Northrop may drop out of tanker competition



Bio | Email | Follow: @GlennFarley

Posted on December 2, 2009 at 8:54 AM

Updated Wednesday, Dec 2 at 7:11 PM

SEATTLE - In 2008, it was Boeing that cried foul and won.

Now, the tables have turned. 

This is all about the battle over which company or companies gets to build the next aerial refueling  tanker for the U.S. Air Force. And for two rounds of competition, it's Boeing vs. a consortium of American defense contractor Northrop Grumman and EADS, the parent company of Airbus.

This time, Boeing is offering a more simplified version of its proposal to base its tanker on the 767 airliner. Northrop is again offering a tanker based on the Airbus 330 that would be assembled near Mobile, Alabama. 

The A330 is a bigger jet and has been ordered by several countries, including Australia. Its larger size was cited by the Air Force as a factor for selecting it back in early 2008, because the A330 could carry more troops and cargo when required.

But Boeing cried foul, saying the Air Force made several procedural mistakes that did not give Boeing's entry a fair chance at winning.

But. with the ink barely dry on the Pentagon's latest "request for proposals,"  it's now Northrop that's calling foul. In a letter dated December 1 to Ashton B. Carter, the Undersecretary of Defense for Acquisition, Technology and Logistics, Northrop says the new RFP skews Boeing's way.

In the letter, Northrop president Wes Bush says the Defense Department has not "substantially addressed our concerns in the final release of the RFP." He goes on to say, "As a result, I must regrettably inform you that, absent of a responsive set of changes in the final RFP, Northrop Grumman has determined that it cannot submit a bid to the Department for the KC-X (tanker) program."

A Northrop spokesman tells me the new rules being used to assess each aircraft's abilities are minimizing important things like the ability of the jets to dispense fuel into other aircraft and maximizing considerations about other criteria such as the printers connected to the pilot's computers to the same level.  The company also says The Pentagon is placing unprecedented financial and contractual burdens that it simply cannot accept.

 "It's heading to be a messy competition again." says Michel Merluzeau, the managing partner with Kirkland, Wash.-based G2 solutions, which studies the  aerospace and defense industries.  Merluzeau is following the tanker competition very closely. "Both aircraft are perfectly capable of executing the mission."  he adds. 

Merluzeau does not think Northrop's threats to withdraw are idle, but he believes something will be worked out to keep them in the competition.

"There is a risk, that costs could go up if you don't have that competition," he said.

Both Boeing and Northrop have been waging a public relations and political battle over the tanker for years. Merluzeau thinks the tanker race is one reason why Boeing chose to put a second 787 production line in Charleston, S.C. That has the effect of weakening support  Northrop has from southern Republican congressional delegations because of Northrop and EADS promises to put an assembly line in Alabama.