Northrop Grumman Corp.’s decision to pull out of the bidding for a multibillion-dollar Air Force aerial tanker contract stunned the aerospace industry last week.
But the news is not as bad as it seems for Los Angeles.
Northrop already announced last year that it was moving its headquarters from Century City to the Washington, D.C., area, making its local ties to the city tenuous at best.
Moreover, rival Boeing Co. is now widely expected to win the contract and is promising that suppliers in Los Angeles will get a share of the work. The contract could be worth as much as $35 billion to build 200 jetliners capable of refueling military airplanes in midflight.
“Californians have a great history of building great military airplanes,” said William Barksdale, a spokesman for Chicago-based Boeing. “In the next few weeks we will be talking about supplier companies across the country, which will include companies in California.”
Northrop and its European partner, Airbus parent EADS, pulled out of a competition that has seesawed between the two rivals for a decade. Northrop’s plane, a modified version of the Airbus A330 commercial airliner, has a wingspan of nearly 200 feet, considerably larger than Boeing’s proposed aircraft, a tanker version of its 777.
Boeing was originally awarded the contract in 2003 but had to give it up after a scandal involving a conflict of interest with an Air Force official. Then in 2008, Northrop and EADS were awarded the contract, but Boeing successfully appealed the evaluation process.
In a statement issued last week, Northrop Chief Executive Wes Bush said his company was disappointed that the revised evaluation methodology “now dramatically favors Boeing’s smaller refueling tanker.”
Had the original contract been upheld, Northrop said 42 California businesses would have been suppliers for the new airplane, known as the KC-45A. The contract would have supported thousands of California jobs, pumping an estimated $300 million or more into the local economy.
Barksdale last week declined to say how many Southern California companies are likely to be involved in production of the new aerial tanker, which will be assembled in Everett, Wash. Boeing has more than 5,800 suppliers in California, including more than two dozen in Los Angeles County. The company also has nearly 26,500 employees in the state.
“What role California will play we don’t know yet, but people need to know that we’re talking about suppliers in California,” Barksdale said.
Loren Thompson, a consultant in the aerospace industry and chief operating officer of the Lexington Institute, a think tank in Arlington, Va., agreed. At least a portion of the jobs generated by production of the new air tanker, he said, will go to Southern Californians.
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