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Northrop: No bid on tanker contract

By Mike Mount, CNN
  • Northrop Grumman CEO: Contract precludes "us from any competitive opportunity"
  • Northrop says contract favors smaller plane, which Boeing offers
  • Northrop, European partner EADS originally won $35B contract to build Air Force tanker
  • Boeing's protest reversed decision

Washington (CNN) -- Northrop Grumman Corp. said it will not bid on a multi-billion-dollar contract to build a new air refueling tanker for the U.S. Air Force because it believes the rules for the contract favor its competitor, Boeing.

Since the Pentagon announced it changed how it will evaluate new proposals for the tanker contract, Northrop has said that the new evaluation requirements clearly favor a smaller plane, which Boeing is offering in its 767 platform.

Northrop Grumman would not submit a bid to the Pentagon because the contract does not "provide adequate value recognition of the added capability of a larger tanker, precluding us from any competitive opportunity," CEO Wes Bush said in a statement.

Northrop said Monday that its larger plane would give the Air Force more aircraft and capability for its money, and the company is "very disappointed" in the Pentagon's evaluation system.

Northrop and European partner EADS, the parent company of Airbus, originally won the $35 billion contract to build the Air Force tanker in February 2008, but a protest by Boeing reversed that decision, forcing the Air Force to change the requirements for the plane.

Last month the Pentagon announced that it was accepting new proposals for the KC-X tanker program. Northrop Grumman remained silent until Monday on whether it would re-bid or not.

Northrop Grumman has said if it won the contract, it would build the planes in Alabama -- and reaction from that states' congressional members has been biting.

"The Air Force had a chance to deliver the most capable tanker possible to our warfighters and blew it," sad U.S. Sen. Richard Shelby, an Alabama Republican.

"This so-called competition was not structured to produce the best outcome for our men and women in uniform; it was structured to produce the best outcome for Boeing," Shelby said in a statement.

Alabama's second senator, Republican Jeff Session, echoed Shelby's sentiments by saying in a statement, "I hope that the Secretary of Defense will personally review the competition in light of this disastrous result for the taxpayer.

"There is no way the Defense Department will be able to get the best price without competition," he added.

Meanwhile, the Pentagon said in a statement, "We are disappointed by Northrop's decision not to submit a bid for the U.S. Air Force tanker replacement program. We strongly believe that the current competition is structured fairly and that both companies could compete effectively."