*Northrop wins a big one

Along with the European Aeronautic Defense & Space Co., it's won a $40-billion contract over the next 10-15 years to supply the U.S. military with aerial refueling tankers. The win is still not official, but it's being reported by several news agencies (announcement is expected at 2 p.m.). It's quite an upset in the military procurement world - Boeing has had a lock in this arena - and it could bolster L.A.-based Northrop's standing in future Pentagon programs. The Air Force initially wants 179 tankers.

*Update: Lots of coverage on the Northrop award, which obviously took lots of aerospace industry watchers by surprise. And yet, Boeing seemed to do its best over the years to upend its chances - mostly by its own bluster and overconfidence. From the NYT:

The Air Force, short on cash and wanting to acquire the planes as fast as possible, proposed an arrangement to Congress in late 2001 under which the Pentagon would lease the Boeing 767s in a multiyear sole-source contract that would keep Boeing’s aging 767 production line alive. But just as the Air Force was about to sign that deal, it came under sharp attack from Senator McCain, a former pilot and a member of the Senate Armed Services Committee. Mr. McCain denounced the deal as a sweetheart arrangement between Boeing and the Air Force that would shortchange the taxpayer and that was arranged with insufficient scrutiny and oversight.

In the ensuring firestorm, embarrassing e-mail messages were made public in which the Air Force secretary, Mr. Roche, said “Go Boeing!” and called opponents of the deal “animals.” Soon afterward, it was reported that the Air Force’s No. 2 weapons buyer, Darleen A. Druyun, had been promised jobs for herself, her daughter and son-in-law in return for steering the tanker contract and billions of dollars of other Air Force business to Boeing. Soon after joining Boeing at a $250,000-a-year post, Ms. Druyun and Michael Sears, Boeing’s former chief financial officer, pleaded guilty in the scandal and received prison terms. The weight of the scandal caused the Boeing deal to collapse in 2004 and opened the door to competition from the arch-rival European Aeronautic Defense and Space Company, which teamed up with Northrop to promote use of Airbus planes as Air Force tankers.



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Mark Lacter
Mark Lacter created the LA Biz Observed blog in 2006. He posted until the day before his death on Nov. 13, 2013.
 
Mark Lacter, business writer and editor was 59
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