Federal court deals blow to Boeing

The U.S. Court of Federal Claims has rejected the Air Force’s $1.1 billion contract with Boeing to maintain Eisenhower-era refueling tankers. 

The rare intervention by a court into a military contract is a victory for Alabama Aircraft Industries, which filed a suit in June challenging the Air Force’s selection of Boeing. The Alabama company received support from the state’s senators.

{mosads}The court’s decision deals a blow to Boeing, particularly given the fact that Defense Secretary Robert Gates decided last month to postpone a bitter competition over a contract to replace the old tankers.

Boeing was competing against the team of Northrop Grumman and EADS North America for that contract, but a charged political atmosphere prompted Gates to punt a decision to the next administration.

Gates’s decision to push the selection to a new administration means that much more attention and money will have to go into the older tankers, the KC-135s, to keep them flying until the Air Force receives new aircraft. The contract to maintain the decades-old planes, as a result, is quite valuable for Boeing.

The ruling means the Air Force can’t proceed with its contract with Boeing, and requires the service to re-solicit proposals for the maintenance contract.

The court’s decision also comes as a sobering blow for the Air Force, which this year has not only been dealing with the tanker controversy but also with the ousting of its chief of staff and top civilian leader.

The Air Force has been struggling to award contracts not only for the new tanker and the tanker’s maintenance contract, but for a new rescue helicopter. Every major multibillion-dollar Air Force contract has been disputed during the past year.

“We could not be more pleased that the court has given this matter a thorough and fair hearing, as we have requested from the beginning,” said Ron Aramini, the president and CEO of Alabama Aircraft, in a statement. “The deficiencies in the award obviously have been recognized and finally addressed. We look forward to working with the United States Air Force and participating in the new KC-135 competition."

The dispute between Boeing and Alabama Aircraft over the maintenance contract has already involved two protests filed by Alabama Aircraft with the Government Accountability Office. The first protest was sustained, but the second wasn’t. That is when the company took its grievances to federal court.

The stakes are high for Alabama Aircraft. The company says it stands to lose up to 900 jobs without the $1.1 billion contract, which could completely push it out of the maintenance work for the workhorse tankers, which will fly for several more years until the Air Force is able to replace them with the new KC-45 tankers.

Alabama Aircraft has the backing of the Alabama delegation. Sens. Richard Shelby (R), a defense appropriator, and Jeff Sessions (R), a defense authorizer, have pressed the Air Force to follow due process.

Boeing spokesman Forrest Gossett said that the company is still reviewing the court’s ruling. "It should be noted that the KC-135 depot maintenance contract was upheld by the GAO. We continue to believe that the Air Force correctly chose Boeing for this vital sustainment work," he said.

The Air Force released the following statement:

“The Air Force has stopped work on the new Boeing KC-135 Programmed Depot Maintenance contract while it reviews the Court of Federal Claims' decision.  The Air Force is committed to supporting the warfighter, while providing the best value for the taxpayer, and will take appropriate action consistent with the court's decision.”

This story was updated at 6:05 p.m.