Air Force Poised to Buy New Bomber, Avoid Acquisition Death Spiral

As the Pentagon prepares to tap a contractor to build a new stealth bomber — projected to be the largest weapons procurement in a decade — Air Force officials are making it known that they have taken every precaution to keep the project from suffering the same grim fate as other big-ticket acquisitions.

It was a telling move when the Air Force in 2011 assigned the management of the long-range strike bomber program to the secretive “rapid capabilities office” that is known for being leaner and more efficient than the conventional Air Force acquisition corps. The RCO made it an imperative that contractors use “mature” technology to ensure the bomber would not get bogged down in complex development. Two designs have been in a head-to-head competition  — one by Northrop Grumman Corp. and another by a Boeing-Lockheed Martin partnership.

Procurement process and technological performance aside, the success of the new bomber ultimately will depend on whether it can stave off cost overruns. To keep prices from going over the set threshold, the Air Force must buy no fewer than 100 bombers. For the contractor, the ability to produce 100 bombers at $550 million apiece is a “pass/fail” requirement, said top Air Force acquisition executive William LaPlante. Like all new weapon procurements, he said, the first one will be “more expensive and the last less expensive.”

The $550 million target is a bit misleading, though, because it was set in 2010 dollars. Adjusted for inflation, the so-called average procurement unit cost will be over $600 million. And it does not include an additional several billion dollars in development costs, which puts the total value of the program at about $70 billion to $80 billion.

The carefully crafted acquisition is all about avoiding the fate of the last stealth bomber, the B-2 Spirit. The batwing shaped B-2 became a poster child for excessive Pentagon spending due to its $2 billion price tag, although manufacturer Northrop Grumman contends the price would have dropped by two-thirds had the service bought the intended quantities of 132, instead of 21. The fleet was reduced to 20 after a 2008 crash. Similarly, the Air Force argued the F-22 fighter jet ended up costing three or four times its original estimate because the Pentagon truncated the buy from 750 to 187.

The theme of the rollout of the new B-3 bomber will be its leading-edge technological prowess but also its affordability. When development is completed in about five years, the goal is to start building seven to eight per year. A predictable building rate will be the key to keeping the bomber from the dreaded acquisition death spiral that occurs when production quantities are reduced and unit costs spike. “Fundamentally, at the rate we need to build to get 100, it’s a steady profile in the budget,” LaPlante told reporters Oct. 21. Unlike other programs that make optimistic assumptions about a steep production ramp-up, the bomber will be put on a slow but stable course to ensure the price goals can be met.

“It was deliberately set up that way to make it resilient to future budget ‘what ifs,’” said LaPlante. “This will make it easier for programmers to keep it funded.”
LaPlante was emphatic that funding predictability and a firm commitment to buying 100 bombers gave the Air Force leverage to press contractors to lower costs. The unit cost goals “drove a very specific behavior in how we developed the program,” he said.

The Obama administration requested $1.2 billion for bomber research and development in fiscal year 2016. In April, Congress slashed $460 million due to a projected delay in the contract award.
One question that the Air Force has not yet answered is what happens if and when budgets are cut and production drops from seven or eight aircraft a year to three or four. “That could hurt,” said aerospace and defense industry analyst Richard Aboulafia, of the Teal Group.

Pressures on the defense budget could keep the bomber program on edge for the foreseeable future, he said. The Air Force needs $4 billion to $5 billion a year to stay on course. That’s ambitious, said Aboulafia. “It’s been a long time since we spent $5 billion a year on anything. There are no funding guarantees for any program, to be sure, but this one will face extraordinary challenges because it will be competing for financial resources against other Air Force must-have weapon systems like the F-35 fighter and the KC-46 aerial refueling tanker.

The Defense Department has put forth a solid case for why a new bomber is needed. The current fleets of B-52, B-1 and B-2 bombers are aging and foreign adversaries continue to deploy increasingly advanced air defenses that legacy bombers could not penetrate. The new bomber also is being cast by the Pentagon as an essential tool of deterrence, both in a conventional role and as a nuclear-missile delivery weapon that would be the third leg of the U.S. nuclear triad.

But as with any other big-ticket weapon acquisition, “fiscal reality” is always a looming threat. The future of this program is “less about cost control and technological readiness than the ability to budget annual funding at a reasonable pace,” said Aboulafia. And that is not something the Air Force can predict with any certainty. It was the post-Cold War fiscal reality that led to the termination of the B-2 program after the Pentagon had invested $30 billion. The Pentagon halted production of the F-22 in 2009 as Defense Secretary Robert Gates sought to shift military investments from “exquisite” weapon systems to other equipment troops needed to fight insurgencies in Iraq and Afghanistan.

“People have short attention spans,” Aboulafia noted. “It wouldn’t take much to shift the bomber to a lower priority.” Gates in 2009 also terminated a next-generation bomber program the Air Force had started in 2004 with a goal to field a new aircraft by 2018. Gates believed the Air Force did not have a firm grasp of what it needed and was creating a boondoggle.
In the wake of the cancellation, the Air Force regrouped and summoned a team of experts from across the Defense Department to help develop credible requirements for a bomber. A study looked at the use of standoff weapons, drones, cruise missiles and other alternatives. “In the end, after all that analysis, the decision was made that a long range strike bomber was the right capability,” said Lt.

Gen. Arnold W. Bunch Jr., military deputy at the office of the assistant secretary of the Air Force for acquisition.

“We are more confident about this program than we have been about others,” Bunch told reporters Oct. 21. “Over the last three years the program office has worked closely with industry to make sure the designs and requirements are stable,” he said. “In 2011, we agreed to requirements based on using existing technology. We held firm those requirements. That has been important to keep cost under control.” In his view, the proposed bomber designs have a “higher level of maturity than any other new aircraft development.”

Officials have repeatedly called attention to the use of an “open architecture” and “modular” design that would make it easier to insert new components like sensors, communications and combat systems over the potential 50-year life of the fleet. “We are going to do something that has never been done in a major platform: an open and modular architecture,” said LaPlante. “The government controls the interfaces. We want to compete the upgrades.”

But LaPlante cautioned that the bomber will present complex “integration challenges,” as should be expected in a new weapon system. “What we don’t want to do is have to invent the subsystems as we invent the system. In the past, that’s been part of the problem.” He also pushed back on criticism that the Air Force is being too conservative in pushing the state of technology. That judgment is off base, LaPlante insisted. Just because technologies are mature doesn’t mean they are not advanced, he said. Much of the technology is secret and unlikely to ever be seen by the public.

In a rare public appearance last month before the House Armed Services subcommittee on seapower and projection forces, the director of the Air Force rapid capabilities office, Randall Walden, described the bomber’s path so far. “From the very start, we've had secretary of defense guidance on the fundamental capabilities required for the nation and our chief of staff continues to serve as the requirement's owner,” he told lawmakers. “Additionally, the program and the user personnel have been working side-by-side in the same office since the very beginning. We drastically slashed the bureaucracy normally involved in getting a program to stable requirements.” The problem with many acquisition programs is that they “overreach when it comes to the number of new capabilities and "bleeding-edge technology,” Walden said. “We put only mature capabilities on LRSB as opposed to every good idea technology. In short, it does not have to be everything for everyone.”

Topics: Armaments, Aviation, Bomb and Warhead, Procurement