Northrop seeks Boeing price data


Northrop Grumman officials on Wednesday signaled they may take legal action to convince the Pentagon to release pricing data from Boeing that could prove critical in the battle to win an Air Force tanker contract worth at least $35 billion.

Northrop and partner EADS North America fear the Pentagon will make its choice based largely on price, which they refer to as “a cost shootout.” They believe that would put the Northrop-EADS team at a disadvantage because Boeing already knows the cost of Northrop’s offering from a previous competition for the tanker that was overturned.

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Northrop officials are pressing the Air Force and high-level Pentagon officials to find a way to release Boeing’s cost data from the previous competition.

But the company is also keeping other options open for obtaining the information, including pressing for the release of pricing data under the Freedom of Information Act, or taking legal action.

Randy Belote, Northrop’s vice president for communications, did not offer any details about possible litigation and stressed that Northrop is trying to resolve the issue before resorting to other options.

The Pentagon has asked Boeing to release information to Northrop, but so far it has declined.

“We are interested in working with the Air Force to resolve this issue as soon as possible,” Belote said at a briefing with reporters Wednesday.
Belote contends that the Air Force broke federal acquisition regulations when it gave Northrop Grumman’s proposed bid price to Boeing rather than an overall cost evaluated by the Pentagon.

“The regulations neither require — nor authorize — the disclosure of the awardees’ proposed cost or price. In fact, they expressly preclude the government from revealing information such as this because it is confidential and thus exempt from disclosure under the Freedom of Information Act,” Belote said.

Belote said that his company disagrees with the Pentagon’s argument that the pricing information Boeing received is “outdated, inaccurate and not germane to this [new] selection.”

Northrop Grumman won the contract to provide the Air Force with a tanker based on the new A330 from Airbus, whose parent company is EADS. While debriefing Boeing, the Air Force disclosed the cost information of the winning bidder, Northrop officials argue.

Boeing successfully protested the contract award with the Government Accountability Office (GAO) last year.

Now the Pentagon has opened a new competition to replace the Air Force’s Eisenhower-era tankers. The competing companies have been given the chance to provide their comments on a draft request for proposals before the government issues the actual request at the end of November or early December.

Belote acknowledged that the tanker contract is “important” to Northrop’s business. He and other company officials declined to answer questions about whether the company would protest the request of proposals with the GAO or pull out of the competition.

“We really need to see what the final request for proposals looks like before we make that determination,” said Mitch Waldman, a Northrop vice president for business development.

Boeing on Wednesday criticized Northrop Grumman for airing its concerns publicly.

“While our opponent and their supporters have begun attacking the U.S. Air Force and its tanker draft Request for Proposal, Boeing has chosen to work within the process and continue asking questions, some of which are posted on the Federal Business Opportunities website,” Bill Barksdale, a Boeing spokesman, said in an e-mail statement to reporters.

“In the past, this competition to replace America’s critical fleet of air refueling tankers has been fought very publicly. Our preference is to allow the process to play out rather than work the requirements through the media. We will talk about the KC-X tanker competition when we’re ready and when it’s appropriate.”

Boeing’s congressional supporters have been vocal about issues they consider to be unfairly disadvantaging the company.

Rep. Norm Dicks (D-Wash.), a defense appropriator, recently wrote the Pentagon’s director for defense procurement to say he had “serious concerns” that the draft request for proposal demonstrated a “clear bias” for Northrop. Boeing is expected to offer a 767 aircraft, which is a smaller plane than the A330.

Dicks argued that the Air Force was using unrealistic assessments of how much fuel will cost over the plane’s life, and how much military bases might have to be modified to house the new fleet of tankers. Dicks also charged that that the Air Force’s requirement for passing fuel to another aircraft at 1,200 gallons per minute would favor the Northrop bid.

Finally, Dicks renewed his call for the Pentagon to factor in European government subsidies in the development of Airbus aircraft.
The Alabama delegation also has been raising a ruckus over the draft request for proposals, arguing that it is already tilted toward Boeing.

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“I believe it’s a sham,” Sen. Richard Shelby (R-Ala.), a defense appropriator, said at a news conference on Tuesday.

Northrop Grumman and EADS plan to assemble the tankers in Mobile, Ala., and have promised the creation of new jobs in the area. Boeing’s major tanker operations would be in Washington state and Kansas.

Shelby, Sen. Jeff Sessions (R) and House lawmakers from Alabama want to meet with Defense Secretary William Gates to discuss their concerns before the Pentagon releases the final version of the bidding rules.