Northrop Drops out of Tanker Competition
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Northrop Drops out of Tanker Competition
WASHINGTON — Northrop Grumman Corp. announced Monday that it won't compete against Boeing Co. for a $35 billion contract to build refueling tankers for the Air Force because Northrop doesn't think it can win.
The decision puts the Pentagon on a path to doing something President Barack Obama said shouldn't happen any more: paying large amounts of money to a major defense contractor without undergoing any competition.
The decision also will probably knock out a major international competitor from gaining a foothold in the U.S. market. EADS, the European Aeronautic Defence and Space Co., had partnered with Northrop Grumman to vie for the tanker but was not expected to be able to compete against Boeing on its own.
Northrop Chief Executive Officer and President Wes Bush said in a statement that the Pentagon's guidelines for the program
"clearly favors Boeing's smaller refueling tanker" but that the company would not file a formal protest.
"We have a fiduciary responsibility to our shareholders to prudently invest our corporate resources, as do our more than 200 tanker team suppliers across the United States," Bush said. "Investing further resources to submit a bid would not be acting responsibly."
The political fallout was swift. Alabama Gov. Bob Riley, where Northrop would have assembled the planes and created thousands of new jobs, called the program a "charade" and said the Pentagon made it "impossible" for Northrop to compete.
"It's disgraceful," Riley said.
Sen. Jeff Sessions, R-Ala., called the development "tragic" and a "dark day for the American warfighter." Added fellow Alabama Republican Sen. Richard Shelby, "The Air Force's refusal to make substantive changes to level the playing field shows that once again politics trumps the needs of our military."
A year ago, Obama said these kinds of no-bid contracts aren't a good deal for the taxpayer and vowed to change the way government agencies do business. With the support of Sen. John McCain, R-Ariz., his campaign rival in 2008, Obama ordered his senior advisers to come up with ways to encourage competition.
"The days of giving defense contractors a blank check are over," Obama declared.
On Monday, McCain spokeswoman Brooke Buchanan said that the senator regrets Northrop's decision and would continue to call for an "open and fair process to ensure the best deal for the American taxpayer."
Industry insiders say that the decision by Northrop wasn't surprising.
"When all was said and done, Northrop saw a lot of risk and not a lot of profit," whereas EADS was focused primarily on gaining entry into the U.S. market, said Loren Thompson, head of the Lexington Institute. "At the end of the day, the interest of the two teams diverged."
Boeing's supporters shrugged off concerns that Northrop's decision would mean higher program costs because Boeing would still have to meet requirements laid out by the Pentagon. Ultimately, they said it was good news that some of the work wouldn't go overseas to EADS.
"This will be an American company with American workers," said Democratic Rep. Norm Dicks of Washington state, where Boeing plans to build its tankers.
Boeing announced last week that it would offer a military version of its 767 passenger jet for a fleet of 179 new planes. The contract is expected to be the first of several to replace many Air Force planes that date back to the 1950s. Boeing said it will submit its formal bid by May 10.
A final contract is to be awarded in September.
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well< I would feel badly if it was truly a northrop/grumman plane, but it was indeed a made over airbus 330.
Boeing isn't my favorite, but all of the tankers of the air force since the KC50/KC97/KC135/KC10 (through douglas ) have been boeings
Boeing isn't my favorite, but all of the tankers of the air force since the KC50/KC97/KC135/KC10 (through douglas ) have been boeings
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Sen. Jeff Sessions, R-Ala., called the development "tragic" and a "dark day for the American warfighter."
So it's a dark day when the plane will be American made vs. European made? Have Communists taken over Alabama or what?
Excellent news. Clearly if everyone believes that it is a good deal because
then the rest of the world looks forward to Boeing and other American companies not competing for contracts where there is a Local supplier able to provide the goods.
That would level the playing field.
Of course the American Forces now have a less capable tanker to use in the future but who cares.............................
This will be an American company with American workers
That would level the playing field.
Of course the American Forces now have a less capable tanker to use in the future but who cares.............................
I have a hard time believing the best product available for our war fighters is going to come out of the vacuum of a one company, one entry (lack of) bid.
I'd love to see the work go to Boeing, but via the proper means and providing those who must use it get the best possible piece of equipment.
I'd love to see the work go to Boeing, but via the proper means and providing those who must use it get the best possible piece of equipment.
Last edited by West Coast; 9th Mar 2010 at 06:25.
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If you think the Boeing will be majority built in the U.S. you are wrong.
They also were looking at Mobile for a plant site. Why? You can dock ships beside the airport there.....
They also were looking at Mobile for a plant site. Why? You can dock ships beside the airport there.....
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The USAF should buy half-life DC10-30, MD-11, 757 and 767 at a fraction of new price, and convert them at various *competitive* MRO, Maintenance, Repair and Overhaul facilities. There's no point buying a brand new airframe, only to use it 3-400 hours a year. That's why the KC-135 have lasted 50 years; the highest time ones don't have 50K hours on them.
The KC-10A Extender has the best reliability record in the USAF history. That's because it was adapted from a proven commercial airliner with a minimum of govt procurement specifications.
At least one DC10-30 was converted to tanker use by private capital, so it isn't rocket science. That one, owned by Omega, is contracted out to the USN and foreign militaries for escort of short range airplanes.
GB
The KC-10A Extender has the best reliability record in the USAF history. That's because it was adapted from a proven commercial airliner with a minimum of govt procurement specifications.
At least one DC10-30 was converted to tanker use by private capital, so it isn't rocket science. That one, owned by Omega, is contracted out to the USN and foreign militaries for escort of short range airplanes.
GB
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The KC-10A Extender has the best reliability record in the USAF history. That's because it was adapted from a proven commercial airliner with a minimum of govt procurement specifications.
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And yet, while no-one is very surprised at this (particularly after the USAF chose the KC-30 in the first competition), European air forces are going to spend several billions on the F-35.
Wouldn't it be fun to adjust the requirements for the new European fighter to favour the Eurofighter/Rafale/Gripen ... and see how the Americans like it!
Should have been a quid quo pro ...
Wouldn't it be fun to adjust the requirements for the new European fighter to favour the Eurofighter/Rafale/Gripen ... and see how the Americans like it!
Should have been a quid quo pro ...
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If the American taxpayer plans to be so foolish as to fund all the costs, we'll happily take them at a lower cost than we could have managed on this side of the Atlantic - thanks!
While not a huge Airbus fan, the 767 is now a 30-year old aircraft...which will be constructed without suitable competition. West Coast is correct - and that surely is the point of US capitalism - competition drives ever greater value.
If the US wants to become a sclerotic European economy - you're welcome to join us...
While not a huge Airbus fan, the 767 is now a 30-year old aircraft...which will be constructed without suitable competition. West Coast is correct - and that surely is the point of US capitalism - competition drives ever greater value.
If the US wants to become a sclerotic European economy - you're welcome to join us...
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The F-22 and F-35 programs should be canceled, and maybe the fleets scrapped. We don't have an enemy worthy of a $350 Million fighter. That will reduce the need for new tankers.
The UAVs are doing just fine, being flown from offices most anywhere, by retired pilots, and maybe Microsoft pilots. The USAF now has a surplus of active duty pilots, and aren't taking any new pilot recruits.
GB
The UAVs are doing just fine, being flown from offices most anywhere, by retired pilots, and maybe Microsoft pilots. The USAF now has a surplus of active duty pilots, and aren't taking any new pilot recruits.
GB
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What I wonder is this: the mighty 707 and the KC135 programme were spawned out of the same programme (or at the very least, both programmes were able to draw on the same technology), presumably reducing the per-unit and development costs of both.
The 767, whilst a great aircraft, is over 30-year-old technology (some bit probably older still). If the new tankers mimic the KC135, they'll be around for at least 40 - so that will mean a 70-plus-year-old programme.
It's smart of Boeing to offer a product whose development costs have been fully amortised such that each unit off the line is now basically pure profit (actual production overheads and materials aside).
But if I were the USAF, I would want a new aircraft to operate with my other new aircraft (F22, F35, etc.) - so why is the Pentagon planning on making the "war fighter" of the future, put up with 70-year-old technology? Why are we not seeing a 'KC787'?
The USAF would, at a stroke, be the programme's largest customer by far and would therefore be able to wring keen pricing out of Boeing. If Boeing was smart, it would price competitively on the basis that the KC135 is not the only 707-family variant in USAF service and most of the others will probably need replacing during the life of the new tanker: E3, JSTARS, etc. So offer keen pricing on the new toy now and you have a shoe-in for the follow-ons.
Once the KC767 is done, I reckon Boeing will close the 767 line as they won't want it competing with the 787. Boeing may get a look-in for other programmes using the 787 platform but they won't have the same leg-up as if they'd offered a 787 tanker for this requirement.
Highland Cow,
Boeing's Everett plant has a dedicated ship dock nearby, which is connected to the factory by (what I believe is) the steepest-grade railway in the US. Parts for all Boeing wide-bodies come in from all over the world - Japan, Korea, various European countries, Australia... They are most certainly not "all-American".
The 767, whilst a great aircraft, is over 30-year-old technology (some bit probably older still). If the new tankers mimic the KC135, they'll be around for at least 40 - so that will mean a 70-plus-year-old programme.
It's smart of Boeing to offer a product whose development costs have been fully amortised such that each unit off the line is now basically pure profit (actual production overheads and materials aside).
But if I were the USAF, I would want a new aircraft to operate with my other new aircraft (F22, F35, etc.) - so why is the Pentagon planning on making the "war fighter" of the future, put up with 70-year-old technology? Why are we not seeing a 'KC787'?
The USAF would, at a stroke, be the programme's largest customer by far and would therefore be able to wring keen pricing out of Boeing. If Boeing was smart, it would price competitively on the basis that the KC135 is not the only 707-family variant in USAF service and most of the others will probably need replacing during the life of the new tanker: E3, JSTARS, etc. So offer keen pricing on the new toy now and you have a shoe-in for the follow-ons.
Once the KC767 is done, I reckon Boeing will close the 767 line as they won't want it competing with the 787. Boeing may get a look-in for other programmes using the 787 platform but they won't have the same leg-up as if they'd offered a 787 tanker for this requirement.
Highland Cow,
Boeing's Everett plant has a dedicated ship dock nearby, which is connected to the factory by (what I believe is) the steepest-grade railway in the US. Parts for all Boeing wide-bodies come in from all over the world - Japan, Korea, various European countries, Australia... They are most certainly not "all-American".