With the latest decision, Northrop executives said the company would suspend hiring for the tanker program, which was slated to swell its workforce in Southern California by about 7,500 people. Boeing's proposal would create about 4,000 jobs in the Southland, mostly with suppliers who would make parts for its plane.
The ruling may become the second major acquisition decision to be overturned by the GAO in a year. Last August, the auditor ordered the Air Force to redo a competition for a $16-billion search-and-rescue helicopter program.
At the Pentagon, the GAO's decision was met with a sense of shock. Air Force officials immediately plunged into the 69-page document to try to make sense of what went wrong, a senior Defense Department official said. The complete document, which contains proprietary information, has not been publicly released.
During the competition, Air Force officials had 700 informal written exchanges, 60 telephone conference calls and 10 face-to-face exchanges with both teams to discuss the bidding process and had high confidence that the GAO was going to uphold the contract, said an official who requested anonymity.
The latest ruling also raises the prospect that the service won't get the new tankers for several more years, placing increasing strain on a fleet whose average age is 47. Replacing the fleet, which enables warplanes to fly great distances without having to land for refueling, has been the service's top priority.
But on Wednesday the GAO sided with Boeing, saying the "Air Force had made a number of significant errors that could have affected the outcome of what was a close competition between Boeing and Northrop Grumman."
The GAO cited seven major reasons for upholding the protest. Among them was a finding that the bids included "misleading and unequal discussions with Boeing." Boeing was told, for instance, that it had satisfied a key performance criterion when it had only partially met it. The report also found problems with the way the Air Force evaluated the cost of operations and maintenance involved in Boeing's plan.
The GAO cautioned that the review did not evaluate the "merits" of each aircraft but examined how the Air Force evaluated the proposals, leaving open the possibility that Northrop's bid could still prevail in another round of competition.
