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Northrop Grumman won't bid in tanker contest

Northrop Grumman said this afternoon that it won’t bid in a contest to replace the U.S. Air Force’s aging fleet of refueling tankers.

The decision was made after a careful analysis of the Department of Defense’s final request for proposal, which clearly favors Boeing’s smaller tanker.

The proposal doesn’t provide “adequate value recognition of the added capability of a larger tanker, precluding us from any competitive opportunity,” Northrop Grumman CEO and president Wes Bush said in a statement.

Northrop will not protest the DOD’s proposal, Bush said. That would further delay a long process to replace the badly-needed tankers.

Northrop “really wanted to bid,” said Lexington Institute defense analyst Loren Thompson. But “they simply could not find a way of bidding that was consistent on their management’s guidance on profitability and risk.”

There were so many risks and the prospect of making a profit was unclear, Thompson said. “They really couldn’t do it.”

The decision will likely leave Boeing as the sole bidder, although a Reuter’s story has said that EADS, the parent company of Airbus, may weigh whether to submit a bid on its own. Boeing said last week that it will offer the Air Force a tanker based on its 767 commercial airliner. Northrop’s tanker would be based on the Airbus A330.

The Air Force issued a final request for proposal on Feb. 24. Bidders have 75 days from that date to submit proposals.