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Originally published October 28, 2009 at 1:21 PM | Page modified October 29, 2009 at 10:53 AM

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Northrop: plan for $35B tanker deal favors Boeing

Northrop Grumman Corp. says a disputed $35 billion Air Force contract competition prioritizes cheaper tankers over vital needs like refueling planes in flight, which could end up favoring rival Boeing Co.

AP Business Writer

WASHINGTON —

Northrop Grumman Corp. says a disputed $35 billion Air Force contract competition prioritizes cheaper tankers over vital needs like refueling planes in flight, which could end up favoring rival Boeing Co.

"Last time, it was very clear it was a capabilities-based, best-value source selection process," Northrop spokesman Randy Belote said Wednesday. "This time, it's very clear that cost is the predominant driver and that the capabilities to the warfighter have taken on a secondary role of importance."

After winning the deal last year and then seeing that decision overturned, Los Angeles-based Northrop and its partner, Airbus parent European Aeronautic Defense and Space Co. NV, are competing against Chicago-based Boeing Co. for the third time to replace the aging refueling tankers.

Belote said he doesn't know why the Air Force has made such drastic changes in draft request for bids, like equally weighting more than 300 requirements and omitting risk when evaluating if bidders can stay on schedule or keep their promises on price.

At a press conference Wednesday, Northrop vice president Mitch Waldman said the company will wait to see the final bids request before deciding whether to drop out of the competition.

Boeing spokesman Bill Barksdale said only that the company "has chosen to work within the process and continue asking questions."

Comments by lawmakers and both companies were due Monday. A final request for bids from the Air Force is expected late next month.

Northrop raised concerns last month that pricing data from its previous bid was revealed to Boeing during the last competition, giving its rival an unfair advantage. While legal action and other options are being considered, the company is hoping to resolve the issue with the Air Force, Belote said.

Briefing reporters Wednesday, Pentagon spokesman Geoff Morrell said the department has been consistent in having a fair, open and transparent competition. "We have deliberately gone to extra lengths to be impartial as humanly possible," he said.

The Pentagon has tried and failed twice to award a contract to replace its Eisenhower-era fleet of tankers that refuel military planes in flight. The deal awarded to Northrop last year was overturned on appeal and led Pentagon leaders to temporarily revoke the Air Force's authority to award a contract. The 2004 award to Boeing was undone by an ethics scandal that resulted in prison terms for a former company executive and a former high-ranking Air Force official.

A political showdown among lawmakers, representing competing interests and thousands of jobs in their districts, is already under way as both sides fight for a contract to build 179 aerial refueling tankers.

Sen. Richard Shelby, R-Ala., a Northrop supporter, and Rep. Norman Dicks, D-Wash., a Boeing supporter, have sent separate letters this week expressing concerns over the Air Force's draft request for bids issued last month.

Should Northrop and EADS win the lucrative deal, a new plant will be built in Mobile, Ala., while states like Florida and West Virginia could also stand to gain jobs. If Boeing lands the award, Washington, Kansas and other states would benefit from a boost in jobs.

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