WASHINGTON — Northrop Grumman announced Monday that it won’t compete against Boeing for a $35 billion contract to build refueling tankers for the Air Force because Northrop doesn’t think it can win.
The decision puts the Pentagon on a path to doing something President Barack Obama said shouldn’t happen any more: paying large amounts of money to a major defense contractor without undergoing any competition.
The decision also will probably knock out a major international competitor from gaining a foothold in the U.S. market. EADS, the European Aeronautic Defence and Space Co., had partnered with Northrop Grumman to vie for the tanker but was not expected to be able to compete against Boeing on its own.
Wes Bush, Northrop chief executive and president, said in a statement that the Pentagon’s guidelines for the program “clearly favors Boeing’s smaller refueling tanker” but that the company would not file a formal protest.
“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 United States,” Bush said. “Investing further resources to submit a bid would not be acting responsibly.”
The political fallout was swift. Alabama Gov. Bob Riley, where Northrop would have assembled the planes and created thousands of new jobs, called the program a “charade” and said the Pentagon made it “impossible” for Northrop to compete.
“It’s disgraceful,” Riley said.
Boeing’s supporters shrugged off concerns that Northrop’s decision would mean higher program costs because Boeing would still have to meet requirements laid out by the Pentagon. They said it was good news that some of the work wouldn’t go overseas to EADS.
