Boeing has inside track for tanker as Northrop steps aside

WASHINGTON — Boeing now has the inside track on a $35 billion contract to start replacing the Air Force's aging fleet of aerial refueling tanks after Northrop Grumman announced Monday that it wouldn't bid.

Northrop's partner, the European Aeronautic Defense and Space Co., left open the possibility that it could bid on its own, though lawmakers and military analysts said that might be difficult. EADS is the parent company of Airbus, Boeing's fierce rival in the commercial airplane market.

"This is now Boeing's contract to lose," said Loren Thompson, a defense analyst with the Lexington Institute, a national security research center based in northern Virginia.

Defense Department officials didn't indicate Monday whether they'd follow through with the bidding process even though there probably will be only one bid or negotiate a sole source contract with Boeing. Bids are due in May, and the Air Force was expected to award the contract this fall.

In a statement, Deputy Secretary of Defense William Lynn said the Pentagon was disappointed that Northrop had decided not to bid and said that the competition was structured fairly so that both companies could compete effectively.

Boeing supporters on Capitol Hill said Defense Secretary Robert Gates had told them the Air Force would move ahead with awarding the contract even if only one firm bid.

However, Rep. Norm Dicks, D-Wash., who's about to become the chairman of the powerful House of Representatives Defense Appropriations Subcommittee, said the bidding should be scrapped and the Air Force should negotiate a contract with Boeing.

"I am confident they can now utilize their authority to proceed with the procurement of KC-767 tankers as quickly as possible, negotiating a contract that will allow the Air Force to begin replacing its tanker fleet rapidly," Dicks said.

Dicks also suggested that once the tanker is in production,

he'd push to increase production levels from 15 a year to 20 to 25 a year in an effort to replace the current Cold War-era tankers as rapidly as possible.

Northrop's decision was the latest development in the nearly nine-year effort to replace the tankers. Northrop-EADS won an earlier competition, but government auditors overturned the award after Boeing protested.

The initial contract is for 179 tankers, but the deal eventually could be worth $100 billion as the Air Force replaces about 600 tankers in what could be one of the largest Pentagon purchases ever.

In announcing that it wouldn't bid, Northrop said the competition "clearly favors" Boeing's tanker and denied the larger Northrop-EADS tanker any "competitive opportunity."

Wes Bush, Northrop's chief executive, said in a statement that the company had a "fiduciary responsibility" to its shareholders. "Investing further resources to submit a bid would not be acting responsibly," Bush said, adding that the company wouldn't protest the latest request for bids.

Boeing said in a statement that it remains "100 percent" focused on the competition and plans to submit a "fully responsive, transparent and competitive" proposal.

Boeing's tanker will be based on its 767 airframe, built in the company's Everett, Wash., plant and converted for military use at its facility in Wichita, Kan. About 9,000 jobs are at stake in Washington state, and 1,000 or so in Kansas.

Northrop-EADS would use an Airbus A330 airframe. It initial tankers would be built in the Airbus factory in Toulouse, France. Though construction hasn't started, Northrop-EADS promised months ago that it would build a plant in Mobile, Ala., to assemble its tankers.

While Washington state and Kansas legislators hailed Boeing's step toward winning the contract, Alabama lawmakers weren't happy.

"This so-called competition was not structured to produce the best outcome for our men and women in uniform; it was structured to produce the best outcome for Boeing," said Sen. Richard Shelby, R-Ala.


Air Force reopens tanker bidding, but will Boeing have competition?

More controversy looms as Air Force re-bids tanker contract

Northrop says it won't bid on air tanker competition

Northrop charges that tanker bidding skewed toward Boeing

Air Force won't factor WTO ruling in tanker competition

Follow the latest politics news at McClatchy's Planet Washington