Boeing Gets Another Chance on Tanker Pact

Boeing (BA Quote) will get a second chance to bid on a $35 billion contract with the U.S. Air Force to provide a next-generation refueling tanker.

The Government Accountability Office found Wednesday that, in awarding a contract for the program to Northrop Grumman(NOC Quote) and partner Airbus, the Air Force "made a number of significant errors that could have affected the outcome of what was a close competition."

The agency sustained a protest by Boeing, although it also denied a number of Boeing's challenges. While the ruling is not binding, it means the Air Force will likely reconsider its decision.

We appreciate the professionalism and diligence the GAO showed in its review of the KC-X acquisition process," said Mark McGraw, Boeing's vice president for Tanker Programs, in a prepared statement. "We look forward to working with the Air Force on next steps in this critical procurement for our war fighters."

Meanwhile, Northrop Grumman spokesman Randy Belote said his company continues to believe it had "the most modern and capable tanker for our men and women in uniform. We will review the GAO findings before commenting further."

The GAO recommended that the Air Force obtain revised proposals and re-evaluate them.