Congressional investigators yesterday recommended the Air Force hold a new competition for part of a Boeing contract worth as much as $4 billion.
Congressional investigators yesterday recommended the Air Force hold a new competition for part of a Boeing contract worth as much as $4 billion to upgrade avionics on C-130 transports because of conflict of interest in the original award.
Last October, Lockheed Martin, L-3 Communications and BAE Systems protested the 2001 award after former Pentagon official Darleen Druyun told prosecutors she improperly favored Boeing in a different contract. The Government Accountability Office (GAO) said it upheld the protest.
The decision is the second successful protest of a Boeing award in the past week.
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The GAO, Congress’ auditor, last week recommended part of Boeing’s contract for a small-diameter bomb be reopened due to Druyun’s influence.
Pentagon officials said earlier this month that Druyun, who went to work for Boeing in 2003, may have improperly influenced eight contracts.
Druyun “certainly is costing the American taxpayer an awful lot of money,” said Paul Nisbet, analyst at Newport, R.I.-based JSA Research. “I can’t imagine that L-3 and Lockheed would compete very well with Boeing on this. Boeing has been doing design. They know intimately what the problems are and would have the upper hand in any kind of recompete.”
Nisbet rates shares of Boeing and Lockheed “buy” and doesn’t own any.
Boeing’s work on the C-130 contract is on schedule, and the company will await the Air Force’s decision on the GAO’s recommendations, Boeing spokesman Paul Guse said in an e-mailed statement.
“In the meantime, Boeing will continue to support the Air Force’s requirement to field a vastly more capable and modernized C- 130 fleet under the current development contract,” Guse said.
“Boeing has received very good performance ratings from the Air Force.”
The system is scheduled to enter flight test on time early next year, he said.
The Air Force should at a minimum hold a new competition for the contract to install the C-130 cockpit equipment, the GAO said, without providing the value of that work. The office also recommended the Air Force review how much it would cost to reopen the entire contract to competition.
If the Air Force finds the cost of a new competition for the whole program is too expensive because of work already done, the GAO recommended each of the protesters be reimbursed their expenses from competing. The companies should also be reimbursed the reasonable costs of filing their protests.
“We are pleased with the GAO’s determination to sustain our protest,” Lockheed spokesman Jeff Adams said in an e-mailed statement.
“We now need to review the decision and the recommended remedy. Until we have completed that review, it would be inappropriate to comment further.”
The Air Force will evaluate the recommendation and “seek clarification on the language,” said spokesman Douglas Karas. “We will have to discuss with them what they mean by ‘installation.’ “
The Air Force to date has obligated $970 million for development work by Boeing, Karas said.
While Lockheed has had success with its protest of Boeing awards, it now faces an investigation into its own hiring of a former Air Force official, the Air Force said yesterday.
That inquiry grew out of Lockheed’s protest of the Boeing bomb award, which was sustained by the GAO last week.