03/09/10 — Officials: They saw Northrop Grumman decision coming

View Archive

Officials: They saw Northrop Grumman decision coming

By Steve Herring
Published in News on March 9, 2010 1:46 PM

Wayne County officials said they are disappointed, but not entirely surprised by Northrop Grumman Corp.'s announcement that it is dropping out of the competition to build refueling tankers for the Air Force.

Despite the Monday announcement, the local leaders, who are in Washington, D.C., for the National Association of Counties' annual legislative conference, remain hopeful that local companies, such as AAR Cargo Systems, may still be in the running for some of the work associated with the tanker construction.

Northrop had been competing against Boeing Co. for the $35 billion contract to build the refueling tankers. Had Northrop, which was partnering with the European Aeronautic Defense and Space Co., won the contract, AAR likely would have been a beneficiary of that work.

County Manger Lee Smith and commission Chairman Jack Best met Sunday in Washington, D.C., with a delegation from Mobile, Ala., as well as representatives of EADS.

The group from Mobile also was interested in securing some of the contract work had Northrop won the contract

"EADS told us Sunday it was a possibility they would not compete, that they felt it was too much of an uphill battle," Smith said in a telephone interview today.

Smith said he had heard the same comments Monday, before receiving the call about the decision.

Northrop's decision probably knocks out EADS, a major international competitor, that had partnered with Northrop Grumman to vie for the tanker but was not expected to be able to compete against Boeing on its own.

The delegation from Mobile also had an interest in Northrop getting the contract and had contacted Wayne County officials about the issue.

"It is a shame," Smith said. "That is pretty disappointing. It was really going to help us with AAR and other local companies. Northrop really looked better, with an Air Force multi-use plane that could carry troops and equipment as well as fuel and operate 25 percent less (cost) than Boeing."

Smith said that Boeing has a large "footprint" in the country, but would not be as much of a direct help to local companies as Northrop would have been in a position to be.

"We are still in the game," he said. "Northrop and EADS build the booms for the new tankers."

Smith and Joanna Helms, president of the Wayne County Development Alliance, said Alliance officials have not yet spoken to anyone from AAR about the announcement.

"Oh, it is a loss," Mrs. Helms said. "It is a lost opportunity for Wayne County and North Carolina. It would have been a great thing anytime a local company like AAR to be involved in such a large project."

The impact would be felt on the local, regional and state level, she said.

Mrs. Helms also expressed some frustration about the decision-making process.

"There is not a lot on the local level we can do," she said. "We are kind of so far out of the loop as far as decision making. It is out of our hands and it can be frustrating."

State Sen. Don Davis, D-Greene, also had begun to work toward a different outcome -- lobbying federal officials to pursue a dual-source procurement solution to allow both Northrop and Boeing to build tankers.

Such a solution, which was also being proposed by officials from Alabama, a nonprofit, nonpartisan coalition called American Jobs Now, and a Gulf Coast aerospace and aviation business and economic group called The Aerospace Alliance, was estimated to be able to produce 100,000 jobs across the nation, as well as build the tankers at twice the speed.

However, at the very least, Davis said, the fact that only one company is bidding on the project is distressing. Even local governments are required to secure at least three bids whenever possible -- and their projects aren't ultimately worth trillions of dollars.

"I believe competition is important. Right now it is apparent we may be on a pathway of giving a blank check to a defense company," he said. "Obviously taxpayers win when there is competition. Whether it was dual procurement or not, I'd have loved to have seen a competitive process. It seems like something is broken there."

AAR officials could not be reached for comment prior to press time this morning.