Pentagon down plays tanker termination fees
September 12th, 2008 | by admin |By Jim Wolf
WASHINGTON (Reuters) - The U.S. Defense Department said on Thursday it expected the cost to taxpayers of postponing its troubled $35 billion aerial tanker program to be minimal.
The Pentagon is on the hook to Northrop Grumman Corp, which bested Boeing Co in February to start building a now-cancelled 179-plane refueling fleet.
Defense Secretary Robert Gates told Congress Wednesday a planned do-over pitting Northrop against Boeing was being postponed until after the next president takes office January 20.
Northrop won the contract on February 29 together with its chief subcontractor, Airbus parent EADS. Boeing filed an ultimately successful protest on March 11, prompting a Pentagon “stop-work” order to Northrop.
Now that the Pentagon has given up on rerunning the contest this year, it will formally end the deal that has been on hold, the department said.
“The government’s liability is not significant beyond what was previously billed and paid for under the contract,” said Chris Isleib, a Defense Department spokesman. He did not specify how much had been paid so far.
Isleib said the termination was for the government’s convenience, “not for cause or default,” an important distinction in the government-contracting world.
Los Angeles-based Northrop said it was awaiting word from the Defense Department.
