Business

<< Previous   of   Next >>   ADVERTISEMENT   CONTACT THE HERALD Mike Benbow, Business Editor benbow@heraldnet.com   Published: Tuesday, January 9, 2007 Tanker competitor hints it may not bid By Michelle Dunlop / Herald Writer EVERETT - The Boeing Co.'s chief competitor for a lucrative deal providing the U.S. Air Force with refueling tankers may not bid for the contract. Northrop Grumman Corp. sent a letter warning the Air Force that it may pass up the multibillion-dollar opportunity because company officials suspect competition guidelines already favor Boeing, according to a Wall Street Journal report Monday. The warning from Northrop comes roughly a week before the Air Force is expected to release its final request for proposal for its new fleet of tankers. Industry analyst Scott Hamilton, who has followed the prolonged tanker bid, suspects that Northrop may be playing its latest card in the game as an effort to create as much political pressure as possible on the company's behalf. "From everything that I've seen, the (request for proposal) is going to clearly favor Boeing," Hamilton said. Northrop officials claim that the Air Force does not make clear in its bidding process how it will weigh the added cargo capacity of Northrop's plane in comparison with the lower cost of Boeing's offering, thus giving Boeing the upper hand, the Journal story said. Northrop's complaint is the latest chapter in a deal riddled with scandals, allegations and delays. A few years ago, Boeing had wrapped up a $23.5 billion deal with the Air Force for 100 of the aircraft manufacturer's KC-767 refueling tankers. However, the agreement unraveled when it was discovered that Boeing had promised a Pentagon weapons buyer jobs for herself and her family in return for guiding the Air Force toward Boeing's bid. Northrop's partner in the bid is European Aeronautic Defence and Space Co. - the parent company of Boeing rival Airbus. Boeing and EADS, via the United States and the European Union, have exchanged complaints over unfair advantages at the World Trade Organization. In December, the Air Force decided to drop WTO criteria that would have hurt the Northrop-EADS bid and delayed publishing its final specifications until this month. If Northrop and EADS win the tanker bid, the two plan to work together at a manufacturing site in Mobile, Ala. The companies would base their refueling tanker on Airbus's A330. Boeing officials have said they will wait until the Air Force releases its final specifications before deciding to offer their Everett-built 767 or their 777. Northrop will determine whether it will participate in the refueling tanker competition after the guidelines are complete, the Journal reported.

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