06.25.08

Cantwell: Full GAO Report Details How Errors Widen Gap on Tanker Costs and Performance

Had the Air Force Followed Its Own Rules, Boeing Could Have Won Tanker Contract

WASHINGTON, DC – Today, U.S. Senator Maria Cantwell (D-WA) issued the following statement on the release of the full redacted GAO decision on the Boeing tanker bid protest that provides new details on the errors including: a flawed cost simulation model; a flawed military-construction costs formula; and, ignored Boeing’s ability to meet tanker performance requirements.

"This full report adds more fuel to the fire. It reaffirms that Northrop/EADS offered an inferior product. The Air Force should reopen and rebid the contract.


"Last week we were given some insights into the GAO’s decision, and today the full scope of this flawed decision was revealed. The GAO determined there were significant and prejudicial errors made by the Air Force in calculating lifecycle costs, the military construction costs, fuel costs, and non-engineering costs; costs that eventually would have landed in the laps of millions of American taxpayers. They also failed to follow their own criteria in evaluating the tankers’ capabilities.Nine separate reasons were given- any one of which the GAO says was sufficient to sustain Boeing’s protest.


"Congress will hold the Air Force and Defense Department accountable and should investigate the way in which our federal agencies award contracts to ensure that taxpayer costs and national security issues are paramount in all procurement decisions. In addition, Secretary Gates and the Air Force need to be fully informed about the national security implications of the decision and to date, they have not shown that they are."


The Air Force’s cost simulation model to estimate Boeing’s non-recurring engineering costs was flawed and resulted in an unreasonably inflated cost estimate for Boeing. The GAO also showed that the Air Force made no determination that Boeing’s estimate for non-recurring engineering costs was unrealistic.

The GAO concluded that the Air Force’s evaluation of military construction costs was "flawed." In today’s report, the GAO stated that, "the Air Force did not evaluate military construction costs related to the offerors’ proposed aircraft, and no further evaluation of the additional military construction costs for each aircraft was performed after proposals were received." Furthermore, the Air Force unreasonably and arbitrarily extrapolated military construction costs and ignored the military construction cost estimates provided by Northrop/EADS and Boeing. Both companies used Fairchild Air Force Base, which is currently home to an aerial refueling wing, to calculate cost estimates, yet the Air Force did not use these estimates.

Finally, the GAO found that the Air Force ignored the fact that Boeing’s proposal was evaluated as satisfying significantly more of the requirements than Northrop Grumman/EADS.

# # #