How Northrop won contract

At least some of credit in grabbing the U.S. military's $40-billion tanker award is the result of a relationship between one guy at Northrop and one guy at European Aeronautic Defence & Space Co. As reported by the WSJ, Scott Seymour, head of Northrop's aircraft systems unit, and Ralph Crosby Jr., the top U.S. executive for Airbus parent EADS, were not only longtime friends and business associates, but had collaborated on an earlier joint program to sell Northrop-designed unmanned aircraft in Europe. Both apparently had reputations as being unconventional and sometimes impatient, qualities not normally associated with the bureaucratic world of military procurement.

"This was a pretty bold step," Mr. Seymour said of the bid. "Initially, there was certainly a lot of healthy skepticism." Mr. Seymour, 57 years old, coincidentally retired from Northrop on Friday, closing his career on perhaps its highest note.

[CUT]

For Mr. Crosby, 60, a French-speaking West Point graduate, the win is the culmination of his attempt to transform EADS North America into a major Pentagon player. Mr. Crosby sees broad implications for the defense industry because the Pentagon's decision to use a European plane "is a transformational shift in the way that weapons systems are acquired. It's an acknowledgment that globalization is real."

Just to give you an idea of how big a deal this contract is and how much of an upset the Northrop win was Washington Rep. Norm Dicks, one of the biggest Boeing supporters in Congress for obvious reasons, said, "It's just one of the worst things in my whole life. I am just shocked over this." On Wall Street, shares of Northrop are up 4.1 percent this morning.


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Mark Lacter
Mark Lacter created the LA Biz Observed blog in 2006. He posted until the day before his death on Nov. 13, 2013.
 
Mark Lacter, business writer and editor was 59
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