Congressman Howard McKeon (R-CA) put out a statement today supporting Northrop. He said that he was “disappointed that Northrop Grumman has decided not to submit a proposal to build the Air Force’s next generation aerial refueling tanker.” He would like Northrop to reconsider its position.

Northrop is currently headquartered in California and has several thousand employees there. It is planning on moving to the Washington DC area in the near future.

The decision leaves Boeing as the sole announced bidder.

Statement on US Refueling Tanker Program Announcement

WASHINGTON, March 9 /PRNewswire-USNewswire/ — The European Commission notes yesterday’s decision by Northrop Grumman / EADS not to submit a bid to the US Department of Defense for the US Air Force’s aerial refueling tanker contract.

“It is highly regrettable that a major potential supplier would feel unable to bid for a contract of this type. Open procurement markets guarantee better competition and better value for money for the taxpayer,” stated EU Trade Commissioner Karel De Gucht.

In February 2008, Northrop Grumman / EADS was selected and awarded the contract to provide aerial refueling tankers for the US Air Force in a fair and transparent competition. This was a positive sign for free and open competition across the Atlantic. This also seemed to indicate that successful bids are possible when European industry teams up with US industry and they are allowed to compete fairly. This award was subsequently cancelled at the end of 2008.

In December 2009, Northrop Grumman / EADS expressed serious concerns to the Department of Defense and the US Air Force on the proposed acquisition criteria for the contract.

The European Commission would be extremely concerned if it were to emerge that the terms of tender were such as to inhibit open competition for the contract.

The US defense trade balance with the EU has traditionally been significantly in the US’ favor. In 2008 the US exported $5 billion and imported only $2.2 billion worth of defense material, in line with a historic ratio of double exports to imports.

The Commission will be following further developments in this case very closely.

Source: Delegation of the European Union to the United States

Statement by Deputy Secretary William Lynn on Northrop Grumman Tanker Announcement

“We are disappointed by Northrop’s decision not to submit a bid for the U.S. Air Force tanker replacement program.

In the last tanker replacement (KC-X) competition, Northrop Grumman competed well on both price and non-price factors. We strongly believe that the current competition is structured fairly and that both companies could compete effectively.

Based on the inputs we received from both offerors to the Department’s draft Request for Proposal (RFP), we made changes to reduce the out-year risk to the potential manufacturers of KC-X. However, we did not change the war-fighters’ requirements to accommodate either offeror.

The Department strongly supports trans-Atlantic defense industrial ties and believes they benefit the American war-fighter and taxpayer.”

The statement was published here.

Statement From Northrop Grumman on U.S. Air Force Aerial Refueling Tanker Program

WASHINGTON, March 8 /PRNewswire-FirstCall/ — The following is a statement from Wes Bush, Chief Executive Officer and President of Northrop Grumman Corporation (NYSE:NOC) , concerning the U.S. Air Force aerial refueling tanker program.

“After a comprehensive analysis of the final RFP, Northrop Grumman has determined that it will not submit a bid to the Department of Defense for the KC-X program. We reached this conclusion based on the structure of the source selection methodology defined in the RFP, which clearly favors Boeing’s smaller refueling tanker and does not provide adequate value recognition of the added capability of a larger tanker, precluding us from any competitive opportunity.

“Northrop Grumman fully respects the Department’s responsibility to determine the military requirements for the new tanker. In the previous competition, Northrop Grumman was selected by the Air Force as offering the most capable tanker for the warfighter at the best value for the taxpayer. However, the Northrop Grumman and EADS team is very disappointed that the revised source selection methodology now dramatically favors Boeing’s smaller refueling tanker. We agree that the fundamental military requirements for the new tanker have not changed since the last competition, but the Department’s new evaluation methodology now clearly favors the smaller tanker.

“We continue to believe that Northrop Grumman’s tanker represents the best value for the military and taxpayer – a belief supported by the selection of the A330 tanker design over the Boeing design in the last five consecutive tanker competitions around the globe. Regrettably, this means that the U.S. Air Force will be operating a less capable tanker than many of our Allies in this vital mission area.

“Our prior selection by the Air Force, our firm belief that we provide the best value offering, and the hard work and commitment of the many individuals and communities on our team over many years made this a difficult decision for our company. But 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. Investing further resources to submit a bid would not be acting responsibly.

“We have decided that Northrop Grumman will not protest. While we feel we have substantial grounds to support a GAO or court ruling to overturn this revised source selection process, America’s service men and women have been forced to wait too long for new tankers. We feel a deep responsibility to their safety and to their ability to fulfill the missions our nation calls upon them to perform. Taking actions that would further delay the introduction of this urgent capability would also not be acting responsibly.

“We recognize that our decision likely creates a sole-source outcome for Boeing. We call on the Department to keep in mind the economic conclusions of the prior round of bidding as it takes actions to protect the taxpayer when defining the sole-source procurement contract. In the previous round, the Air Force, through a rigorous assessment of our proposal, determined that it would pay a unit flyaway cost of approximately $184 million per tanker for the first 68 tankers, including the non-recurring development costs. With the Department’s decision to procure a much smaller, less capable design, the taxpayer should certainly expect the bill to be much less.”

Northrop Grumman Corporation is a leading global security company whose 120,000 employees provide innovative systems, products, and solutions in aerospace, electronics, information systems, shipbuilding and technical services to government and commercial customers worldwide.

Source: Northrop Grumman Corporation

It is being reported that Northrop Grumman (NOC) will not submit a proposal in response to the new KC-X RFP released at the end of last month. Supposedly the announcement will be made after the markets close. Northrop had written to the DoD in December saying they most likely would not without changes in the RFP to make it fairer to the Airbus 330 based aircraft.

There is no word on whether EADS will find another partner or bid by themselves for the $35 billion contract.

The Air Force, Navy and Marine Corps released to Congress their “Aircraft Investment Plan”. This lays out how many fixed wing aircraft they intend to buy and maintain through 2020. The U.S.A.F. intends to buy 109 tankers by that year at an estimated cost of over $30 billion.

The Air Force also plans to maintain a force of 223 C-17 and 91 C-5 heavy lift aircraft. The core of the services aircraft though will be the F-35 JSF with about 600 planned for purchase at the current schedule.

Boeing Selects Pratt & Whitney to Power Boeing’s Proposed NewGen Tanker to be Offered to U.S. Air Force

EAST HARTFORD, Conn., March 5 /PRNewswire-FirstCall/ — In an announcement made today, Boeing said it is offering the Pratt & Whitney-powered NewGen Tanker as its platform for the U.S. Air Force’s KC-X recapitalization program. Boeing’s proposal calls for the NewGen Tanker to be powered by Pratt & Whitney’s PW4062 engine. Pratt & Whitney is a United Technologies Corp. (NYSE:UTX) company.

“Pratt & Whitney is honored to partner with Boeing on the NewGen platform to be offered as America’s next generation of tankers for the U.S. Air Force’s KC-X program,” said Bill Begert, Pratt & Whitney Vice President of Military Business Development and Aftermarket Services. “The PW4000 engine has an exceptional track record of performance and reliability with numerous commercial customers operating the engine globally. We are confident it will meet Boeing and the U.S. Air Force’s performance requirements and expectations.”

Pratt & Whitney has delivered more than 2,500 PW4000-94″ commercial engines that collectively have logged more than 100 million flight hours on commercial aircraft around the world. The PW4062 is the highest thrust model in Pratt & Whitney’s PW4000-94″ commercial engine family and is offered for both commercial freighter and military tanker applications. Two PW4062 engines, each delivering 62,000 pounds of thrust, will power The Boeing Company’s NewGen Tanker.

The PW4000 family of engines includes models with thrust ratings ranging from 52,000 pounds to 98,000 pounds. These engines have an outstanding safety record, high reliability, excellent performance and low maintenance costs. The PW4000 family meets all required emissions and noise regulations, and offers superior fuel economy and maintainability. The PW4000-94″ engine operates commercially on Boeing 747, 767 and MD-11 aircraft and the Airbus A300/310 series.

This press release contains forward-looking statements concerning future business opportunities. Actual results may differ materially from those projected as a result of certain risks and uncertainties, including but not limited to changes in government procurement priorities and practices, budget plans and availability of funding, and in the number of aircraft to be built; challenges in the design, development, production and support of advanced technologies; as well as other risks and uncertainties, including but not limited to those detailed from time to time in the companies’ Securities and Exchange Commission filings.

Pratt & Whitney is a world leader in the design, manufacture and service of aircraft engines, space propulsion systems and industrial gas turbines. United Technologies, based in Hartford, Conn., is a diversified company providing high technology products and services to the global aerospace and building industries.

Stephanie Duvall
Pratt & Whitney Military Engines
860.557.1382
stephanie.duvall@pw.utc.com

Source: Pratt & Whitney

As it did in the last contest two years ago Boeing (BA) plans to submit a 767 based tanker. This is similar to the ones they are already building for Japan. To differentiate it from previous versions they are calling it a “NewGen” aircraft. Boeing will upgrade the basic 767 design with a new fueling boom and parts of the 787 cockpit technology.

There is still no formal word from Northrop Grumman (NOC) or EADS (EADS:P) if they plan to submit a proposal this time around.

It is being reported by various sources that EADS is pressuring Northrop Grumman to go ahead and submit a bid for the new KC-X RFP. Northrop had informed the Government that they planned not to if the terms were not significantly changed. They felt the RFP was favoring Boeing’s cheaper, smaller KC-767 aircraft.

The final RFP came out two weeks ago and still no word from Northrop that they will go ahead and submit something in May. EADS obviously would like another chance to win the contest after they lost the last one to Boeing’s protest in 2008. The $35 billion would go a long way to make up for the lost A400M revenue.

According to The Seattle Pilot-Intelligencer the International Association of Machinists District 751 wrote to the new Build Them Both Coalition that they support Boeing’s bid for the KC-X. They were responding to a letter sent to them by Build Them Both. The IAM argued that a split buy would not meet their goals of maximizing Washington jobs.