Feb. 26 (Bloomberg) -- Boeing Co.'s $15 billion contract to build U.S. Air Force rescue helicopters should be put back out to bid, the Government Accountability Office said following protests by Lockheed Martin Corp. and United Technologies Corp.

The GAO said today in an e-mailed statement it recommended the Air Force reopen discussions and request revised proposals. If after reviewing the new bids, ``Boeing's proposal no longer represents the best value to the government, the agency should terminate its contract,'' the GAO said.

Lockheed Martin, the world's largest defense company, and United Technologies' Sikorsky unit protested Boeing's Nov. 9 award, saying the Air Force didn't uniformly apply the criteria used to evaluate the three bids. Boeing's order for 141 HH-47 helicopters, a variant of its twin-rotor Chinook family, was picked to replace Sikorsky's Pave Hawk aircraft. The award was put on hold during the GAO review.

If bidding is reopened ``that would be great for Lockheed, but it's far from that at this point,'' said Eric Hugel, a New York-based analyst with Stephens Inc. who has an ``equal weight'' rating on Lockheed's shares and doesn't own any. ``The most likely outcome may still be that it goes back to Boeing with revised terms.''

Boeing spokesman Joseph LaMarca, in an e-mailed statement, said the company ``will take some time to review this decision to decide what our next steps will be regarding this contract.''

``The HH-47 is the most capable platform and provides the best value to the Air Force,'' LaMarca wrote.

Protests Filed

Shares of Chicago-based Boeing dropped $1.35, or 1.5 percent, to $88.93 at 4 p.m. in New York Stock Exchange composite trading. Bethesda, Maryland-based Lockheed fell 64 cents to $101.47, while Hartford, Connecticut-based United Technologies declined 32 cents to $67.23.

The secretary of the Air Force must now respond within 60 days with a course of action based on the GAO findings. If the service fails to reply, an instance of non-compliance will be reported to Congress, said Michael Golden, who specializes in procurement law in the GAO's office of general counsel.

``Our recommendation is to correct the flaw,'' he said in an interview. ``How that plays out will depend on the agency.''

Sikorsky filed its protest on Nov. 17, and Lockheed on Nov. 20. The Air Force plans to purchase the helicopters through 2019, and the initial contract was valued at $712 million.

Lockheed Pleased

``We are pleased the GAO has upheld the protest,'' Lockheed spokesman Greg Caires said. ``We look forward to learning how the Air Force intends to implement the GAO's recommendations.''

Sikorsky President Jeffrey Pino said in an e-mailed statement that the company's offering, the HH-92 Superhawk, ``is the best platform for the Air Force's current and future needs.''

Air Force spokeswoman Major Brenda Campbell said the service had just received the GAO decision and was reviewing it.

The Government Accountability Office, previously known as the General Accounting Office, is the investigative arm of Congress.

Six out of nine analysts in a November survey by Bloomberg had picked Lockheed as the favorite to win the award. One picked Boeing, the second-largest U.S. defense contractor, and two declined to project a winner.

To contact the reporter on this story: James Gunsalus in Seattle at jgunsalus@bloomberg.net.

Last Updated: February 26, 2007 16:31 EST