US Air Force adapting to rise in protests - Wynne

By Andrea Shalal-Esa

WASHINGTON, May 22 (Reuters) - U.S. Air Force Secretary Michael Wynne expressed concern on Thursday about the growing number of protests over defense contract awards, and said the service is doing careful internal reviews before releasing any contract decisions.

Wynne said it was "too easy to protest right now" and the increase was clearly resulting in staffing pressures for the Government Accountability Office (GAO), the nonpartisan arm of Congress that considers contract disputes.

But he said it would be difficult to rein in protests, given the small number of defense companies the Pentagon relies on to bid for federal contracts. "We've got so few suppliers that I'm not going to treat them badly because they protest. It's their right," Wynne told an aerospace industry group.

The GAO is due to rule by June 19 on a protest by Boeing Co (BA.N) against a $35 billion Air Force project for new aerial refueling aircraft won by Northrop Grumman Corp (NOC.N) and its European subcontractor, Airbus parent EADS (EAD.PA).

In another major contract dispute, the Air Force is redoing a $15 billion rescue helicopter competition, initially won by Boeing, after the GAO twice upheld protests filed by losing bidders Lockheed Martin Corp (LMT.N) and United Technologies Corp (UTX.N). Final bids are due in August from the companies in a process that resulted in "a lot of lessons learned all around," Wynne said.

Given the increase in protests, Wynne said the Air Force was conducting careful legal reviews before announcing any new contract awards. "We just have to prepare ourselves," he said.

WAS AIR FORCE TOO TRANSPARENT?

Wynne said some critics had said the Air Force was too transparent in the tanker competition between Boeing and Northrop, making the process too complex and presenting too many issues that the losing bidder could dispute.

"Maybe the next time we ought to just throw a dart," he joked. "Maybe if I don't have a good rationale for something, how can you attack me?"

The GAO received 1,411 protests in the 2007 fiscal year which ended on Sept. 30. That was six percent more than a year earlier but less than the 1,485 cases received in fiscal 2004.

The agency upheld 91 of the 2007 protests, or 27 percent of the cases that were not summarily dismissed, after upholding 29 percent in fiscal 2006. Both years were well above the 17 percent upheld in fiscal 2003.

Boeing and Northrop, and their respective supporters, continue to battle about the tanker program, even as the GAO considers Boeing's protest.

Boeing ran another full-page advertisement in the Washington Post on Thursday, arguing that the KC-30 Northrop refueling tanker was "less capable" and "more vulnerable" than its 767 refueling tanker.

Northrop answered the ad with a widely distributed e-mail, arguing that in the two categories most critical to the Air Force's decision -- refueling and airlift -- Northrop beat Boeing by a margin of more than two to one. (Reporting by Andrea Shalal-Esa; Editing by Tim Dobbyn)