Air Force Blues

Northrop Drops Out of Competition for Pentagon Tanker Contract

AP

Northrop Grumman Corp. has decided not to compete against Boeing Co. for the $35 billion the U.S. Air Force will spend to buy its own fleet of refueling tankers.

WASHINGTON -- Northrop Grumman Corp. announced Monday that it will not compete against Boeing Co. for a $35 billion contract to build refueling tankers for the Air Force because Northrop doesn't think it can win.

The decision puts the Pentagon on a path to doing something President Barack Obama said should not happen any more: paying large amounts of money to a major defense contractor without undergoing any competition.

The decision also will probably knock out a major international competitor from gaining a foothold in the U.S. market. EADS, the European Aeronautic Defence and Space Co and parent of Airbus, had partnered with Northrop Grumman to vie for the tanker but was not expected to be able to compete against Boeing on its own.

Northrop Chief Executive Officer and President Wes Bush said in a statement that the Pentagon's guidelines for the program "clearly favors Boeing's smaller refueling tanker" but that the company would not file a formal protest.

"We have a fiduciary responsibility to our shareholders to prudently invest our corporate resources, as do our more than 200 tanker team suppliers across the United States," Bush said. "Investing further resources to submit a bid would not be acting responsibly."

The political fallout was swift. Alabama Gov. Bob Riley, where Northrop would have assembled the planes and created thousands of new jobs, called the program a "charade" and said the Pentagon made it "impossible" for Northrop to compete.

"It's disgraceful," Riley said.

Sen. Jeff Sessions, a Republican , called the development "tragic" and a "dark day for the American warfighter." Added fellow Alabama Republican Sen. Richard Shelby, "The Air Force's refusal to make substantive changes to level the playing field shows that once again politics trumps the needs of our military."

A year ago, Obama said these kinds of no-bid contracts aren't a good deal for the taxpayer and vowed to change the way government agencies do business. With the support of Sen. John McCain, R-Ariz., his campaign rival in 2008, Obama ordered his senior advisers to come up with ways to encourage competition.

"The days of giving defense contractors a blank check are over," Obama declared.

On Monday, McCain spokeswoman Brooke Buchanan said that the senator regrets Northrop's decision and would continue to call for an "open and fair process to ensure the best deal for the American taxpayer."

Industry insiders say that the decision by Northrop wasn't surprising.

"When all was said and done, Northrop saw a lot of risk and not a lot of profit," whereas EADS was focused primarily on gaining entry into the U.S. market, said Loren Thompson, head of the Lexington Institute. "At the end of the day, the interest of the two teams diverged."

Boeing's supporters shrugged off concerns that Northrop's decision would mean higher program costs because Boeing would still have to meet requirements laid out by the Pentagon. Ultimately, they said it was good news that some of the work would not go overseas to EADS.

"This will be an American company with American workers," said Democratic Rep. Norm Dicks of Washington state, where Boeing plans to build its tankers.

Boeing announced last week that it would offer a military version of its 767 passenger jet for a fleet of 179 new planes. The contract is expected to be the first of several to replace many Air Force planes that date back to the 1950s. Boeing said it will submit its formal bid by May 10.

A final contract is to be awarded in September.

The lawmakers need to stop their damn bitching. The AF laid out EXACTLY what it wanted with this proposal. If Northrop doesn't think they can cut it, oh well. Doesn't mean it's going to be any easier for Boeing, though. They still need to deliver all the requirements for the price tag. I'm just glad to see this project is finally going somewhere.

You beat me to the post! lol! This article warms my heart so much! If Northrup doesn't bid, as Chaos stated, there will still be plenty of oversight and attention to detail placed on Boeing -- it won't be a cake walk for them. That said, IMHO, the 767 is the right airframe for this job. Now let's get some forward progress!

Oh, and by the way, this is for the KC-X contract. There is still going to be a KC-Y contract and I am willing to put a full month's pay on that contract being for a larger airframe (ala KC-135 and KC-10) that will fit the terrifying Airbus airframe just fine.

I wouldn't mind seeing the stats on a 777 tanker. Those birds would dwarf the 135's in every way imaginable.

It's a crock however it turns out. The AF already knew what the two bidders will produce before the RFP came out, and we knew that the tankers are very different. So of course it'll be automatically and clearly slanted toward one of the two.

Still, this "withdrawl" is a bluff, hoping that the requirements will change.

Gentlemen, with all due respect, STFU. You are being overly dramatic over something that, in the grand scheme of things, really is not a big deal.



Oooooor, maybe the AF knew exactly what it wanted from the beginning, and only one company can produce that? I mean, really, what difference does it make to the AF who produces their A/C, as long as they are produced to spec?

I seriously doubt that this was all some grand scheme to award Boeing a contract over NG. Besides, it isn't like NG is hurting for govt business. I am pretty sure that they have a monopoly on the Nueclear Carrier side of the house.

From my end, there was much rejoicing. Maybe we can finally get a new tanker after years of begging for one, but getting mired by political bs left and right.

Here's my question: how freaking hard can it be to design a tanker? Isn't it basically an airliner with the seats, lavatories, and trim ripped out, and the lower cargo deck filled with fuel tanks, with a big gas nozzle sticking out the hind end? If the Air Force RFP requested an airframe significantly smaller than the A330, then maybe they could have, oh, I dunno, submitted a proposal with a smaller airframe to be competitive?

Or, you know, just throw a hissyfit and go home with your toys. Whichever makes you more money.

I don't see how the AF is getting more money by awarding a multi-million dollar contract to a company to design a better refueler.

I think he meant Northrop being the one throwing the hissy-fit and the more money thing being tongue-in-cheek.