GAO To Rule On Boeing Protest By Friday

We're approaching the final days -- and possibly hours -- before the Government Accountability Office will rule on a protest filed by Boeing, contesting the February 29 awarding of a lucrative US Air Force tanker contract to a team comprised of Northrop Grumman and EADS. A decision on that protest could come at any time... and that means the competitors are getting their last licks in, while they still can.

Late Tuesday, Northrop stated if the GAO rejects the protest filed against the Air Force selection of the Northrop Grumman KC-45A aerial refueling tanker, there should be no further delay in the program moving forward.

"We have to keep in mind that the Air Force was ready as early as 2001 to begin replacing the aging KC-135 tanker fleet. The failed tanker lease agreement, coupled with the improper actions of our competitor, put the brakes on the tanker replacement effort," said Randy Belote, Northrop Grumman vice president of corporate & international communications. "If we're given the 'all clear,' it is critical that we get to work."

That comes as Air Mobility Command chief, General Arthur Lichte, told an industry publication that he wants to accelerate purchases of the new KC-45A tanker. He also expressed a desire to get funding approved for the fiscal 2010 budget request now being put together at the Pentagon, with the goal of boosting KC-45A production from 15 per year to 26 per year.

A faster infusion of the new aircraft into the fleet would allow faster retirement of the fleet's current, geriatric KC-135s; "otherwise, some KC-135s will still be flying in 2040," Northrop notes.

"Forcing these 50-year-old KC-135s to fly even longer increases the chance of structural and system failures, putting the lives of our men and women at greater unnecessary risk," Belote added.

Having already been selected once for the KC-X contract, Northrop has the luxury of looking ahead... while Boeing, in an attempt to garner support for its KC-767 entrant, has been forced to look back, reviewing the Air Force's decision criteria with fine-toothed combs.

Those reviews have apparently borne fruit. According to a recent report by CNBC, the Air Force conceded its math was flawed in initially determining the KC-767 would cost more to operate over its expected lifespan than the KC-45A. The USAF's initial determination was heavily promoted by Northrop... but alas, following a review by Boeing, the service conceded it got its own math wrong. In five different places, no less.

Instead of costing as much as $34 million more to maintain over its service life than the KC-45A, as the Air Force originally said... it turns out the KC-767 will cost slightly less. Combined with the KC-767's lower initial cost that its larger competitor, that could be a significant swing in Boeing's favor.

Predictably, Northrop downplayed the revelations. "The 25 year most probable life cycle cost (MPLCC) was a dead heat: $108.010B for the KC-45 versus $108.044B for the KC-767, a difference of $34m or 3/100 of a percent," Northrop told CNBC. "The lower development and acquisition costs of the KC-45 were balanced out by the slightly lower operating costs of the less capable KC-767.

"Perfection, while an admirable goal, is rarely achieved in human affairs and particularly not in something as complex as the KC-X evaluation," Northrop added, somewhat tongue-in-cheek.

In any case, that GAO ruling can't come soon enough... although if Boeing wins out, the GAO will recommend the Air Force send KC-X out for bid yet again, and we get to do this all over again. Oy.

FMI: www.northropgrumman.com/kc45, www.globaltanker.com