labels: Boeing, News reports, Military aircraft, Airbus
Congressional review faults USAF decision to award tanker contract to EADS/Northrop news
19 June 2008

Washington/Paris: The EADS/Northrop combine took a heavy blow yesterday when the Government Accountability Office (GAO), a review arm of the US Congress, urged the US Air Force (USAF) to reopen the $35bn (18bn) refuelling tanker deal which it had awarded to the combine.

The GAO agreed with Boeing, the losing contender, that there were flaws in the process that resulted in the EADS/Northrop Grumman aircraft being selected in preference to the one offered by Boeing.

The GAO report stressed that its decision focused on the errors in the selection process and was not an assessment of the merits of the two aircraft competing to replace the USAF's fleet of ageing tankers. According to GAO officials, the USAF made "significant errors" that could have affected the outcome of a very close competition, including flawed cost assessments.

Though the GAO ruling is not legally binding, the USAF has committed itself to following any recommendation made by it. It said yesterday that it was reviewing the decision. It has 60 days to respond to the GAO findings.

The USAF tanker contract is likely to be one of the biggest contracts in Pentagon history, potentially worth $100 billion with follow-on orders. The current $35 billion deal was to build 179 midair refuellers over the next 15 years which would have replaced the USAF's current fleet of Boeing KC-135 tankers.

The fleet, on an average, is 47 years old.

Responding the GAO findings, Sue Payton, a top USAF acquisitions official, said the air force would "do everything we can to rapidly move forward so America receives this urgently needed capability".

According to industry experts, the outcome would now likely be decided by the next administration.

Meanwhile, the ruling is likely to cause severe heartburn in Europe, where the EADS victory had been cheered as a breakthrough into the world's richest arms market.

On the civil aviation side, Boeing and Airbus are already entangled in World Trade Organization cases, accusing each other of unfairly using government subsidies.

Agencies have quoted a French government official as saying: "We need a clear view on the reasons why the GAO took this decision."

Louis Gallois, EADS chief executive, said: "Though we are disappointed, it is important to recognise that the GAO's announcement is an evaluation of the selection process and not the merits of the aircraft."

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Congressional review faults USAF decision to award tanker contract to EADS/Northrop