Boeing Scrambles for Contracts
December 16, 2008 · Posted in Business
Boeing Co (BA.N: Quote, Profile, Research, Stock Buzz) on Monday filed a protest with the Government Accountability Office about a $1.1 billion contract for next-generation weather satellites won by Lockheed Martin Corp (LMT.N: Quote, Profile, Research, Stock Buzz) on December 2, a company spokeswoman said.
“Based on the information that we received, we felt that we had a superior product under the disclosed evaluation criteria,” Boeing spokeswoman Diana Ball told Reuters.
The contract, awarded by NASA and the National Oceanic and Atmospheric Administration (NOAA), calls for Lockheed to build two Geostationary Operational Environmental Satellite R-Series, known as GOES-R, and includes options for two additional spacecraft.
Chicago-based Boeing filed the protest with the nonpartisan congressional agency on Monday, meeting a five-day deadline to ensure a stop-work order against the program.
The five-day clock begins when a losing bidder receives a detailed briefing from the awarding agency about why it lost the bid. Boeing received its briefing last Wednesday.
The GAO has the authority to review government acquisition decisions and recommend corrective actions, including termination of contracts if they are deemed improper.
Ball said Boeing took the step only after careful consideration. Boeing rarely filed contract protests in the past, but it prevailed with a protest last June against a $35 billion contract for new refueling aircraft initially won by Northrop Grumman Corp (NOC.N: Quote, Profile, Research, Stock Buzz) and Europe’s EADS (EAD.PA: Quote, Profile, Research, Stock Buzz).
In that case, the GAO upheld Boeing’s protest, and the Pentagon later decided to scrap the competition and let the new administration redo the entire process.
Protests have become far more common against Pentagon contracts in recent years as the number of defense deals available to bidders has declined, and their relative size has increased.
Ron Sugar, chief executive of Northrop, which had also bid for the program, declined comment on whether his company would also file a protest. He spoke at the Reuters Aerospace and Defense Summit on Monday.
Northrop officials were briefed about the contract loss last Thursday, which means it must file a protest by Tuesday to ensure a stop-work order against Lockheed.
Northrop filed a protest last month against a set of U.S. Army contracts for prototypes of vehicles that could replace the U.S. Humvee fleet in a deal valued at up to $40 billion.
Defense analyst Loren Thompson described the contract loss as bad news for Boeing, given that it also recently lost out to Lockheed on a Global Positioning System satellite contract.
Boeing needed to reevaluate its financial investment in the space sector, but probably could not exit the business completely since it had several long-term classified contracts with the U.S. government, he said.
I already described the dire situation Boeing is in. The fact that Boeing sees no other way than to scramble for government contracts by legal means shows how desperately the company needs the money. If thay had other profitable activities going on, they wouldn’t be spending all this time for administratve bureacuratic work.
With the government deficit already stretched beyond sanity, how should any more money be left for new fighter jets and planes, especially under an Obama administration?
Boeing is a stock that is poised to collapse.