Wow ... didn't see this coming.
Northrup-Grumman has been fighting Boeing for the USAF's next generation tanker contract, called the KC-X competition. This competition has been ongoing for years, and plagued by corruption, charges of bid rigging, changing requirements, and protectionism.
Boeing's KC-767 was leading the first iteration of the competition, when it was uncoverd that senior USAF officials involved in the bid evaluation were offered post-service jobs by Boeing.
Northrup-Grumman's KC-30 won the second try at the competition, but Boeing protested the verdict. The GAO got involved, agreed, and ordered a new competition with much more stringent requirements that would make it more clear the exact definition of what the USAF was looking for.
Boeing is offering a tanker configured version of its 767 airliner.
Northrup-Grumman was offering a tanker configured version of the Airbus A330 airliner.
The contract is one of the largest defense contracts still up for grab. The USAF is planning on procurring 109 of the aircraft, at a cost of around $30 billion. The aircraft will supplement its current fleet of KC-135R and KC-10 tankers. The KC-135R fleet, the newest of which was built in 1963, is somehow expected to soldier on until 2040. The KC-10s, built between 1979 and 1984, are overworked and limited to what airfields they can operate from.
Northrup-Grumman announced today that it was removing itself from the competition, stating generally that the new requirements could not be met by its KC-30 entry. Primarily, this was due to the size of the aircraft - the KC-30 is much larger than the KC-767, preventing it from operating on smaller airstrips the Boeing entry is capable of. N-G has pulled it's website dedicated to the KC-30.
I really thought Northrup-Grumman would fight harder. They've fought this battle for about 10 years now. Something has changed. Something has given them insight that tells them they will not win the competition, besides the obvious differences between the aircraft. Something has told them to cut their losses and run. Don't know what it is, but it will surely come out later on.