Boeing Co.’s successful protest of Northrop Grumman Corp.’s $35 billion Air Force tanker order pushes the decision-making deeper into an election year and further delays the replacement of an aging fleet.
“This being an election year, we doubt whether any decision will be made rapidly,” Rob Stallard, an analyst at Macquarie Research Equities in New York, wrote to clients Wednesday. “Political support for both sides is vocal and entrenched.”
UBS Investment Research analyst David Strauss said it may be a year or more before the ultimate victor is known.
The Government Accountability Office on Wednesday recommended the Air Force seek revised proposals, evaluate them and make a new decision.
The service made “significant errors” that could have affected its choice, the GAO said.
The Air Force has 60 days to respond, adding to the current four-year delay in the program designed to replace a fleet of tankers in use since 1956.
The ruling may turn Northrop’s largest aircraft- contract victory into a loss and delay revenue and profit contributions to the eventual winner, while likely scuttling plans to deliver aircraft into service by 2013.
Boeing shares have fallen 9 percent since the February decision, and Northrop has dropped 11 percent.
