Northrop CEO urges quick action on US tanker

By Andrea Shalal-Esa

WASHINGTON (Reuters) - Northrop Grumman Corp (NOC.N) Chief Executive Ron Sugar is urging quick action to wrap up a $35 billion competition for new aerial refueling tankers saying the Pentagon had thoroughly addressed concerns raised by government auditors.

Northrop and its European partner EADS (EAD.PA) beat out Boeing Co (BA.N) to win the lucrative contract in February, but the Pentagon relaunched the competition after the Government Accountability Office in June upheld Boeing's protest, saying the Air Force made significant errors in the first round.

Sugar told Reuters in an interview on Thursday that the Pentagon had reaffirmed its requirements for 179 medium-sized airplanes to refuel fighters and other aircraft during flight, and there was no ambiguity about what those requirements were.

Any further delays or protests in the process would be disruptive to the industrial base and would further delay efforts to replace the Air Force's aging fleet of KC-135 refueling tankers, Sugar said.

The Pentagon last week released a new draft request for proposals (RFP) to address the GAO's concerns, including a decision to give the bidders credit for greater fuel delivery, a factor that lawmakers backing Boeing say will give an edge to Northrop's larger tanker based on the Airbus A330.

But the Pentagon also said it would measure government ownership costs over 40 years instead of 25, which analysts say should favor the smaller Boeing 767-based tanker.

The Pentagon plans to release a final request for proposals sometime soon, and will give the companies until October 1 to submit revised bids.

Sugar said Northrop was in the process of drafting its revised bid, and rejected assertions by some Boeing supporters that the Pentagon had changed the requirements to favor the Northrop bid.

He said it was the Pentagon's job to define what weapons it needed, and there was no ambiguity about its requirements for the tanker.

"They revalidated the requirements for the tankers. We don't see a change in that," Sugar said, adding that Northrop had never doubted that "the Pentagon would value getting more for their money, more capability, for a comparable price."

(Reporting by Andrea Shalal-Esa; Editing by Tim Dobbyn)