Northrop Grumman CEO Defends Air Force Deal The Air Force awarded one of its largest-ever contracts in February to Northrop Grumman and its European partner, EADS. Then controversy erupted. Now Boeing is trying to get the Government Accountability Office to overturn the contract. Northrop's CEO says Boeing's complaints are unfounded.

Northrop Grumman CEO Defends Air Force Deal

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This is MORNING EDITION from NPR News. Good morning. I'm Renee Montagne.


And I'm Steve Inskeep.

A military airplane that will never fire a shot is at the center of a major battle at the Pentagon. Aviation companies are defending their massive contract to build a refueling tanker.

Mr. RONALD SUGAR (CEO, Northrop Grumman): The United States very urgently needs to replace the tanker fleet it has. We have over 500 tankers. Most of them are 40, 50 years old, some older. We can't go anywhere in the world without them.

INSKEEP: Ronald Sugar is CEO of Northrop Grumman. He's meeting lawmakers in Washington this week because this is a matter of politics now and lobbying. His company won the contract along with the parent company of Airbus, the European firm. And one word there, European, starts to explain why Congress is concerned.

Chicago-based Boeing has protested its loss of the contract. Boeing argues, among many other things, that its smaller tanker could use airfields all over the world. Northrop's leader argues that's an oversimplification.

Mr. SUGAR: There were hundreds of criteria which the Air Force used. They modeled many, many scenarios in which these planes would be deployed, including across oceans, fields - forward fields. Based on all of those considerations, the issue of where you could land was not a discriminating factor at the end of the day. These are two very capable commercially based planes. As far as we can tell, the criteria for where you land is really one of many, many, many criteria and certainly not apparently the most important.

INSKEEP: So if you - not the most important, but is Boeing right, at least, that their plane could land in more places?

Mr. SUGAR: You know, I don't know that that's the case. I really don't. I think that both planes can land at 75, 80 percent of the airfields that need to be landed at. More importantly, there were five important capabilities or requirements that the Air Force looked at. In four out of those five criteria, Northrop Grumman was rated as superior. We tied in one. The Air Force determined that in terms of the costs we provided, we were also superior as well.

So it's easy to take one or two things - you can show a replay of a basketball game and show a shot that was blocked and maybe it was a foul and it wasn't a foul. Another guy may have stepped out of bounds. At the end of the day, you play a game by the rules. When the game is over, there is a decision and you move on.

INSKEEP: Of course, you're in Washington as the CEO of Northrop Grumman because we're going to do some instant replay with Congress here, aren't we?

Mr. SUGAR: Mm-hmm.

INSKEEP: And I have a quote here from John Murtha, well-known Democratic congressman, chairman of a subcommittee that's going to make some key appropriations decisions here. And he says that he thinks you followed the law in your submission. But then he goes on to say, quote, "There's a lot more to this. There's the industrial base you have to consider." Now, let me stop the quote right there.

Mr. SUGAR: Sure.

INSKEEP: Is there a serious concern because even though both Boeing and Northrop will use overseas parts in their manufacturing processes, you do have a European partner - Airbus - and there's going to be more of this plane built overseas than would be the case with Boeing.

Mr. SUGAR: Well, first of all, it's not a question did Northrop follow the law. Of course we did. The question is did the Air Force follow the law that Congress provided.


Mr. SUGAR: And everything we can say is that they followed the law religiously, to a T. It was a spotless procurement. Now, having said that, Congressman Murtha, who's a good friend and certainly a key leader in the Congress, has a right to look at the broader issues.

But let me dispel some misinformation. First of all, both aircraft have significant foreign content. And in the case of our plane, it does have overseas content, which involves content from countries which are allies of the United States with whom we have treaties. Secondly, the underlying 330 airliner itself contains substantial U.S. parts, components and subassemblies.

INSKEEP: Can Boeing argue more of our plane would've been built in the United States than would be the case with the Northrop and Airbus submission?

Mr. SUGAR: Well, I can't really speak to Boeing's numbers. I will tell you that 60 percent of our plane is going to be built with U.S. labor, U.S. contents. We're talking about 48,000 new direct and indirect jobs, 230 suppliers around the United States in 49 states.

INSKEEP: Let me read some more of Congressman Murtha's quote here, who says, once again, there's a lot more to this than the question of purely whether the deal was strictly legal. And he goes on to say later on, there are allies that have not stepped up and helped us in Iraq and Afghanistan. The suggestion seeming to be why do we want money to go to France and countries like that when they're not side-by-side with us all the time?

Mr. SUGAR: Well, you know, France is picked on a lot. The fact is, is the aircraft we're using - the 330 - is based upon a consortium of countries. The jobs that might have been done in Toulouse will in fact be done in Mobile, Alabama. That will add capability. It will add industrial base to the Southeast.

And I think it's probably false patriotism, perhaps even to some extent jingoism, arguing that one of the competitors is foreign while the other one isn't, when in fact both companies use substantial foreign supply chains. And by the way, I'm fine with that. That is OK. I think it's just important that we all recognize it.

INSKEEP: One more bit of the congressman's rather provocative quote. He goes on to say all this committee - his committee that he heads - all this committee has to do is stop the funding and this program is not going forward. What are you going to do as the CEO of Northrop Grumman? What's your strategy to make sure that Congress doesn't stop this deal?

Mr. SUGAR: Well, certainly my objective is to make sure the facts are known. There's been tremendous misinformation spread in the media and frankly, also spread to members of Congress. All we can do is make sure that people understand our view of what was done.

Now, at the end of the day, the Congress has to consider all the facts. If Congress wishes to overturn this decision, that's certainly something they can consider doing. They can cut off funding. I will tell you, though, as far as I know it'll be unprecedented in our history, and the process of doing it would have very significant ramifications for the work with all of our allies. And it would have a fundamental problem of potentially undermining the integrity of the entire acquisition process.

INSKEEP: Ronald Sugar is CEO of Northrop Grumman.

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