WASHINGTON — Northrop Grumman Corp. announced Monday that it won't compete against Boeing Co. for a $35 billion contract to build refueling tankers for the Air Force because Northrop doesn't think it can win.
The new planes would replace the KC-135 Stratotankers at MacDill Air Force Base in Tampa that the Air Force has been flying since the Eisenhower administration.
The decision puts the Pentagon on a path to doing something President Barack Obama said shouldn't happen anymore: paying large amounts of money to a major defense contractor without undergoing any competition.
The decision also will probably knock out a major international competitor from gaining a foothold in the U.S. market. EADS, the European Aeronautic Defence and Space Co., had partnered with Northrop Grumman to vie for the tanker but was not expected to be able to compete against Boeing on its own.
Northrop chief executive officer and president Wes Bush said in a statement that the Pentagon's guidelines for the program "clearly favors Boeing's smaller refueling tanker" but that the company would not file a formal protest.
The Pentagon defended the program as fair and said both companies could compete effectively. Defense Department spokesman Bryan Whitman said the program would not be reworked just to ensure a competition.
"To suggest that the department should conduct a competition that would result in DOD paying a much higher price for capabilities that are not needed simply isn't effective," Whitman said.
The political fallout was swift. Bob Riley, governor of Alabama, where Northrop would have assembled the planes and created thousands of new jobs, called the program a "charade" and said the Pentagon made it "impossible" for Northrop to compete.
Sen. Jeff Sessions, R-Ala., called the development "tragic." Added fellow Alabama Republican Sen. Richard Shelby: "The Air Force's refusal to make substantive changes to level the playing field shows that once again politics trumps the needs of our military."
A year ago, Obama said these kinds of no-bid contracts aren't a good deal for the taxpayer and vowed to change the way government agencies do business. With the support of Sen. John McCain, R-Ariz., his campaign rival in 2008, Obama ordered his senior advisers to come up with ways to encourage competition.
The tanker program is considered one of the biggest blunders in defense contracting history. The Pentagon has tried twice — and failed twice — to award a contract to buy tankers since 2003.
Information from Times files was used in this report.