WASHINGTON, DC - PRNewswire via COMTEX - March 08, 2010
-- 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