Northrop may quit tanker fight

Changes sought in contract rules

By Joshua Freed
Associated Press / December 2, 2009

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Northrop Grumman Corp. said yesterday it won’t bid on a major contract to make a new Air Force tanker plane unless the Defense Department changes the rules.

Northrop has been tussling for years with Boeing Co. over a contract worth at least $35 billion to build 179 new Air Force tankers.

The Pentagon had circulated a draft of its request for proposals. Northrop said asked for revisions on Nov. 4. But the Pentagon said the revisions would not be included, according to a letter sent yesterday from Wes Bush, Northrop’s president and chief operating officer, to Ashton B. Carter, undersecretary of Defense for Acquisition, Technology, and Logistics.

Without those changes, Northrop Grumman “cannot submit a bid’’ for the tanker program, Bush wrote.

The Pentagon’s preliminary request includes what Los Angeles-based Northrop called a “clear preference’’ for a smaller plane with limited flexibility. Critics have said the request appeared tailored for Boeing, which is based in Chicago.

The initial Pentagon request “places contractual and financial burdens on the company that we simply cannot accept,’’ Bush wrote.

In a written statement, the Defense Department said it regretted “that Northrop-Grumman and Airbus have taken themselves out of the tanker competition and hope they will return’’ when the request for proposal is issued, which it expects in January. Northrop’s partner, Airbus, is owned by Paris-based European Aeronautic Defence & Space Co.

The Defense Department said both companies suggested changes to its request for proposal that would favor their own planes.