Air Force lifts stop-work order on Boeing

WASHINGTON (Reuters) - The U.S. Air Force has allowed Boeing Co to resume work on a $1.2 billion contract for maintenance of KC-135 refueling aircraft after the Government Accountability Office on Friday denied a second protest filed by Alabama Aircraft Industries Inc.

"As a result of the GAO's decision, the suspension on your award of 10 Sep 2007 is hereby lifted," the Air Force told Boeing in a document obtained by Reuters.

Alabama Aircraft, formerly known as Pemco Aviation, had won its first protest of the contract award in December, but filed a second protest in March after the Air Force again awarded the contract to Boeing.

The GAO, a nonpartisan congressional agency that reviews federal contract disputes, had already rejected part of the second protest in May, but dismissed the remainder of the case on Friday.

Boeing said it was pleased the GAO had affirmed the Air Force decision. "It is now time to move forward and serve the warfighter by executing this vital contract," spokesman Forrest Gossett said.

Alabama Aviation President Ron Aramini announced the decision late on Friday, saying his company would continue to press its case until the Air Force has conducted a full and fair evaluation of proposals.

"We believe that a proper evaluation would result in the selection of AAII as the highest quality and lowest cost source for the maintenance of the Air Force's KC-135 fleet," he said.

(Reporting by Andrea Shalal-Esa; Editing by Derek Caney and Maureen Bavdek)