And this one really is a surprise. The GAO rarely interferes with a decision on a contract award, and usually has even less inclination to do so on military contracts, where the Pentagon’s expertise creates a large benefit of the doubt. However, today the GAO upheld Boeing’s challenge to the award of a new refueling tanker to Northrop, which could press the Air Force to put the project back out for bid:

In a surprise move, the Government Accountability Office (GAO) upheld a protest filed by Boeing of the Air Force’s decision to award a $40 billion contract for its new midair refueling tankers to rivals Northrop Grumman and EADS North America.

The GAO decision all but ensures that lawmakers who support Boeing will pressure the Air Force to reopen the competition. The Air Force is not bound by law to follow the GAO’s recommendations, but it is customary that the Pentagon heeds them.

The GAO said it had determined the Air Force had made “a number of significant errors” that led to its decision to award the contract to Northrop Grumman.

The decision vindicates not just Boeing but its supporters in Congress, which demanded an investigation after the contract went to the partnership between Northrop and the EU-based EADS. That followed a tortured history of back-dealing and corruption on the part of Boeing that helped create the opportunity for Northrop. No one really came off as a hero in this instance, but it did provide an excellent look at the sewer of defense appropriations, especially after the big consolidation among contractors in the field.

If the Air Force cancels its award and rebids it, the decision will have a multitude of ripples through economic and diplomatic circles. The US wants to compete for defense contracts in EU countries, and the award to EADS (which produces the Airbus) showed that we would open our markets as well. A switch to Boeing now will make the Europeans believe that American politicians will never allow for significant openness in our market and will almost certainly push the EU to adopt protectionist measures as well. If the Air Force doesn’t cancel its contract with Northrop/EADS or once again snubs Boeing, Congress will inevitably haul the procurement officials into hearings to explain their decision.

What seems to be lost in all of this is which aircraft best meets the needs for the Air Force. Maybe another round of bidding will focus more on that trivial issue than nationalism, influence-peddling, and political intervention. Then again, why should this procurement decision be different than any other?

Update: Corrected spelling of Northrop; sorry for the earlier error.