting both companies' proprietary data means that not even McNerney or his defense chief, Jim Albaugh, may see the amended protest documents, except in a heavily redacted form.