Ron Sugar Discusses the KC-45A Tanker Program on Fox Business Network
Ronald D. Sugar
Chairman and Chief Executive Officer,
Northrop Grumman Corporation
On Thursday, March 13, 2008, Northrop Grumman Chairman and CEO Ronald D. Sugar appeared on Fox Business Network's “Money for Breakfast” program to discuss the company’s KC-45A tanker contract. Below is a transcript of the interview.
Alexis Glick: US defense heavyweight Boeing is going after the Pentagon. The plane maker is challenging the US Air Force’s decision to award a European-based manufacturer, Northrop Grumman/EADS, a $35 billion air tanker contract. While this is already one of the single largest defense contracts in US history, it could eventually top $100 billion. Now, Boeing is accusing the Air Force of making last-minute changes to the specifications of the fuel tanker, giving Northrop Grumman/EADS the advantage. Here to defend the fairness of the Pentagon’s decision is Dr. Ron Sugar. He is the CEO and Chairman of Northrop Grumman. Good morning, Doctor.
Dr. Ronald Sugar: Good morning. How are you?
Alexis Glick: I’m terrific. I’m glad to have you here because we’ve been talking about this now for a couple of weeks. Let’s put it plainly. Did you win the contract fair and square?
Dr. Ronald Sugar: Everything we can see says that this was the most rigorous, fair, open, transparent competition in the history of the Pentagon. Everybody knew that this was going to be a highly-scrutinized competition. The Air Force was extraordinarily forthcoming with us and the other competitor regarding what they were interested in, what they needed. We each had the same RFP. We were each encouraged to bring our very best to the party. Competition is a good thing, and best we can tell, our plane was superior and was the one that was selected. We were very pleased with the process, and we think that the airplane, which is the thing which is most important, will be the best one for our young men and women in uniform.
Alexis Glick: All right. Dr. Sugar, as you know, the number one issue, I think, that is surrounding this debate, both on the Hill and across the country, is about jobs. Put it to me straight: what is going to be the situation in terms of the number of jobs that will be created here in the United States, and what percentage of those jobs will occur overseas?
Dr. Ronald Sugar: Well, first of all, Northrop Grumman is a United States company. We have 230 companies as part of our team, all of which will have work in the United States. We’ve stated that 60% of the jobs will be based in the United States. We believe that they’ll be in 49 states, 230 companies. This is a creation or supporting of on the order of 48,000 jobs nationwide, when you consider not only the direct jobs in the aerospace factories but also the related jobs as you use the Bureau of Labor Statistics. We believe that this will be a very substantial content. I would also point out that both offers have significant international content on their airplanes, as, in fact, is the case in all major weapons and international airplane programs today. It is a global supply chain; it’s an international supply chain. It’s rather disingenuous to say that somehow this is a European company versus an American company.
Alexis Glick: All right, so Boeing files a protest with the Government Accountability Office – the GAO – to review the contract. They suggest many issues. They put, in essence, together a four-point plan of why they think this was unfair. One of the key things they say is that there were five ratings and that the measurement of those five ratings between both you and Boeing were identical. Do you think their protest is fair? What do you make of their call to have this reviewed?
Dr. Ronald Sugar: Well, first of all, it is their right, under the procurement process, to have an appeal if they believe they have grounds for an appeal. We have regular process in this regard; it goes to the Government Accountability Office, which is independent of the Pentagon and the Air Force. It has 100 days to make a decision as to whether the protest will be upheld or basically turned down. That is due process. I think what we would argue is that: let the process proceed. We’ve certainly seen some members of Congress – by far, not most members of Congress, but a few – who have felt that they should block the program. What we would say: let the regular process occur. We have laws in the country; we have a procurement system. We don’t want to undermine the integrity of the system. If it turns out for some reason that the GAO determines that there was something about the process which was not right, that will be a finding they’ll have. Obviously, we will abide by whatever the GAO says, but at this point in time, based on everything we can see and our participation in this, this has been about as fair and straight as anything we’ve ever seen.
Alexis Glick: All right. Dr. Sugar, we want to thank you so much for joining us and giving us your side of the story. We appreciate it.
