Filed under: Deals, Competitive strategy, Boeing Co (BA), Northrop Grumman (NOC)
Boeing (NYSE: BA) lost its bid for the new Air Force tanker to Northrop Grumman (NYSE: NOC). The aircraft builder was able to get the process re-opened and now has a shot at getting the business that was awarded to Northrop.
Winning another chance at the large contract isn’t enough. According to The Wall Street Journal, “Boeing Co. stated it is inclined to bail out of its effort to win a $40 billion contract to build aerial refueling tankers for the U.S. Air Force unless the Pentagon agrees to give it a total of six months to submit a new bid.”
Boeing claims that it will take a long time to figure out how to configure one of its airplanes to haul the amount of jet fuel required by the Air Force.
The request is bogus. Boeing has been through the bidding process for the tanker once before. The idea that the company didn’t understand the specifications is remarkable.
Boeing might be trying to gain time to shave some of its costs off the project so that it can bring the price of its bid down. It should have done that in the first round. There’s no reason it should get that additional time.
It is no wonder Northrop got the original approval, and it is prone to get it again in this round.
Douglas A. McIntyre is an editor at 247wallst.com.
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