Northrop Joins Chase For Massive Air Force Contract for Tankers

Northrop Grumman said yesterday that it would compete for a $40 billion contract to build refueling tanker planes for the Air Force, setting up a two-way race between the Los Angeles weapons maker and rival Boeing.

The stakes are high. The companies are competing to build 179 tankers, which refuel other planes in midair, over the next 15 years, and the winner would be in place to potentially build hundreds more.

Northrop's decision to compete was considered critical because otherwise the Air Force would have been left with just one contractor, and some in Congress were likely to question whether the service could get a good deal under those circumstances.

Northrop had expressed concern that it would be at a disadvantage because it is proposing to build an aircraft that is larger than the Boeing plane, holding more fuel and cargo but also more expensive. But "we and our team members have determined that the Northrop Grumman KC-30 is a very competitive offering that fully supports the Air Force's tanker mission," Scott Seymour, a Northrop corporate vice president, said in a statement.

The contract has also drawn unusual curiosity because of its long and controversial history. In 2003, the Air Force tried to give the work to Boeing without competitive bidding, and planned to lease the planes before buying them in order to keep the upfront costs down. But the deal fell apart after Sen. John McCain (R-Ariz.) questioned the propriety of the deal and a former Air Force official admitted giving Boeing favorable treatment before taking a job with the firm.

Boeing said it would decide whether to enter its 767 or 777 aircraft in the competition. The Air Force, which has made replacing its aging refueling tankers its top priority, is expected to pick a winner later this year. "We aim to provide as level a playing field as possible," Michael W. Wynne, secretary of the Air Force, said in a statement. "We are pleased to see our industry partners have determined this process has allowed them to compete and win."