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.

{mosads}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“outdated, inaccurate and not germane to this [new] selection.”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.

{mosads}“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.