The Government Accountability Office (GAO) on Tuesday denied Boeing’s [BA] protest of the Air Force’s Long Range Strike Bomber (LRSB) award to Northrop Grumman [NOC].
Ralph White, managing associate general counsel for procurement law at GAO, said in a statement that GAO found no basis to sustain or uphold the protest after reviewing Boeing’s challenges to the selection decision. White said in denying Boeing’s protest, GAO concluded that the technical evaluation, and the evaluation of costs, was reasonable, consistent with the terms of the solicitation and in accordance with procurement laws and regulations.
GAO’s decision is the only information it will reveal as the details of Boeing’s challenges, and GAO’s decision resolving them, are classified and covered by the terms of a protective order issued by GAO for the protest. GAO’s decision must also undergo a security classification review by the Air Force and is not available for public release, the office said.
Air Force spokesman Maj. Robert Leese said the service’s stop work order would be lifted Tuesday and that Northrop Grumman would immediately resume performance of the LRSB contract. If dissatisfied with GAO’s decision, Boeing’s next step would be to pursue the case in the U.S. Court of Federal Claims.
Asked if Boeing was considering performing legal action following Tuesday’s decision, Boeing spokesman Todd Blecher said in a statement that the company will carefully review the GAO’s decision and decide upon its next steps with regard to the protest in the coming days. Boeing, he said, continues to believe that its offering represents the best solution for the Air Force, and the nation, and believes the government’s selection process was fundamentally and irreparably flawed.
The Air Force last year awarded Northrop Grumman, instead of the Boeing-Lockheed Martin [LMT] team, a cost-reimbursement contract for engineering and manufacturing development (EMD) and early production of LRSB. GAO said Boeing argued the Air Force’s evaluation was fundamentally flawed with respect to the assessment of the offeror’s proposed costs and the technical evaluation of Northrop Grumman’s proposal.
The Air Force requested nearly $1.4 billion for LRSB in its fiscal year 2017 budget request released last week. The service expects to request nearly $12 billion for LRSB through FY ’21, but this could turn out to be substantially less than the Air Force anticipated in its FY ’16 request, in which the service expected to request nearly $14 billion for fiscal years 2016 through 2020. Including the $736 million enacted for FY ’16, the Air Force expects to spend nearly $10 billion on LRSB through FY ’20.
GAO said the current contract for LRSB is comprised of two parts: the EMD phase and the subsequent options for the production of the first 21 aircraft. GAO said the EMD phase has an estimated value of $21 billion in 2010 dollars, as previously announced by the Air Force. The Air Force has not provided a public figure for the production cost of the first 21 planes and that the total cost of the contract is classified. GAO said the Air Force has explained that the fixed price production award supports the average unit cost of $511 million per aircraft, stated in 2010 dollars with a production purchase of 100 aircraft. The service expects to procure between 80 and 100 aircraft.
Analyst Byron Callan of Capital Alpha Partners (CAP) said Tuesday in a note to investors that the GAO’s decision was not surprising and that CAP had previously assigned an 85 percent probability of Northrop Grumman retaining the program. Pentagon spokesman Peter Cook said Tuesday that DoD was confident in the Air Force’s original decision and it thinks GAO’s decision reflects that confidence.