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By Jennifer Yousfi
Managing Editor
After months of legal and political wrangling to reopen bids for a $35 billion U.S. Air Force tanker contract, U.S. aerospace firm The Boeing Co. (BA) is considering entering a “no bid” plea versus the joint-venture bid of rivals Northrop Grumman Corp. (NOC) and Europe’s EADS NV (PINK: EADSY).
“Company officials are strongly considering the option of not submitting a proposal as the company's Integrated Defense Systems sector tries to respond to the draft [request for proposal] within the government's speedy timeline," the aerospace industry magazine Aviation Week reported yesterday (Monday), citing “multiple” anonymous sources close to Boeing's ongoing deliberations.
However, Boeing representatives declined to comment on the report, stating that the firm would be meeting with Pentagon officials today (Tuesday) to discuss the bid. Any comment prior the meeting would be “premature,” said Boeing spokesman Dan Beck Reuters reported.
If Boeing decides to withdraw itself from the tanker race, it could prove embarrassing to the Air Force, which has gone to great pains to ensure a fair and open proposal process after the Government Accountability Office (GAO) backed a petition brought by Boeing that the U.S. Air Force altered the auction for a $35 billion aerial-tanker contract in the initial bid that was awarded to the Northrop Grumman/EADS joint venture in February.
Boeing filed a complaint in early March, claiming that the Air Force misled the company and modified its specifications to accommodate models made by Northrop and Airbus S.A.S.
The GAO found that there were discrepancies in the bidding process and recommended the Air Force re-conduct the bidding. However, GAO rulings are only advisory in nature, and the Air Force did not have to comply.
The Air Force was given 60 days to respond to the GAO’s ruling, and the speedy return of a decision to reopen the bid was seen as a good sign for Boeing.
But Boeing supporters were critical of the revised bid, which was released last week, claiming it favored the larger tanker model originally proposed by its rivals. Some members of Congress have been quite vocal about the U.S. defense contract going to a European firm.
The new criteria “appear to favor a tanker larger than any real-world scenarios would require,” said Rep. Norm Dicks, a Washington state Democrat, Reuters reported, implying that the new requirements give the edge to Northrop Grumman and EADS.
California-based Northrop feels the new bid process is more than fair.
“We are reviewing the draft RFP with an eye toward ensuring that it addresses the issues raised by the GAO in a way that facilitates a fair and non-political evaluation of the competing bids,” said Northrop vice president Randy Belote, AFP reported.
The new deadline for bid submissions is October 1.
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Money Morning:
Second Chance for Boeing as Defense Department Reopens Bidding on $35 Billion Contract
