The Boeing Company released details of its proposed next-generation tanker on Thursday that underscored just how tough it will be for Northrop Grumman to prevail in the next round of competition. Every feature of the Boeing plane seems calculated to maximize its competitive advantage under the revised terms of the solicitation, while also putting its rival at a disadvantage in the political debate about how the Air Force should recapitalize its aerial-refueling fleet. Boeing’s press release touting its plane was uncharacteristically blunt:
More cost-effective to own and operate than the larger, heavier Airbus plane, the Boeing NewGen Tanker will save American taxpayers more than $10 billion in fuel costs over its 40-year service life because it burns 24 percent less fuel. The Boeing NewGen Tanker program also will support substantially more jobs in the United States than an Airbus A330 tanker that is designed and largely manufactured in Europe.
Clearly, Boeing has jettisoned the reserved, diplomatic language that once characterized its public pronouncements on military programs. The company is working hard to prove that it is responsive and motivated, while calling attention to every one of the operational, budgetary and political drawbacks in its competitor’s offering. The shock of losing in the first round of competition has changed the company’s whole approach to preserving its fifty-year aerial refueling franchise, so don’t expect it to take any prisoners in the coming battle unless there is a need for hostages.
The Thursday disclosures must be unsettling for Northrop Grumman, because it still hasn’t determined whether there is a business case for bidding at all under the revised rules of competition. All of the benefits of bidding a bigger plane have been excised from the final solicitation, while the pricing requirements expose offerors to considerable risk. Northrop executives at this point are probably of two minds on how to proceed: the rational part of their brain is warning of all the potential pitfalls, but the emotional part desperately wants to fight and win.
The company has repeatedly told Pentagon leaders that it cannot bid under the terms being offered, but that was before its European partner, its government customer, and its political backers in the Congress began pressuring it to do so. On the other hand, Northrop Grumman’s management is also under pressure from its board and shareholders not to put big money on a long-shot bet that may not deliver positive results to the company’s bottom line for many years to come (if ever). Boeing’s announcement Thursday did nothing to ease the stress.
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