KPLU Local News
(2010-02-24)
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In this artist's depiction provided by Northrop Grumman Corp., a KC-45A refuels a B-2 stealth bomber.
(AP Photo/Northrop Grumman Corp)
The refueling tankers currently used by the Air Force were built in the Eisenhower era. The Pentagon has been trying to replace them for nearly a decade. First, a bid to sidestep the traditional procurement process by leasing planes from Boeing fell apart because of an ethics scandal. Then two years ago, Boeing lost the bid to a partnership between Northrup Grummon and Airbus-parent EADS - but successfully contested the process. Now the Air Force has issued a new request for proposals. Boeing's expected to propose a tanker based on its 767 airframe. But it's not clear what the competition will do.
"I think there's a very good chance that Northrup might just walk away from this."
Aviation analyst Richard Aboulafia says for Northrup and EADS, the tanker contract could mean entree into the world's biggest defense market. That's motivated their bidding in the past. But their strategy of providing a larger tanker with more capability at a higher cost isn't playing well. Based on preliminary information in the latest round, they've threatened not to bid.
"It came down to what they called a price shoot out. At the end of the day the only credit you get amounts to about 1%. So, it's probably not going to make a difference if you have a more capable but more expensive machine."
Aboulafia says with a new CEO at the helm, Northrup is unlikely to take a financial risk just to get into the market now. And he thinks EADS is facing cost overruns at home that will keep it from backing deep discounts. At the Pentagon briefing, Deputy Defense Secretary William Lynn told reporters the government wants a competition and hopes to award the contract this fall. Northrup isn't commenting for now. Both parties have 75 days to submit their bids.
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