GAO Upholds Challenge to $1.2 Billion Boeing Contract

By Dana Hedgpeth
Washington Post Staff Writer
Friday, January 4, 2008

The Government Accountability Office has upheld a competitor's protest of a $1.2 billion contract awarded to Boeing to maintain a fleet of Air Force refueling tankers.

In September, Pemco Aeroplex of Birmingham, Ala., protested the Air Force's award of the deal to Boeing, saying that the Air Force's evaluation was flawed in "various aspects, including the evaluation of offerors' past performance, mission capability and cost/price."

The GAO last week sustained Pemco's protest over how cost and price were evaluated. Its decision said the "record does not reflect any Air Force analysis as to the realism of certain changes" in Boeing's final proposals "or the potential risk associated with those changes." Officials in the procurement division of the Air Force said they expect to respond to the GAO's findings soon.

The GAO did not rule on Pemco's allegations that a senior Air Force official in the office that awarded the contract had a conflict of interest.

Pemco made the allegation after a story in The Washington Post detailed the relationship between the official, Charles D. Riechers, and an Air Force contractor. That contractor was a subsidiary of an organization that claims Boeing as a client, the Pemco protest said.

While waiting to be confirmed as the Air Force principal deputy assistant secretary for acquisitions, Riechers did no work for the firm, Commonwealth Research Institute. Instead, he worked for Sue C. Payton, assistant Air Force secretary for acquisition.

But the Air Force defended the arrangement as a way to keep Riechers involved while his nomination was pending. The arrangement later drew scrutiny from Congress and the Pentagon's inspector general.

On Oct. 14, days after Pemco's allegation, Riechers, 47, was found dead at his home, an apparent suicide.

Boeing denied any connection with Riechers. The Pentagon's inspector general, a special investigative office of the Air Force and local law enforcement agencies are looking into Riechers's work and his death.

The GAO said it had been advised by the Air Force that "both local law enforcement and federal government investigative authorities are conducting an ongoing investigation into 'the root cause' of Mr. Riechers' death."

The agency's statement said that "it is our understanding that this investigation will encompass matters that may have a bearing on Pemco's allegations of bias." Because of the ongoing investigations, the GAO "does not express any opinion regarding Pemco's bias allegations."

© 2008 The Washington Post Company