Let’s Be Fair

In the highly competitive landscape of large-scale defense contracts, one of the keys to continued innovation and technology growth are healthy bidding wars.  However, once a bidding battle has been completed, it should not have to be performed once again due to one company’s dissatisfaction with their loss.  Although it appears to be the what is occurring in the current Pentagon Tanker Competition.

Photo Courtesy of WSJ

The Wall Street Journal reported that the bidding war, for the pentagon’s highly sought after $40 billion dollar tanker contract, has been temporarily called off due to the political entanglements involved in the situation.  This is despite the fact that Northrop Grumman Corp. had already been declared the winner over Boeing this past February.  Boeing’s domestic domination has caused a slowdown in the competitive marketplace and it is clear that the next US Presidential regime will not be forced to make the decision between the two companies.

So does this decision give Boeing a legitimate chance at winning back this contract?  Most likely not.  And there are two main reasons:

1. Boeing currently does not have a plane large enough to fulfill the Air Force’s request.  And with the current Boeing labor dispute (coverage), the company will certainly be meeting with delays for all new projects, especially its new 787.  Conversely, Northrop Grumman has already satisfied the Pentagon’s demand due to the fact that they won the original contract at the end of this past Winter.
2. If the new President is Sen. John McCain, Boeing will find itself on an uphill slope considering that McCain has previously blocked contracts from the aerospace firm that he believed were won ‘too easily’.

Austin Cole from the WSJ says this about the situation,

“Although the decision gives Boeing a chance at a fresh start, the company will face the prospect that one of its key critics, Sen. John McCain, could potentially be the next president when the matter is decided. Five years ago, the Republican senator helped scuttle an original plan to lease a fleet of tankers from Boeing because the contract was not competitively bid. His office played a key role in opening up the competition to Northrop Grumman and its partner, European Aeronautic Defence & Space Co.”

So despite the fact that Boeing has been given a second chance to win this contract, Northrop Grumman still appears to be the most likely company to win this bidding war, and rightfully so.