Bidding tradeoff

The exit of a bidder for a new Air Force tanker is good news for Boeing and Kansas but maybe not so good for U.S. taxpayers.

Monday’s announcement that Northrop Grumman had decided not to bid on a $35 billion Air Force tanker contract virtually guarantees that contract will go to Boeing Co.

That’s great news for Kansas and other states with Boeing plants and employees. It’s also good news for U.S. security and the U.S. military, which will get the refueling tanker it wants, built by an American company rather than the French-based EADS company that was partnering with Northrop Grumman.

Aside from Northrop Grumman and EADS, about the only potential losers on this deal are the American taxpayers, who will be asked to pay for the new tanker without the benefit of a competitive bidding process.

The battle over the tanker contract has been going back and forth between the two bidders for almost a decade. During that time, the Department of Defense accepted, then later rejected, tanker contracts with both Boeing and Northrop Grumman. At different times, both companies have threatened to withdraw from the competition, saying that the bidding process or the bid specifications favored the other party. Even though Northrop Grumman now has withdrawn, the final contract won’t be awarded until September, so stay tuned.

Between now and then, Boeing will be finalizing its bid — and its price tag — for the tanker. An article in Tuesday’s Seattle Times detailed the pricing dilemma facing the company. Without a competing bidder, Boeing theoretically would have a free hand in setting its price. However, the controversy that has surrounded this bidding process will place added scrutiny on how much the Pentagon pays for the tanker. If Boeing is seen to be taking advantage of Northrop Grumman’s departure, there could be a backlash to the contract being awarded without a competitive bid.

There are obvious advantages to keeping key military aircraft contracts with American companies. It’s also important that the U.S. military gets equipment that best serves its purposes. Northrop Grumman contends that the Pentagon’s latest guidelines for the bids “clearly favors Boeing’s smaller refueling tanker,” but if the smaller tanker is what best meets U.S. military needs, the Pentagon shouldn’t change the specifications just to ensure competing bids.

Competition certainly is desirable when it comes to spending taxpayer money, but it isn’t always the most important factor in the purchase of military equipment. Nonetheless, Boeing should understand its obligation not only to produce a superior product for the U.S. military but to do so at a price that is fair to American taxpayers.