Northrop Grumman, citing unfairness, declines to compete in $40 billion tanker contract

Alex Pappas Political Reporter
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Northrop Grumman, which in 2008 was named the victor in the Pentagon’s $40 billion KC-X tanker competition only to have the win taken away, announced on Monday that it will not re-submit its bid, citing unfairness in the contest with Boeing.

Wes Bush, chief executive of Northrop Grumman Corporation, said in a statement that the company opted not to submit a bid to the Department of Defense after reaching the conclusion that proposal “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.”

Sen. Jeff Sessions, a Republican from Alabama, called it “tragic” and said “the Obama Defense Department rewrote the bid rules in such a biased fashion that only one team felt it could win.”

Leaders in Alabama, where Northrop planned to assemble tankers if awarded the contract, had favored a split-buy compromise for the contentious $40 billion tanker refueling contract between Boeing and Northrop Grumman.

“This is truly a dark day for the American warfighter and for the Pentagon,” Sessions said in a statement. “Today’s withdrawal by the Northrop Grumman team is concrete proof that the dramatic changes in the way that the Pentagon will evaluate competing proposals had the effect of eliminating the superior aircraft that was the low bidder in the last competition.

In 2004, the bidding process fell apart after charges of corruption involving Boeing. Northrop in 2008 was awarded the contract, though it was rescinded after protests from Boeing.

Critics argued that if Northrop Grumman, a subsidiary of foreign-owned EADS, won the contract that it would not create American jobs like Boeing would. Sessions took issue with those critics, pointing out that the aircraft would have been built in Mobile, Ala., “with suppliers employing Americans in all 50 states, employing 48,000 Americans.”

Rep. Jo Bonner, who represents the Alabama district where the Northrop tankers would have been assembled, said he is “outraged at the Defense Department’s bungling of this contract for what is now the third time.”

“The Pentagon … handed the president a $35 billion sole-source hot-potato, under circumstances that are highly suspect,” Bonner said in a statement. “The president must now intervene to protect the interests of the taxpayer and the men and women of our military.”

Boeing spokesman Sean McCormack could not be reached for comment.

Last month, Northrop faced another setback when Democratic Washington Rep. Norm Dicks, an ardent supporter of Boeing, took over the gavel from the late Rep. John Murtha as chairman of the Defense Appropriations Subcommittee.