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Northrop Grumman/EADS renews threat to bail out of competition

By Chip Drago
Mobile Bay Times
Northrop Grumman's chief executive today "regrettably" informed U.S. defense officials that unless the Defense Department reverses course in its present Request For Proposal the company will concede to rival Boeing in the $40 billion competition to build a new refueling tanker for the U.S military, according to a letter obtained by Inside Defense, a website devoted to coverage of military matters.

Dated today, the letter from Wes Bush, Northrop Grumman's president and chief operating officer, to the Pentagon's Ashton B. Carter, Under Secretary of Defense for Acquisition, Technology and Logistics, reads:

"... absent a responsive set of changes in the final RFP, Northrop Grumman has determined that it cannot submit a bid to the Department for the KC-X program."

Bush notes that the defense department recently provided notice that it doesn't plan to issue a second draft RFP nor does it entertain any serious consideration of the company's concerns in a final release of the RFP.

Bush implied that the new draft RFP seemed skewed toward Boeing, favoring a "smaller aircraft with limited multi-role capability and its imposition of a structure that places contractual and financial burdens ... that we simply cannot bear."

About four weeks ago Bush had written a letter forewarning Carter of Northrop Grumman's plans if its concerns were ignored.

With the Pentagon's apparent dismissal of Northrop Grumman's position, the company must withdraw, according to Bush, although he did close by offering to discuss the matter further.

Northrop Grumman in a partnership with EADS, the European Aeronautic Defence and Space Company, planned to build its tankers at the Brookley Industrial Complex in Mobile. 

Citing its 200 suppliers in the tentative tanker program and many community and governmental partnership, Bush wrote that Northrop Grumman would inform them of its position.

The letter was copied to Deputy Secretary of Defense William Lynn and Secretary of the Air Force Michael
Donley.

Congressman Jo Bonner, R-Mobile, echoed Bush's frustration.

“I am very concerned the Pentagon has biased its RFP to the point that it is tantamount to the pre-selection of the smaller, less capable Boeing aircraft," Bonner said in a statement. "That is not competition at all — it is sole source, pure and simple.  We have been down the sole-source path before and it leads to exploding costs and less capability.   In an era of unprecedented deficits we can’t afford to give a blank check to Boeing or anyone else, yet the Pentagon seems intent on doing so."

"I sincerely hope the Pentagon officials make the changes necessary in the final RFP to preserve competition,” Bonner stated.
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