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Northrop Grumman threatens to withdraw from bidding on tanker contract

December 02, 2009|By W.J. Hennigan

Northrop Grumman Corp. has stepped up its threat to pull out of a $35-billion competition to build aerial refueling tankers for the U.S. Air Force.

In a letter to the Pentagon's top acquisition official Tuesday, Northrop President Wes Bush said the government's "request for proposal" that outlines requirements for the aircraft favors a bid by its rival, Boeing Co. If the terms are not changed, Northrop might not enter the competition to build 179 tankers, he said.

"I must regrettably inform you that, absent a responsive set of changes in the final RFP, Northrop Grumman has determined that it cannot submit a bid," Bush said.

The Air Force is looking to replace its fleet of 415 Eisenhower administration-era tankers, which refuel planes mid-flight. Since 2001, Century City-based Northrop and its partner, Airbus, have been locked in a brutal competition with Boeing for the contract. The contest has been scrapped twice amid accusations of underhanded politics and discriminatory rule-making.

In September, the Pentagon unveiled new criteria.

But the latest requirements call for a smaller aircraft with more limited capabilities than past contests, Bush said. These demands place "contractual and financial burdens on the company that we simply cannot accept," he said.

Northrop plans to submit a modified Airbus A330 in the contest, which is larger than the 767-based tanker that Boeing is considering as its contender.

Bush's letter triggered an immediate reaction from Sen. Patty Murray (D-Wash.), whose state is home to several major Boeing manufacturing plants. Murray accused Northrop of attempting to tilt the tanker competition in its favor. She pointed out that the company and Airbus have made similar threats in the past.


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