Reversed

The U.S. Court of Appeals today sided with the Air Force, rejecting a claim by Alabama Aircraft Industries that the service unfairly awarded a $1 billion-plus KC-135 maintenance contract to defense giant Boeing back in 2007.

The decision paves the way for Boeing to begin executing scheduled depot maintenance on its aging fleet of Stratotanker aerial refueling aircraft.

The Air Force awarded the depot maintenance contract to Boeing in September 2007. Alabama Aircraft Industries protested that decision to the Government Accountability Office, which “denied the protest on all grounds raised by AAII, with the exception of the agency's cost/price evaluation,” according to the decision.

“The GAO concluded that the record was insufficient for the GAO to determine the reasonableness of the agency’s price-realism analysis,” the decision reads.

The Air Force then reexamined both companies' proposals and determined the prices presented “were realistic and reasonable.” The Air Force affirmed the contract award to Boeing in March 2008. AAII protested for a second time; however, GAO denied the claim.

The company then filed a complaint in the Court of Federal Claims. That court ruled the Air Force's price realism analysis was “arbitrary and capricious” because the agency failed “to deal explicitly with the aging-fleet issue in the RFP” and then sought “to sidestep the aging-fleet issue in the price-realism analysis of Boeing’s prevailing offer,” according to the decision.

The court ordered the Air Force to resolicit the contract. The Air Force and Boeing subsequently appealed the ruling, which the U.S. Court of Appeals reversed today.

Alabama Aircraft Industries -- in a last-ditch chance to have the contract voided -- could petition the U.S. Supreme Court to review today's decision.