Northrop to drop out of bid for Air Force tanker
WASHINGTON, D.C. -- Northrop Grumman is dropping out of the competition to win a $35 billion Air Force contract to build refueling tankers, possibly leaving Boeing as the sole bidder.
In a statement released Monday afternoon, the company said after a comprehensive analysis of the Air Force's final request for proposals, they determined it clearly favors Boeing's smaller refueling tanker and "does not provide adequate value recognition of the added capability of a larger tanker, precluding us from any competitive opportunity." (Read the full statement here.)
Rep. Norm Dicks (D-Wash.) told KOMO News he was told by high level officials at Northup earlier Monday that they are not going to make a bid.
"This means we can go forward on the tanker project and hopefully move more quickly to build a new tanker which Boeing has done before and can do again," Dicks said.
Northrop said while it believes their tanker provided the best value for the military and taxpayer, it has a responsibility to their shareholders to invest their corporate resources wisely.
"Regrettably, this means that the U.S. Air Force will be operating a less capable tanker than many of our Allies in this vital mission area," the company said.
Meanwhile, Boeing said they remain fully committed to the project and "intends to submit a fully responsive, transparent, and competitive proposal that meets the terms the Air Force has announced. As we have in each of the previous rounds of competition Boeing will offer the most capable tanker and the tanker best suited to begin modernizing the aging KC-135 fleet -- at lower total life cycle cost than any competitor."
Reuters reports that Northrop's withdrawal will force Airbus' parent company EADS to decide whether it will submit a solo bid. Before, Northrop's bid was partnered with EADS to build a tanker off of Airbus' A330 platform.
"I think it would be a very difficult thing to do," Dicks said. "They (EADS) don't have Northrop, I don't see how they would do the Alabama part of this thing, so we'll have to wait and see. But I think it's good news that Northrop has dropped out because obviously they don't think they could win the competition."
Boeing said last week it would push a military version of its 767 plane in its bid that they say would save taxpayers $10 billion over the 40-year life of the contract.
"I think it would be very hard for the A330 to compete and win even if there was a competition," Dicks said.
Aviation analyst Scott Hamilton says while EADS has done very well in building aircraft in previous U.S. military contracts, if EADS goes it alone, it could present some political challenges.
"It will only aggravate the situation because you won't have that U.S. cover in the Northrop name -- it'll strictly be EADS/Airbus versus Boeing as opposed to Northrop/EADS versus Boeing," he said. "And the politics on this thing are going to get uglier than they have been."
Northrop hinted on Feb. 24 that it might withdraw their bid after the Air Force unveiled the latest request for bids, citing what it believed were terms that unfairly favored Boeing.
It's just the latest in a seven year saga that has seen the Pentagon try twice, and fail twice, to award a contract to replace its Eisenhower-era fleet of tankers that refuel military planes in-flight. Most recently, a deal awarded to Northrop Grumman was overturned on appeal.
In 2004, a Boeing victory was nixed after an ethics scandal resulted in prison terms for a former company executive and a former Air Force official. The two were accused of discussing a job for the Air Force official while she was still overseeing billions of dollars of Boeing's business for the service.
On Feb. 24, the Pentagon tried again and publicly released its final bid request for the job. The bid involves building 179 tankers, but the job could be expanded. A final contract is to be awarded in September.
The Pentagon's senior leaders defended the proposal when it was released.
"We believe that both offers are in a position to win this competition," Air Force Secretary Michael Donley said.
Added Deputy Defense Secretary Bill Lynn: "We think we've put forward a balanced and fair competition."
Politics has factored in heavily into the debate because the outcome will mean thousands of jobs. Alabama senators Richard Shelby and Jeff Sessions supported a win by Northrop because it would translate into as many as 5,000 jobs in their home state, including 1,500 in Mobile, where the tanker would be assembled.
And the political fallout from Monday's announcement 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.
Sessions 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.
Lynn declined to say what the Pentagon would do if it's faced with only one contract bid for the program.
"When we get to that point we'll address that question," he told reporters on Feb. 24. "I don't want to go beyond the statement that we have. ... We are hoping that we don't have to."
Last fall, Northrop said it would drop out without significant changes to the criteria. It has teamed with the European maker of Airbus to compete with Boeing. That partner, Paris-based European Aeronautic Defence & Space Co., has seen the deal as essential to breaking into the lucrative U.S. defense contracting market.
In a statement released Monday afternoon, the company said after a comprehensive analysis of the Air Force's final request for proposals, they determined it clearly favors Boeing's smaller refueling tanker and "does not provide adequate value recognition of the added capability of a larger tanker, precluding us from any competitive opportunity." (Read the full statement here.)
Rep. Norm Dicks (D-Wash.) told KOMO News he was told by high level officials at Northup earlier Monday that they are not going to make a bid.
"This means we can go forward on the tanker project and hopefully move more quickly to build a new tanker which Boeing has done before and can do again," Dicks said.
Northrop said while it believes their tanker provided the best value for the military and taxpayer, it has a responsibility to their shareholders to invest their corporate resources wisely.
"Regrettably, this means that the U.S. Air Force will be operating a less capable tanker than many of our Allies in this vital mission area," the company said.
Meanwhile, Boeing said they remain fully committed to the project and "intends to submit a fully responsive, transparent, and competitive proposal that meets the terms the Air Force has announced. As we have in each of the previous rounds of competition Boeing will offer the most capable tanker and the tanker best suited to begin modernizing the aging KC-135 fleet -- at lower total life cycle cost than any competitor."
Reuters reports that Northrop's withdrawal will force Airbus' parent company EADS to decide whether it will submit a solo bid. Before, Northrop's bid was partnered with EADS to build a tanker off of Airbus' A330 platform.
"I think it would be a very difficult thing to do," Dicks said. "They (EADS) don't have Northrop, I don't see how they would do the Alabama part of this thing, so we'll have to wait and see. But I think it's good news that Northrop has dropped out because obviously they don't think they could win the competition."
Boeing said last week it would push a military version of its 767 plane in its bid that they say would save taxpayers $10 billion over the 40-year life of the contract.
"I think it would be very hard for the A330 to compete and win even if there was a competition," Dicks said.
Aviation analyst Scott Hamilton says while EADS has done very well in building aircraft in previous U.S. military contracts, if EADS goes it alone, it could present some political challenges.
"It will only aggravate the situation because you won't have that U.S. cover in the Northrop name -- it'll strictly be EADS/Airbus versus Boeing as opposed to Northrop/EADS versus Boeing," he said. "And the politics on this thing are going to get uglier than they have been."
Northrop hinted on Feb. 24 that it might withdraw their bid after the Air Force unveiled the latest request for bids, citing what it believed were terms that unfairly favored Boeing.
It's just the latest in a seven year saga that has seen the Pentagon try twice, and fail twice, to award a contract to replace its Eisenhower-era fleet of tankers that refuel military planes in-flight. Most recently, a deal awarded to Northrop Grumman was overturned on appeal.
In 2004, a Boeing victory was nixed after an ethics scandal resulted in prison terms for a former company executive and a former Air Force official. The two were accused of discussing a job for the Air Force official while she was still overseeing billions of dollars of Boeing's business for the service.
On Feb. 24, the Pentagon tried again and publicly released its final bid request for the job. The bid involves building 179 tankers, but the job could be expanded. A final contract is to be awarded in September.
The Pentagon's senior leaders defended the proposal when it was released.
"We believe that both offers are in a position to win this competition," Air Force Secretary Michael Donley said.
Added Deputy Defense Secretary Bill Lynn: "We think we've put forward a balanced and fair competition."
Politics has factored in heavily into the debate because the outcome will mean thousands of jobs. Alabama senators Richard Shelby and Jeff Sessions supported a win by Northrop because it would translate into as many as 5,000 jobs in their home state, including 1,500 in Mobile, where the tanker would be assembled.
And the political fallout from Monday's announcement 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.
Sessions 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.
Lynn declined to say what the Pentagon would do if it's faced with only one contract bid for the program.
"When we get to that point we'll address that question," he told reporters on Feb. 24. "I don't want to go beyond the statement that we have. ... We are hoping that we don't have to."
Last fall, Northrop said it would drop out without significant changes to the criteria. It has teamed with the European maker of Airbus to compete with Boeing. That partner, Paris-based European Aeronautic Defence & Space Co., has seen the deal as essential to breaking into the lucrative U.S. defense contracting market.