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Northrop warns against plane contract

by Staff Writers
Washington (UPI) Dec 3, 2009
Northrop Grumman has warned the Pentagon that it will pull its bid out of a multibillion-dollar contest to replace the Air Force's aging fleet of air refueling tankers unless major changes were made to the competition rules.

The threat set Pentagon officials scrambling to salvage the contest with Robert Gates, the U.S. defense secretary, telling the U.S. Senate Armed Services Committee that "both of the principal competitors are highly qualified and would like to see the competition continue in the process."

Earlier this week Northrop President and CEO Wes Bush said in a letter sent to Pentagon acquisition chief Ashton Carter that defense officials should "make meaningful changes" to the draft request for proposals, known as RfP, for the KC-X program.

Bush argued that the existing competition rules favored Northrop's competitor, Boeing.

Northrop is vying for the project with its European partner EADS.

"Absent of a responsive change in the final RfP, Northrop Grumman has determined it cannot submit a bid for the KC-X program," Bush wrote according to U.S. media.

Military experts say the air tankers are vital for the country's Air Force. The contract concerns the provision of 179 aircraft in a deal estimated to reach $50 billion. By some accounts, the deal could exceed $100 billion because of follow-up agreements linked to the contract.

In his letter, Bush argued that the evaluation criteria outlined in the initial proposal request give "a clear preference" to a smaller plane with "limited role capability."

The Northrop option is bigger than its rival's entrant -- Boeing's KC-767 -- affording also more cargo and passenger hauling capacity.

Five years ago Boeing was awarded a $20 billion contract to supply the tankers but the deal was withdrawn in the wake of an ethics scandal. Northrop also is accused of waging similar saber rattling in previous bids.

"The last time around Northrop did the same thing," an industry expert was quoted saying by the Financial Times. "This time people are aware it is a tactic."

Either way, the current competition was supposed to be a model procurement process.

Defense experts now believe that a sole-contract award could prove politically damaging to the Pentagon and the White House.

More so, reported Defense News, Northrop's threat will be seen by the international defense community as an attempt to force the U.S. Air Force into "altering the rules and evaluation criteria" of request procurement proposals.

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