GAO urges Air Force to again reopen helicopter contract
Winning bidder argues that delays caused by starting over again would hurt soldiers fighting overseas; other companies applaud GAO decision.
The Air Force's $15 billion program to replace its aging fleet of search and rescue helicopters has been thrown into flux -- again -- after the Government Accountability Office concluded that the service should allow two losing bidders to revise their proposals.
In a move that will almost certainly delay the signing of a final contract, GAO recently upheld the latest round of contract protests by Lockheed Martin Corp. and Sikorsky Aircraft Corp. Although the Aug. 30 decision is nonbinding, agencies ordinarily comply with GAO rulings.
The Air Force said it is reviewing the decision and is developing a "plan of action." In a statement, Sue Payton, Air Force assistant secretary of acquisition, said, "We are committed to providing an urgently needed capability, but we are equally dedicated to properly conducting our evaluations of offerors' proposals."
The helicopter contract is one of the Air Force's top priorities, second only to its plan to procure new aerial refueling tankers.
A source familiar with the helicopter contract negotiations, who asked to remain anonymous, expected that within the next few weeks, the Air Force will comply with GAO's ruling and allow the bidders to fully update their proposals. Due in part to the recent delays, the new proposals will place a greater emphasis on speed, schedule and "kicking [the helicopters] out the door," the source said.
The Air Force wants to have its first squadron of new CSAR-X aircraft ready by September 2012. The source does not expect a contract to be signed until the beginning or middle of 2008.
The Air Force's contract proposal to build 141 new CSAR-X helicopters has been plagued by controversy and missteps for nearly a year. The unusual series of events began last November when, after a fierce competition, Boeing Co. was awarded the contract for the HH-47, a modified Army Chinook.
Sikorsky and Lockheed, competing with their HH-92 and US 101 helicopters, respectively, immediately filed protests, arguing that their bids had been evaluated incorrectly. The GAO upheld the protests, finding that the Air Force had miscalculated the operations and maintenance costs over the lifespan of the plane.
The congressional watchdog recommended that the Air Force re-open the competition and issue a new request for proposals clarifying the overall life-cycle requirements. The service complied, but only narrowly. It released an amended solicitation, asking for additional information on the costs to operate and support the helicopter. But the Air Force refused to allow the bidders to submit cost and pricing changes to their original proposals.
The two firms filed a second set of protests in June, suggesting that the Air Force had not complied with GAO's ruling and that they should be allowed to revise their entire bids. GAO agreed in its latest decision, arguing that the changes to the Air Force's evaluation methodology would alter how the companies prepared their overall proposal.
"We recognize that this represents a significant change in the Air Force's intended conduct of this procurement . . . and that the result could delay the acquisition," GAO stated in the Aug. 30 ruling.
If an evaluation of the revised proposals finds that Boeing's bid no longer represents the best value to the government, "the agency should terminate its contract," GAO said.
The protesters expressed their support for GAO's decision and said the ball was now in the Air Force's court.
"We hope the Air Force will take corrective action to ensure all competing aircraft are fully and fairly evaluated to provide the best solution for the war fighter and the taxpayer," said Sikorsky spokesman Paul Jackson.
Lockheed spokesman Michael Drake added that the contractor was prepared to "support a schedule that will deliver this urgently needed capability to the warfighter as quickly as possible."
Boeing, meanwhile, said it was "extremely disappointed" with the decision and argued that the latest holdup will hurt soldiers fighting overseas. "We believe that the Air Force acted in good faith in response to the original GAO recommendation on the first protests, and this decision will once again delay putting this lifesaving equipment in the hands of our warfighters," Boeing said in a statement.
Company spokesman Joseph LaMarca Jr. said Boeing is "waiting on the Air Force to decide what the next step might be in this process, and it would be inappropriate for us to speculate on what that might be."
While internal e-mails as recently as March indicated that the Air Force "would like to stay" with its original selection of Boeing, the HH-47 has far from unanimous support within the Air Force and on Capitol Hill.
Air Force Chief of Staff Gen. Michael Moseley raised some eyebrows in February when he told a House panel that the HH-47 would not have been his first choice.
House and Senate leaders also have weighed in with concerns about the criteria used to select the HH-47.
"Two protests upheld by GAO is very unusual," said Sen. Joseph Lieberman, I-Conn., chairman of the Senate Armed Services Subcommittee on AirLand Forces. "This should be a strong signal that a serious re-examination of the entire procurement process is needed."