WASHINGTON — Congressional investigators have upheld Boeing's protest of a $35 billion Air Force tanker contract awarded to Northrop Grumman Corp. and Airbus parent European Aeronautic Defence and Space Co. and recommended that the service hold a new competition.
The Government Accountability Office said Wednesday that it found "a number of significant errors that could have affected the outcome of what was a close competition between Boeing and Northrop Grumman."
The Air Force had no immediate reaction to the GAO findings, saying only that it is aware of the report and will review it.
Boeing said it looks forward to working with the Air Force on the next steps in this "critical procurement for our warfighters."
Northrop said that it continues to think its plane is the service's best option.
While the GAO decision is not binding, it puts tremendous pressure on the Air Force to reopen the contract and could pave the way for Boeing to capture part or all of the award. It also gives ammunition to Boeing supporters in Congress who have been seeking to block funding for the deal or force a new competition.
The contract has sparked fierce backlash among lawmakers from Washington, Kansas and other states that stand to gain jobs if Boeing succeeds in landing the contract.
"Boeing and the American people are the big winners in this decision," said Sen. Maria Cantwell, D-Wash. "The Air Force will have no choice but to rebid this project."
House Armed Services Committee Chairman Ike Skelton, D-Mo., agreed. "The GAO did its work, and the Air Force is going to have to go back and do its work more thoroughly."
By statute, the Air Force has 60 days to inform the GAO of how it will respond to the recommendations. Sen. Pat Roberts, R-Kan., called on the Air Force to rebid the contract and said he would introduce legislation requiring a new competition if the service does not reopen the process.
Boeing estimates the tanker contract would support 44,000 new and existing jobs with more than 300 U.S. suppliers. The company would perform much of the work in Everett, Wash., and Wichita, Kan.
For its part, Northrop said its tanker would support four new factories and 48,000 jobs with 230 U.S. suppliers, including more than 1,500 new positions in Mobile, Ala., where the tanker would be assembled.
Sen. Richard Shelby, R-Ala., said it is "very disturbing" that the Air Force "will likely have to go back to square one on the warfighter's No. 1 priority."
The tanker contract has touched off a heated debate over the military's use of foreign contractors because the Northrop tanker would be based on an Airbus plane largely built in Europe. Backed by union officials representing Boeing workers and "Buy American" proponents, Boeing supporters on Capitol Hill have painted the competition as a fight between an American company and its European rival.
Although the GAO denied some parts of the Boeing protest, it also offered a lengthy rationale for why the contract should be re-competed. Among its conclusions was that the Air Force awarded the Northrop team improper extra credit for offering a larger plane that could carry more fuel, cargo and troops. It also found that the Boeing tanker would be cheaper to operate over its lifespan even though the Air Force initially said the Northrop tanker offered cost advantages.
Sen. Patty Murray, D-Wash., stressed that Congress needs to examine more than just the narrow technical issues raised by the GAO review, including the role of subsidies and American jobs in defense contracts.
The contract for 179 aerial refueling tankers is the first of three deals worth up to $100 billion to replace the Air Force's entire tanker fleet over the next 30 years.
Boeing's stock rose 27 cents, or 0.4 percent, to close at $74.65 a share Wednesday on the New York Stock Exchange. Northrop Grumman's shares fell $1.08, or 1.5 percent, to close at $70.01, also on the NYSE.