A Warning On Nixing The Tanker Deal

A Warning On Nixing The Tanker Deal
March 14th, 2008  
Team Infidel

Topic: A Warning On Nixing The Tanker Deal

A Warning On Nixing The Tanker Deal
Seattle Post-Intelligencer
March 14, 2008 Reversal would hurt future bids, says Northrop CEO
By Joelle Tessler, Associated Press
WASHINGTON -- Northrop Grumman Corp.'s chief executive said Congress would undermine the entire government procurement process if it tries to block a $35 billion Air Force contract won by his company and its European partner.
Two days after The Boeing Co. filed its official protest of the air tanker award, Northrop Chairman and CEO Ronald Sugar said letting Congress step in and change the rules of the procurement game would make companies simply not want to play.
"How do you get companies to bid when you discover at the end of the day that Lucy pulls away the football?" Sugar said. "It would discourage companies from making significant investments to compete and then the Defense Department wouldn't get full competition. The stakes here are bigger than just one contract."
On Feb. 29, the Air Force awarded a high-stakes aerial refueling tanker contract to what many considered the underdog team of European Aeronautic Defense and Space Co. and Northrop Grumman. The contract to replace 179 refueling tankers is the first of three Air Force awards worth as much $100 billion to replace the entire fleet of nearly 600 tankers over the next 30 years.
While no Charlie Brown, Northrop Grumman and EADS weren't expected to beat out Boeing, which has been supplying refueling tankers to the Air Force for five decades.
Surprise quickly turned to fury as Boeing, its friends in Congress and labor unions registered their discontent over jobs, competitive fairness and foreign companies winning big U.S. defense contracts. Although Northrop Grumman is based in Los Angeles, EADS, parent of Boeing archrival Airbus, is headquartered in Paris and Munich.
Sugar's comments come as Northrop Grumman ramps up its public relations offensive to counter fierce criticism of the tanker deal on Capitol Hill. The company has run full-page advertisements in The Washington Post and several Capitol Hill newspapers this week.
On the lobbying front, the company has hired former Sens. Trent Lott, R-Miss., and John Breaux, D-La., to make its case.
For now, the contract is in the hands of the Government Accountability Office, the investigative arm of Congress, after Chicago-based Boeing filed its formal complaint two days ago. The GAO has 100 days from the date of the filing to review the Air Force decision.
In its protest, Boeing says the Air Force changed its evaluation method for the two tankers even after issuing a request for proposals -- allowing a larger tanker to be competitive even though the Air Force originally called for a medium-size plane. Air Force officials have indicated that the larger size of the tanker offered by the EADS/Northrop team helped tip the balance in its favor.
But Sugar said Thursday that the Air Force gave both bidders the same request for proposal and the same basic capability requirements, leaving each company to propose its own solution.
In addition, Sugar said he wants to diffuse "this jingoistic view that they picked the foreign airplane."
Although the EADS/Northrop tanker will be assembled in Mobile, Ala., many parts of it will come from Europe. That has led lawmakers from states that would have added jobs with a Boeing win to charge that the Air Force decision will hurt America's defense industrial base and send jobs overseas.
Boeing also sources many parts from other countries, including the U.K., Italy and Japan -- a point Sugar stressed.

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