WASHINGTON — Northrop Grumman has pulled out of the T-X program, becoming the second company to drop from the competition in a matter of weeks.

The company announced in 2015 that it had partnered with BAE Systems, L3 and Northrop subsidiary Scaled Composites for the Air Force program. But despite designing a clean-sheet trainer and building a prototype, the companies felt its offering was not competitive enough.

"Northrop Grumman and its principal teammate BAE Systems have carefully examined the U.S. Air Force's T-X Trainer requirements and acquisition strategy as stated in the final request for proposals issued on Dec. 30, 2016," a Northrop statement said. "The companies have decided not to submit a proposal for the T-X Trainer program, as it would not be in the best interest of the companies and their shareholders."

The competition now comes down to Boeing's clean-sheet design, the Lockheed Martin-Korean Aerospace Industries T-50, and a mystery offering from Sierra Nevada and Turkish Aerospace Industries.

During an earnings call last week, Northrop CEO Wes Bush hinted that the company was considering an exit from the competition. 

"Let me be clear: We have not reached a conclusion on that," he said, adding that the company was "really looking at each of these opportunities through the cold, hard lens of what does the RFP really tell you, and what would the business case look like?" 

One analyst asked if the competition had become a "low-cost shootout" between Lockheed Martin — which is offering an existing, off-the-shelf aircraft — and Boeing, whose offering was purpose built to be as low cost as possible. While Bush answered the question in general terms, he stated that the company was not often interested in proposing "lowest-cost, technically acceptable" solutions unless it believed its engineering or manufacturing process gave it significant advantages in that arena.

There is a growing sense around industry that T-X may end up following an unofficial lowest cost technically acceptable model. Certainly cost was a factor in the decision of Raytheon to abandon its partnership with Leonardo on the T-X just days ago, following the inability of the companies to reach an agreement on the cost of the plane.

If that is true, Northrop may have become a victim of doubled-back requirements. When T-X was first spinning up in earnest, the assumption among industry watchers was that the Air Force wanted an off-the-shelf, cheap and proven option. Leonardo’s T-100 offering (then with General Dynamics) and the Northrop-BAE offering of the Hawk system seemed likely winners, while Boeing’s decision to go with a clean-sheet design was seen as a long shot.

Then two years ago, Northrop shook up the competition when it announced it was dropping the Hawk design and going with a brand-new design through its Scaled Composites prototyping shop. At the time, it seemed to signal massive change in the competition — that the service wanted capability and was willing to pay more for it.

What happens next for Northrop's design is unclear. Little has been unveiled around it, with the company keeping details under wraps regarding the design and whether it has taken flight, although aviation enthusiasts have grabbed a few photos.