What options does losing tanker bidder have?

By @ibtimes on

The Pentagon will announce later Thursday whether Boeing Co Co or Airbus parent EADS has won a contract worth up to $35 billion to build 179 new refueling planes for the U.S. Air Force.

The long-awaited announcement, due at 5:10 p.m. ET, marks a pivotal moment in a procurement epic that began days after the September 11, 2001, hijacking attacks, but the contract could well be tied up in a legal protest for some time.

Following are some questions and answers on a possible protest:

TIMELINE FOR ACTION

Question: What happens after the contract award is announced?

U.S. Air Force officials will meet with the winning company within a few days to go over details. They will debrief the losing company next week, possibly Wednesday, explaining the rationale for their decision.

After that briefing, officials will meet with U.S. lawmakers, but plan to provide very limited explanations for their decisions, according to congressional aides.

The losing company has ten days after the contract is awarded to file a protest with the Government Accountability Office, the investigative arm of Congress that also rules on federal contract disputes, or five days after it receives a debrief from the government, whichever comes later.

The government is required to issue a stop work order once a protest is filed, unless it can demonstrate urgent, compelling circumstances, or determines that continuing work on the contract is in the country's best interest.

The winning company can continue work on the program, even if a stop work order is issued, but might not recoup the money it spends while one is in effect if the protest is ultimately upheld.

Once a protest is filed, the GAO assigns a lead attorney to handle it, and must issue a ruling within 100 days.

One key step during the GAO review would be a hearing at which the top Air Force officials who handled the procurement would likely testify about how they reached their decision.

WHAT ACTION CAN GAO TAKE?

Question: What action can the GAO take?

The GAO can dismiss the protest and take no action at all, or it can sustain part or all of the protest.

Generally, if it sustains or upholds a protest, the GAO recommends action for the contracting agency, but it has no authority to implement that recommendation. GAO rulings are not binding, but government agencies generally follow them to avoid political fallout from U.S. lawmakers and other parties.

The GAO does not rule on whether the Air Force chose the right aircraft, according to Scott Hamilton with Leeham Co. It rules only on whether the proper process was followed during the source selection, he wrote.

OTHER OPTIONS

Question: What other options would the losing bidder have?

The losing bidder could also file a lawsuit in federal claims court, but such actions are rare because the process is generally more cumbersome, said defense consultant Jim McAleese.

The losing company is also likely to press its case with U.S. lawmakers, who have the power to block $900 million in funding that the Air Force has requested for fiscal 2012 to begin work on the new tanker planes.

Lawmakers could also slow funding for the program in the remainder of fiscal 2011, or halt it altogether, and could require lengthy reports or investigations that would further slow work on the contract.

Some Boeing supporters already asked the Pentagon's inspector general to investigate a data mix-up that gave each company some of the rival's bid data.

But the internal Pentagon watchdog agency last week said it saw no need to investigate the matter further after determining that the Air Force complied fully with federal law in its handling of the clerical error.

(Reporting by Andrea Shalal-Esa; Editing by Phil Berlowitz)

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