GAO sides with Boeing

In a surprise move, the Government Accountability Office (GAO) upheld a protest filed by Boeing of the Air Force’s decision to award a $40 billion contract for its new midair refueling tankers to rivals Northrop Grumman and EADS North America.

{mosads}The GAO decision all but ensures that lawmakers who support Boeing will pressure the Air Force to reopen the competition. The Air Force is not bound by law to follow the GAO’s recommendations, but it is customary that the Pentagon heeds them.

The GAO said it had determined the Air Force had made “a number of significant errors” that led to its decision to award the contract to Northrop Grumman.

“We therefore sustained Boeing’s protest,” the GAO said in a statement.

It also denied some of Boeing’s specfic challenges to the award “because we found that the record did not provide us with a basis to conclude that the agency had violated the legal requirements with respect to those challenges.”

Boeing's stock had gained 1.1 percent in mid-afternoon trading, while Northrop's had fallen 1.36 percent, according to the website of the New York Stock Exchange.

Boeing has engaged in a lobbying and public relations effort to overturn the Air Force decision since it was announced earlier this year. Its supporters have emphasized that the contract should have been awarded to an American company.

EADS is the parent company of Boeing’s commercial aircraft rival, Airbus.