Sponsored Link:

Boeing’s Air Force Petition Sustained, Back in Running for $35 Billion Contract

By Mike Caggeso
Associate Editor

The Government Accountability Office backed The Boeing Co.’s (BA) petition that the U.S. Air Force altered the auction for a $35 billion aerial-tanker contract - a bid that went to rivals Northrop Grumman Corp. (NOC), and in turn, helped push Boeing’s stock down more than 11%.

Boeing filed the complaint in early March, claiming that the Air Force misled the company and modified its specifications to accommodate models made by Northrop and Airbus S.A.S.

The GAO agreed.

“The Air Force conducted misleading and unequal discussions with Boeing by informing Boeing that it had fully satisfied a key performance parameter objective relating to operational utility, but later determined that Boeing had only partially met this objective,” according to the GAO, as reported by MarketWatch.

Story continues below…

Sign up right now, and we’ll send you an important new report for free: “The Three Best Investments in Asia.”




The ruling is critical because the contract in question could be decades-long and grow to $100 billion in value. Obviously, Boeing is thrilled with the GAO’s decision.

“We welcome and support today’s ruling by the GAO fully supporting the grounds of our protest,” Mark McGraw, vice president of Boeing’s Tanker Programs, said in a statement. “We appreciate the professionalism and diligence the GAO showed in its review of the KC-X acquisition process. We look forward to working with the Air Force on next steps in this critical procurement for our warfighters.”

As for what’s next, that answer lies somewhere between nothing and everything because GAO rulings are only advisory. The Air Force isn’t required to follow the recommendation to change its flight plan. But if it chooses not to, it would have to explain to Congress why, Bloomberg reported.

The Air Force has 60 days to respond to the GAO’s ruling, and even if accepted, Boeing is far from being a shoe-in for the contract.

“To be successful in any potential re-competition, Boeing must demonstrate that it is either technically superior at a reasonable cost/price-premium, or that it is significantly lowest-evaluated-cost,” Jim McAleese of McAleese & Associates, a government contracting and national-security law firm unaffiliated with the protest, told Bloomberg.

News and Related Story Links:

June 18th, 2008

Peter Schiff: Why this Money Should Replace the U.S. Dollar

There’s a new universal currency, backed by solid gold. You can use it to make online purchases anywhere in the world. Converting some money to the new currency takes just 5 minutes. You can start with as little as $10… or as much as $10 million.

According to CNBC star analyst and Euro Pacific Capital President Peter Schiff, this money could double the value of your savings – automatically – in just 6-9 months.

For Schiff’s full analysis and recommendations, please go here.




This entry was posted on Wednesday, June 18th, 2008 at 10:16 pm and is filed under Boeing, Mike Caggeso, Top News. You can follow any responses to this entry through the RSS 2.0 feed. Due to the amount of comments we receive Money Morning will not be able to respond to all questions. If you have not already registered to leave a comment, once doing so you will receive Money Morning's Daily Email. Responses are currently closed, but you can trackback from your own site.