Aviation

Boeing rival's absence may delay tanker deal again

If Northrop Grumman decides not to bid to replace U.S. Air Force refueling tankers, the lack of competition could delay the program once more, a defense analyst said.

Northrop Grumman, which has spent four years and reportedly $200 million in an attempt to win the contract, has said it might walk away from a competition that is stacked against it.

That would leave Boeing as the sole bidder for the $35 billion contract to build 179 tankers.

But a lack of competition could raise a lot of questions and potentially expose the process to another round of congressional scrutiny, Lexington Group defense analyst Loren Thompson said.

"Anybody who thinks by not bidding Northrop is giving up on this program doesn't know Northrop," Thompson said.

The Pentagon issued the final bid proposal on Wednesday. Companies have 75 days to turn in their bids.

It's the Air Force's third attempt to buy new tankers. Northrop won the previous round, but the decision was later overturned by the General Accountability Office.

Northrop has said the proposal favors Boeing and its smaller tanker based on the 767 rather than the larger Airbus A330 tanker Northrop would offer.

But new acquisition reform law may require Congress to take action before the contract's structure can change from a competitive one to a sole-source award.

A sole-source contract can be awarded only under a handful of circumstances.

And Northrop could charge that none of those circumstances exist.

"If the government contends there is only one responsible source — an argument deemed acceptable by the regulation — Northrop could argue that it too is a responsible source but has been forced out of contention by a flawed solicitation," Thompson said.

The government also could say there's a "compelling urgency" to move ahead with only one bidder, but Northrop could argue that the multiple delays in awarding a contract doesn't demonstrate a need for urgency

"And so on," Thompson said.

Northrop could petition Congress for redress. However, it doesn't have the kind of clout it did when Sen. John McCain was on its side and when Alabama's delegation, where Airbus would build a plant to build the planes, was in the majority, he said.

"A lot of its partisans have either left power or departed the fray," Thompson said.

Northrop has other options.

It could lodge a complaint with the Government Accountability Office that the process is so tilted in Boeing's favor that it violates federal acquisition standards.

"I don't think they (Northrop Grumman) would expect the GAO to take their side," Thompson said.

Northrop also could "bite the bullet and bid," he said.

But because Boeing's offering is smaller, it is likely to offer the most competitive price.

That makes it difficult for Northrop CEO Wes Bush to explain to his demanding board why the company should spend $100 million putting together another tanker proposal, Thompson said.

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