Dec 02 2009
Mobile Press Register
Northrop Grumman Corp. said Tuesday that it would drop out of the U.S. Air Force tanker competition because of its concerns that the Pentagon's selection criteria are tilted toward rival Boeing Co.
Los Angeles-based Northrop left room to change that stance. But the company's president and chief operating officer, Wes Bush, said in a letter delivered to the Pentagon that Northrop "cannot proceed" under the Air Force's proposed guidelines.
"It is my hope that the department will elect to modify its approach to this procurement in a way that would enable us to offer our product for your consideration," Bush wrote to Undersecretary of Defense Ashton Carter, the Pentagon's chief weapons buyer.
The decision was met with disappointment in Alabama, where Northrop is proposing to assemble its planes, and derision in Washington state and Kansas, where Boeing backers labeled it as a political stunt.
"I sincerely hope the Air Force will not yield to this pressure, because the competition should be conducted on the merits," said U.S. Rep. Norm Dicks, D-Wash.
He added that if Northrop chooses not to bid, the Air Force "has the full authority" to award a sole-source contract to Boeing.
At the Pentagon, reaction was stoic.
"The department cannot and will not change the warfighting requirements for the tanker to give advantage to either competitor," said Bryan Whitman, a spokesman for the Department of Defense. "The department wants competition but cannot compel the two airplane-makers to compete."
Northrop's ultimatum comes after weeks of wrangling with the Air Force over the ground rules for the competition. The Pentagon released a draft version of its Request for Proposals on Sept. 24, inviting contractors to submit comments on the 1,000-plus-page document.
While both bidders have expressed concerns directly to the Air Force, Northrop and its supporters have publicly complained that the RFP sets up a "cost shootout" favoring Boeing's smaller, cheaper KC-767 aircraft.
"The draft RFP is practically a sole source contract to Boeing. It's a sham," said U.S. Sen. Richard Shelby, R-Tuscaloosa. "If the Air Force wants a true competition -- one that aims to procure the best product for our warfighter -- it must fundamentally alter the current framework."
A final version of the RFP is expected later this month.
The decision roils a contest already marked by scandal and political turmoil.
Northrop won the potential $40 billion contract last year. But the deal unraveled after federal auditors upheld a protest filed by Chicago-based Boeing, leading Defense Secretary Robert Gates to order a rematch beginning this fall.
Both companies have used the threat of withdrawal to win concessions from the Air Force over the course of their four-year battle for the 179-plane order.
Northrop in 2006 said it would walk away from the contest unless the Air Force removed controversial questions about a World Trade Organization dispute involving its subcontractor, the European Aeronautic Defence and Space Co.
Boeing last year said that it would not compete unless it was given additional time to prepare its bid. In both cases, the Air Force, eager to move ahead with the competition, agreed to satisfy the contractors' demands.
This time around, the Pentagon appears unwilling to budge. That's led some officials to say a dual buy may be the only viable solution to the Air Force's tanker troubles.
"It's clearly impossible to get a level playing field that everybody can agree on, so I really think a split is the only option at this point," said Mobile Mayor Sam Jones.