"After a comprehensive analysis of the final (request for proposal), Northrop Grumman has determined that it will not submit a bid to the Department of Defense for the KC-X program," said Northrop CEO and President Wes Bush, in a statement.

Northrop said it felt the structure of the source selection methodology defined in the proposal clearly favored Boeing's smaller refueling tanker and didn't provide "adequate value recognition" of the added capability of a larger tanker.

 

While Northrop believes it had grounds to successfully protest the contract proposal, it decided not to do so as it would cause another delay.

 

"America's service men and women have been forced to wait too long for new tankers. ... Taking actions that would further delay the introduction of this urgent capability would also not be acting responsibly," Bush said.

 

U.S. Deputy Defense Secretary William Lynn told the Wall Street Journal the department was "disappointed" by Northrop's decision not to submit a bid for the program.

 

"We strongly believe that the current competition is structured fairly and that both companies could compete effectively," Lynn said.

 

Northrop's partner in the proposal was European defense group EADS, rhe parent company of Airbus. Sources told Reuters EADS could still mount a bid on its own.

 

Northrop and EADS won the last competition in February 2008 with a bigger A330-based plane. But the deal was canceled after government auditors upheld a Boeing protest, Reuters notes.

 

Northrop shares rose slightly after hours Monday.

 

Source - http://www.thestreet.com/