GO
Loading...

Boeing, Northrop Still Battling Over Air Force Tanker

The Air Force will soon release its final request for proposed bids in the long saga of replacing it's mid-air refueling tankers. Boeingand Northrop Grumman/EADSare facing off again for a massive deal that will start at $35 billion, but could end up over $100 billion.

Nothing about this deal has gone smoothly, and it looks like that's not going to change.

Boeing supporters took an early lead in complaining about the new competition, even before the Air Force released a draft of its request for proposal (RFP).

In September, politicians from Washington and Kansas, where the Boeing tanker would be made, said the tanker competition won't be "fair" if the Air Force doesn't take into account a preliminary ruling by the World Trade Organization that Northrop's European partner, EADS, benefits from illegal subsidies. The Air Force says the WTO situation is irrelevant to this competition.

Boeing has also taken the offensive in new media, launching a blog about its tanker and tweeting .

Now it's Northrop Grumman's turn to complain, and its concerns could potentially be more serious. After Northrop won the original tanker competition last year, and after that win was overturned because the GAO sided with Boeing in a protest, the Air Force let Boeing see Northrop's bidding information.

The Air Force says it did so according to regulations, and that the information is now of no use. Northrop Grumman disagrees, arguing the information is confidential and not subject to the regulations cited. Northrop wants to see Boeing's bid information from the last round, but Boeing has said "no" and the Air Force won't hand over the data.

"We have been very clear that this is an issue of fundamental fairness," says VP of communications Randy Belote, "and Northrop Grumman has been placed at a significant disadvantage in the current competition."

Boeing responds in a blogpost that, "When you win a contract you expect details to become public along with details of the decision that are shared with the team that was not awarded the contract. And there's no requirement for the government to share the losing bidder's proprietary pricing information with the winner or the public."

Northrop officials also say the new bidding process appears to be more about cost than value. "This really is a cost shootout that incentivizes a race to the bottom," says Mitch Waldman, VP of Northrop's Aerospace Systems. "We may be on a path where the taxpayer may pay more for less capability." Waldman wouldn't go so far as to say whether Northrop will protest if it loses. "It really depends on what the final RFP looks like," he says. Only then will the company "assess our various options."

Here is Northrop Grumman's Randy Belote, followed by Mitch Waldman, speaking to reporters recently about the tanker bid.

When will the final RFP come out? The Air Force is telling us that it won't happen until the end of November. Aviation Week reports that the Air Force says it's open to changing the bid requests. Good luck with that. It appears that nothing short of a split buy between the two companies might avoid a protest and more delays, but that is a solution the Defense Secretary is adamantly against.

Finally, a little late to the game compared to their counterparts supporting Boeing, a delegation of politicians from Alabama has started making the media rounds to support Northrop and EADS in this latest contract battle. Much of the production for a Northrop tanker would happen in Alabama.

Here is Alabama Rep. Mike Rogers, Sen. Richard Shelby, Rep. Jo Bonner, and Rep. Spencer Bachus expressing their concerns that the deck may be stacked in favor of Boeing.

For its part, the Air Force says it's tried to come up with the most transparent, plug-in-the-numbers, understandable way possible to figure out a winner. But the longer this drags on, the less likely it appears anyone is winning, especially the tanker pilots flying aircraft older than their parents.

Contact U.S. News

  • CNBC NEWSLETTERS

    Get the best of CNBC in your inbox

    To learn more about how we use your information,
    please read our Privacy Policy.
    › Learn More

Don't Miss

U.S. Video