Tuesday, Northrop Grumman Corp forwarded its intentions to not to compete in a projected $50 billion aerial tanker competition, expecting notable changes in terms that it argues favor rival Boeing  Co.

The Pentagon expressed regret over the decision taken by Northrop and its European partner EADS and said that it will not alter its military requirements to give either company an advantage.

Pentagon spokesman Bryan Whitman, while emphasizing that both Boeing and Northrop had suggested changes that would favor their respective bids, explained that the Department has played this right down the middle.

Mr. Whitman said, “The department cannot and will not change the warfighting requirements for the tanker to give advantage to either competitor. The department wants competition but cannot compel the two airplane makers to compete.”

The final terms for the competition would be issued by Pentagon after it finishes reviewing comments and questions about the draft request for proposals, most likely in January.

Tuesday, the Pentagon's chief weapons buyer was specified by Northrop President and Chief Operating Officer Wes Bush that until the Defense Department significantly changes the terms, Northrop would not submit a bid in the competition.

In a letter dated Dec 1, Bush told Ashton Carter, defense undersecretary for acquisition, technology and logistics, Northrop remained worried that the existing terms reflected a preference for an aircraft smaller than the A330-based tanker it had offered formerly with Airbus parent EADS.

The letter also read that the terms also imposed a structure that places contractual and financial burdens on the company that we simply cannot accept.

Bush specified that Northrop was informed by the Pentagon that it did not plan to issue a second draft, and its responses to Northrop's questions did not appear responsive.

The Defense Department, which was unhappy with the move, said that it expected Northrop and EADS to return to the process when the final terms were announced.