Northrop to skip tanker bid, EADS mulls going solo
Mon Mar 8, 2010 1:55pm EST
WASHINGTON/PARIS, March 8 (Reuters) - Northrop Grumman Corp plans to announce on Monday that it will not compete for the U.S. Air Force's multibillion-dollar aerial tanker contract, forcing Airbus parent EADS to decide whether it will submit a solo bid, according to sources closely following the issue.
Northrop spokesman Randy Belote declined comment, saying his company would announce a decision when it finished analyzing the Air Force's final request for proposals (RFP).
EADS officials in Paris and Washington also declined comment.
But sources briefed on the decision said Northrop had told EADS it would not bid, forcing EADS to consider its options, including possibly bidding for the work without Northrop despite continuing reservations about how the competition is structured. They said an announcement was expected after the close of the U.S. stock market.
The sources declined to be identified since they were not authorized to speak on the record.
"If they don't see big money, they don't want to do anything," said one European defense source in describing Northrop's decision.
Northrop and EADS won the last competition in February 2008 with an Airbus A330-based tanker plane, but the deal, valued at around $35 billion, was later canceled after government auditors upheld a Boeing Co protest.
Northrop told the Pentagon in December it would not submit a bid in this follow-on competition unless there were significant changes to the Air Force's draft rules, which it said clearly favored Boeing's smaller 767 airplane.
EADS, anxious to add to its defense portfolio and gain a bigger foothold in the United States, has been backing a new bid by Northrop, a European source told Reuters last week. (Reporting by Andrea Shalal-Esa and Tim Hepher in Paris)