Ron Sugar Discusses the KC-45 Tanker on Fox News Channel
Ronald D. Sugar
Chairman and Chief Executive Officer,
Northrop Grumman Corporation
On Friday, April 4, 2008, Northrop Grumman Chairman and CEO Ronald D. Sugar appeared on Fox News Channel’s “Your World with Neil Cavuto.” Below is a transcript of that interview.
Neil Cavuto: Well, another battle is brewing, this one over air tankers used to fuel military jets. Northrop Grumman got the $40 billion contract a few weeks ago, but Boeing claims an Air Force evaluation shows that its air tankers have a better survival rate during combat.
My next guest isn't buying it. Ron Sugar is the chairman and the CEO of Northrop Grumman. Ron, good to have you.
Ronald D. Sugar: Glad to be here, Neil.
Cavuto: Where does this stand with you guys? This is very unusual for a major government contractor to come back and cry foul.
Sugar: It is very unusual. In the years I've been in the business I've never seen anything quite like this. The Air Force did make a selection. In my 40 years, I've never seen a more fair and open, transparent competition. The selection was made.
Now, the other company does have the right to file a protest. We respect that. And the process will play out in the next 90 or so days of the 100 days of the period.
Cavuto: If you had lost, would you have done the same thing?
Sugar: You know, Neil, I'm not sure I can answer that. Clearly, we would watch the competition process. As we watched it unfold, we saw nothing that would give us any reason to believe it was not being done fairly. Clearly, that was their decision.
They decided to protest; that's their right. But the fact is the Air Force decided that the tankers that we offered were the ones they wanted to fly and the ones they wanted to go to war with.
Cavuto: All right, Ron. It is very unusual to have two major American military contractors at each other's throats. I don't think you described your view that way, but what do you make of the long-term implications of this?
Sugar: You know, it's hard to say. Obviously, competition is a good thing, Neil. I think it's very important we support it. We like to win whenever we can. Sometimes we can't. You know, the fact we had competitions will get 179 new tankers for what we would have paid for 110 without competition. So, competition is good.
And, by the way, no matter which company won this competition, the Air Force would have gotten a better tanker. I do think though that there is a concern that all of us have that as this plays out in the political scene that we might have an undermining of the fundamental integrity of military procurement. That's something that would not be good for anybody in this country. Certainly not good for national defense.
Cavuto: All right, the national defense has an issue that has come up again and again in this presidential contest as you know, Ron. And there is a perception at least that if a Democrat wins the White House – and given the fact that both of the prominent Democratic candidates see a drawdown in Iraq – the defense spending will decline, and decline dramatically. What do you make of that?
Sugar: Well Neil, I'm not sure that’s really going to happen. I'll tell you why. Because the president has sworn to defend the country against all threats. If you believe the threats in the world are going to diminish soon, then you will see a drawdown in defense, and rightly so. I'm not that optimistic. I think that we're going to have a very dangerous world for years to come. I think whichever party's in power, whichever candidate is there is going to have to defend the country.
Cavuto: So what did you make of it today when an Obama operative had indicated that it was distinctly possible that thousands of U.S. troops could remain in Iraq for some years to come? Was that a sign of the very thing you're talking about?
Sugar: Well you know, Neil, I really wouldn't comment on the presidential candidates, but I would say that our interests are very important around the world. American presence is important. The ability to project that presence depends on systems such as this refueling tanker. That's why it's so important that they get this plane as quickly as they can.
The planes we have now, many of them are 40, 50 years old. Many of them are getting very old. We really do need to replace them. One of the things that I would wish for, and I think many others in the Air Force would wish for, would be a speedy resolution to the protest process.
Cavuto: OK, very quickly. You're not as vilified, and not your individual company, certainly like others that have been, like the subprime lenders and some of the controversial companies that have become whipping boys in the political process.
But defense contractors have gotten their fair share of criticism, too. Would it be in your interest more to have a Republican in the White House for just business interest than a Democrat, or do you just say, “Hands off?”
Sugar: You know, Neil, we just say, “Hands off.” We don't participate in presidential elections; we don't support individual candidates. We obviously work with the Congress; we work with both sides of the aisle.
We work with those people who believe in a strong national defense. We think a bipartisan approach is the right one, because, at the end of the day, the Congress and the president have to do what's right for national defense. And, that's where we think we'll be best served.
Cavuto: All right, Ronald Sugar, Northrop Grumman chairman and CEO, thank you very much for joining us.
