Northrop pulls out of race for $35 billion contract

Northrop Grumman has threatened to withdraw from the competition for a $35 billion contract to build new US military tanker aircraft.  Northrop had teamed with European Airbus parent EADS to bid against Chicago-based Boeing. If Northrop drops out, Boeing would become the sole bidder for the job.  The contract is to supply 179 converted civilian jetliners to become tanker aircraft for aerial refueling, to replace the Air ForceÔÇÖs current ageing fleet of KC-135 tankers.  Los Angeles-based Northrop submitted a modified Airbus A330 jet, with Boeing likely to put forward a smaller and cheaper 767-based tanker. The Airbus tankers would have been constructed in Alabama, were the bid successful. Northrop is arguing that the bidding guidelines put it at a disadvantage because it doesnÔÇÖt make commercial planes on its own. It is believed that by withdrawing at an early stage in proceedings, the firm is hoping that the Pentagon will modify its contract terms. The Air Force first launched the tanker competition in 2006, awarding the work to Northrop and EADS in 2008 after they offered a more versatile plane at a cheaper initial price. However, Boeing successfully contested the decision, complaining that its rivals had been unfairly awarded extra points for offering a larger plane, despite its higher operating costs.  Following the appeal, the Pentagon was forced to scrap the contract and begin the whole process again. The new competition was announced in September of this year.  Defense officials have said they are not prepared to change the requirements for the contract to favor either company.  In a final twist to the saga, Northrop and EADS have also accused the Pentagon of disclosing sensitive price details from their bid for the tanker contract in the previous round of the competition that could give their rival Boeing an edge in the current round.  Defense officials have rejected the allegations, saying that no federal regulations were violated by the disclosure and that the details are now outdated and therefore not relevant to the current round of bidding.  Advocates in Congress for both Northrop and Boeing have both accused the Pentagon of bias towards the other party.  The final bid rules are expected to be released in January next year.  *┬á┬á┬á┬á┬á┬á┬á *┬á┬á┬á┬á┬á┬á┬á *