Watchdog rejects Air Force sally in protest saga

WASHINGTON (Reuters) - The Government Accountability Office has rejected an Air Force request to reconsider a ruling that faulted the service's handling of a $1.2 billion contract with Boeing Co (BA.N: Quote, Profile, Research, Stock Buzz) for depot maintenance of KC-135 refueling aircraft, a source familiar with the decision said on Friday.

GAO, the audit arm of Congress that weighs federal contract disputes, has "denied the Air Force request," said the source who asked not to be named. No comment was immediately available from GAO or the Air Force.

Boeing spokesman Brian Ames said the company had not been briefed about the GAO decision, but remained confident that at the end of the process it would be the winning bidder.

On December 27, GAO upheld in part a protest by losing bidder Pemco Aviation Group Inc PAGI.O, which changed its name to Alabama Aircraft Industries Inc. on January 1.

The Air Force had argued that GAO made a mistake in its decision and had asked for a reversal.

The company previously known as Pemco welcomed the GAO's response to the Air Force as a "positive development," said Trent Wisecup, a company spokesman.