What will Northrop do about Air Force tanker contest?

Published 2:06 pm Friday, February 26, 2010

Politicians and industry observers alike seem to think the Boeing Co. has the edge in the Air Force aerial refueling tanker contest.

That begs the obvious question: if Boeing’s going to win, what should competitor Northrop Grumman do?

Defense analyst Loren B. Thompson with Lexington Institute takes a look at Northrop’s options in his latest blog entry.

Thompson sees four options for Northrop:

Bid: The defense contractor already has spent $200 million and four years in the tanker battle. To bid in a contest the company is more than likely going to lose, Northrop would spend another $100 million.

File protest with GAO: Northrop has the option of filing a protest with the Government Accountability Office on the premise that the Air Force’s contest “is so skewed in Boeing’s favor that it violates federal acquisition standards.”

Not bid, then challenge contract’s lack of competition: If Northrop decides not to bid, then the Air Force likely will pick Boeing, based on the absence of any other choice. The government’s rules for acquisition only provide a few circumstances in which a sole-source contract can be awarded. “Northrop might contend that none of the required circumstances exist,” Thompson wrote.

Complain to Congress: “Some members of Congress will undoubtedly find it suspicious that Northrop Grumman won the first round of tanker competition handily, but in the second round faces such bleak prospects that it may not bid at all,” Thompson wrote. However, he points out, Northrop, which depends more heavily on Republican backers in Congress, has fewer friends in Congress today than it did in 2008, when the Air Force initially awarded it the contract.