Northrop Grumman and BAE Systems have decided not to submit a bid for a $16 billion US Air Force contract for 300-350 advanced jet trainers, narrowing a once diverse field to as little as two competitors.
The announcement on 1 February comes after Northrop Grumman chief executive Wes Bush warned analysts last week that the company was reassessing the business case for submitting a bid. One analyst speculated that Bush was simply applying pressure on Northrop’s T-X bidding team to keep bidding prices in check, but instead the company decided the benefits of winning the contract outweighed the costs.
Submitting a bid for the T-X Trainer contract “would not be in the best interest of the companies and their shareholders,” Northrop and BAE said in a statement issued jointly on 1 February.
The sudden withdrawal means the Boeing/Saab and Lockheed Martin/Korea Aerospace Industries teams remain committed to responding to the USAF’s request for proposals from late-December. Last week, Raytheon withdrew as the prime contractor for a bid based on the Leonardo T-100, leaving the Italian manufacturer to evaluate options for participating in the competition. Leonardo has not yet announced if the it will team with another US company, submit an independent bid or withdraw.
Northrop’s decision to bow out of the USAF competition surprised many industry analysts. The T-X contract, after all, will replace one of Northrop’s successful franchises, with the 400-strong T-38C Talon fleet approaching more than 55 years in service. For nearly a decade, Northrop has participated in every step of the USAF’s extended process for organising the competition. The Aerospace Systems segment invested heavily in Northrop’s bid, commissioning in-house rapid prototyping expert Scaled Composites to build and fly a prototype internally designated as the Model 400.
In his remarks last week, Bush made it clear that the terms of the USAF’s RfP made Northrop think twice about submitting a bid. He cited other ongoing competitions, such as a bidding war to recapitalise JSTARS, as more interesting to Northrop, as the USAF seems more willing to reward greater performance by allowing higher prices. If the T-X contract forces bidders to win on price alone, Northrop prefers to compete for new business elsewhere.
Boeing/Saab and Lockheed/KAI also are flying dedicated prototypes, including Boeing’s clean-sheet T-X in St. Louis and Lockheed’s T-50A in Greenville, South Carolina.