Air Force to decide on tanker contract after GAO ruling

The Wall Street Journal (6/20, A3, Cole, Michaels) reports, "The ruling this week that the Defense Department erred in its biggest-ever trans-Atlantic defense contract could have a ripple effect, emboldening U.S. politicians who want to stop the Pentagon from buying European weapons systems and shaking the Continent's confidence in U.S. defense markets." The Defense Department "has been increasingly willing to buy foreign-made equipment," while "U.S. companies are looking to European and other international markets to remain open, in order to counterbalance an expected slowdown in Defense Department spending."

The Financial Times (6/20, Done, et al.) adds that "EADS has asked European governments not to comment on" the ruling, calling "the process...'tense and critical,'" and saying "that any political interference could further jeopardize EADS and Northrop's chances." Some company officials remained "confident that the Air Force would select the U.S.-European consortium if the competition is reopened." The company also "believes the Air Force will choose a compromise between a second full competition, which could take two years, and ignoring the GAO." However, "experts in the U.S. believe a new competition is the most likely outcome."

Reuters (6/20, Wolf) notes that Northrop Grumman Corp. "said on Thursday it was putting off indefinitely a planned groundbreaking ceremony at a Mobile, Alabama, site where it was set to modify Airbus aircraft into U.S. Air Force tankers." A Northrop spokesman cited "obvious reasons."

The AP (6/20) adds that a multitude of "contractors' potential fortunes sink or rise, depending on whether they get anticipated work from Boeing or Northrop Grumman and...Airbus." The Seattle Times (6/20, Gates), Bloomberg (6/20, Lococo, Ratnam), and the Seattle Post-Intelligencer (6/20, Wallace) also cover the story.

Tanker issues part of larger procurement problems, watchdogs say. The Washington Post (6/20, D1, Hedgpeth, O'Harrow) reports on the front of its Business section that the recent problems affecting the Air Force's tanker contract "is an example of persistent overall problems with the way the Pentagon buys weapons, procurement specialists and government watchdogs say." And, numerous reports indicate that, "as the government cedes more of its work to private companies and reduces the size of the workforce that oversees contracts, such problems are growing."