The Seattle Times is reporting that Northrop Grumman and its partner European Aeronautic Defence and Space Co. will pull out of the race for the $35 billion contract to supply the Air Force with a new fleet of refueling tankers.
The paper cites an anonymous source who says the official announcement will come after the stock market closes this afternoon.
There had been rumors that Boeing would eventually have the competition to itself after the Pentagon released the final request for proposals Feb. 24.
For the ST’s full report, click here.
Magnolia Marketplace was about to call it a day when a Google alert caught our attention.
Several national media outlets are reporting that Northrop Grumman/EADS is threatening to pull out of the competition with Boeing for a $35 billion contract to supply the U.S. Air Force with a new fleet of refueling tanker planes.
In a letter with today’s date on it, Northrop Grumman President and COO Wes Bush told the Pentagon that the company believes the request for proposals basically rigs the competition to the point that it would be almost impossible for Boeing not to win it.
Obviously, if today’s threat became reality, it would be met with a healthy amount of disappointment in the Gulf Coast’s aerospace corridor, and more specifically, Jackson County in Mississippi, where Northrop Grumman’s shipbuilding division is located.
The leaders of the multi-state aerospace alliance that was launched recently, Gov. Haley Barbour among them, made it plain that their first priority was helping Northrop Grumman/EADS win the tanker contract.
Details of Bush’s letter can be read here.
The third competition between Northrop Grumman/EADS and Boeing to land a $35 billion contract to replace the Air Force’s ancient fleet of refueling tankers officially began last Friday. Tuesday, the first serious allegation surfaced.
A Northrop Grumman executive accused the Pentagon of sharing his company’s pricing information from the second bid — which Northrop Grumman won but was overturned after a Boeing protest — with Boeing, without returning the favor in the other direction. The first bid, won by Boeing, was thrown out after a corruption scandal blew up and sent a Boeing executive and an Air Force official to prison.
Clearly, with this much money on the line — the overall impact of the contract to the area that lands it could exceed $100 billion — both companies have their chin straps buckled extra tight.
It goes without saying (actually, Magnolia Marketplace said it recently) that the Mississippi Gulf Coast would reap untold impact cash and supplier jobs if Northrop Grumman wins the bid and ends up building the planes in Mobile.
Tuesday’s development probably is the first of many accusations and allegations Boeing and Northrop Grumman will hurl at each other before this thing is over. Stay tuned.
The years-old fight between Northrop Grumman/EADS and Boeing to supply the Air Force with a new fleet of refueling tankers had a pretty significant development this morning.
Since Defense Secretary Robert Gates reopened the bidding due to a Boeing protest after Northrup Grumman had originally won it, his office had total oversight over the rebidding process. That is no longer the case, or as much of the case as it used to be (if that makes sense).
Gates has restored to the Air Force the control over the process it enjoyed before the Boeing flare-up. Gates did say in a speech at the Air Force Association trade show that his office will continue to closely monitor things.
This probably doesn’t provide any sort of advantage to either company as the rebidding moves forward. Northrop Grumman’s victory was greeted with a lot of high-fives in Mississippi, specifically on the Gulf Coast. Northrop Grumman plans to build the KC-45 Tanker in Mobile, which could spin off suppliers and supplier jobs — not to mention direct jobs — to the area. Over the life of the contract, the deal could exceed $100 billion.
George Freeland, the executive director of the Jackson County Development Foundation, couldn’t overstate its potential during a conversation with Magnolia Marketplace a couple months ago.
The details of Gates’ speech can be found here.