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March 10, 2010 -
Northrop Grumman will not bid for the US Air Force Tanker replacement
program. In 2008, Northrop Grumman was selected and awarded the US Air
Force KC-135 modernization program contract. However, Northrop Grumman
has decided not to submit a bid to the Department of Defense (DoD) for
the KC-X program. Northrop had expressed serious concerns to the DoD and the U.S. Air Force that the acquisition methodology outlined in the Request for Proposal (RFP) would heavily weigh the competition in favor of the smaller, less capable Boeing tanker. |
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"After a comprehensive analysis of the final RFP, Northrop Grumman has
determined that it will not submit a bid to the Department of Defense
for the KC-X program. We reached this conclusion based on the structure
of the source selection methodology defined in the RFP, which clearly
favors Boeing's smaller refueling tanker and does not provide adequate
value recognition of the added capability of a larger tanker, precluding
us from any competitive opportunity.
"Northrop Grumman fully respects the Department's responsibility to
determine the military requirements for the new tanker. In the previous
competition, Northrop Grumman was selected by the Air Force as offering
the most capable tanker for the warfighter at the best value for the
taxpayer. However, the Northrop Grumman and EADS team is very
disappointed that the revised source selection methodology now
dramatically favors Boeing's smaller refueling tanker. We agree that the
fundamental military requirements for the new tanker have not changed
since the last competition, but the Department's new evaluation
methodology now clearly favors the smaller tanker.
"We continue to believe that Northrop Grumman's tanker represents the
best value for the military and taxpayer – a belief supported by the
selection of the A330 tanker design over the Boeing design in the last
five consecutive tanker competitions around the globe. Regrettably, this
means that the U.S. Air Force will be operating a less capable tanker
than many of our Allies in this vital mission area. |
"Our prior
selection by the Air Force, our firm belief that we provide the best
value offering, and the hard work and commitment of the many individuals
and communities on our team over many years made this a difficult
decision for our company. But we have a fiduciary responsibility to our
shareholders to prudently invest our corporate resources, as do our more
than 200 tanker team suppliers across the
"We have decided
that Northrop Grumman will not protest. While we feel we have
substantial grounds to support a GAO or court ruling to overturn this
revised source selection process,
"We recognize that
our decision likely creates a sole-source outcome for Boeing. We call on
the Department to keep in mind the economic conclusions of the prior
round of bidding as it takes actions to protect the taxpayer when
defining the sole-source procurement contract. In the previous round,
the Air Force, through a rigorous assessment of our proposal, determined
that it would pay a unit flyaway cost of approximately $184 million per
tanker for the first 68 tankers, including the non-recurring development
costs. With the
Department's decision to procure a much smaller, less capable design,
the taxpayer should certainly expect the bill to be much less" said Wes
Bush, Chief Executive Officer and President of Northrop Grumman
Corporation |
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