Northrop Grumman Wins Long-Range Strike Bomber Contract
The estimated $80 billion program, which pitted Northrop against a team comprising aerospace giants Boeing and Lockheed Martin, is the largest and most highly anticipated award since Lockheed Martin won the F-35 joint strike fighter contract in 2001. Northrop Grumman is the manufacturer of the B-2, the last stealth bomber built by the United States.
Air Force officials said the result of two independent cost estimates put the per-aircraft unit price lower than the previously stated goal of 100 bombers at $550 million each. The new estimate is $511 million in 2010 dollars, which is now about $564 million adjusted for inflation in 2016 dollars. The engineering manufacturing and development portion will cost $21.4 billion in 2010 dollars and $23.5 billion in current dollars.
James said: “Our goal in the Air Force will be to beat these cost estimates.”
The three major military aircraft manufacturers now have one major program each: Boeing the KC-46 tanker, Lockheed Martin the F-35, and Northrop Grumman the bomber.
Air Force Assistant Secretary for Acquisitions William LaPlante said industrial base concerns were not a factor in the contract award.
What exactly Northrop and runner-up Boeing-Lockheed offered is shrouded in secrecy. Unlike other major military contract awards, the contenders have had to keep their proposed designs and ideas under wraps. The Air Force in 2011 assigned the management of the long-range strike bomber program to the secretive “rapid capabilities office.”
Wes Bush, chairman, chief executive officer and president of Northrop Grumman, said in a statement that: “the Air Force has made the right decision for our nation’s security. As the company that developed and delivered the B-2 Spirit stealth bomber, we look forward to providing the Air Force with a highly-capable and affordable next-generation long-range strike bomber.”
“Our team has the resources in place to execute this important program, and we’re ready to get to work,” Bush added.
A joint Boeing-Lockheed Martin statement said: “The Boeing and Lockheed Martin team is disappointed by today’s announcement. We will have further discussions with our customer before determining our next steps. We are interested in knowing how the competition was scored in terms of price and risk, as we believe that the combination of Boeing and Lockheed Martin offers unparalleled experience, capability and resources for this critically important recapitalization program.”
Officials at the press conference said Boeing-Lockheed executives would be debriefed on the selection process on Oct. 30. They declined to speculate on a possible contract protest.
The winning proposal included all major subsystems such as the engine, but officials said those specifics were classified.
Development will take about five years with the aircraft expected to reach initial operating capability in the mid-2020s. There is no set timeline for full operational capability, officials said.
Ray Jaworowski, a senior aerospace analyst at Forecast International, a Connecticut-based market consulting firm said, “There’s an awful lot of talk among industry people … that this is going to lead to some kind of massive consolidation of the industry. Boeing may jump in and try to acquire Northrop because it doesn’t want to lose out completely on the aircraft market.”
Mackenzie Eaglen, a resident fellow at the American Enterprise Institute, a Washington, D.C.-based think tank, said the loss for Boeing will not be as significant given the company's volume of commercial aerospace work and given its mega-win in the new tanker procurement.
Richard Aboulafia, vice president of analysis at the Teal Group, a Virginia-based defense and aerospace market analysis firm, said, “This somewhat rearranges the chairs of the industrial base.” In the long run, Northrop Grumman will become the second combat aircraft prime after Lockheed Martin. Boeing has some hard choices to make, he said. The company can return to being an overwhelmingly commercial airliner manufacturer, which is what it was before it purchased McDonnell Douglas and Rockwell [International], or it can make a bid for Northrop Grumman’s aircraft unit and hope that Northrop would rather disaggregate its bomber program.
Dakota Wood, a senior research fellow for defense programs at the Heritage Foundation, a Washington, D.C.-based think tank, said the Northrop win, “keeps them in the aircraft manufacturing business. ... I don’t mean to oversimplify it, but clearly Lockheed Martin and Boeing have other things that they are involved in. ... They’ve got markets that keep their aerospace sectors in business. Northrop Grumman, with the bomber project, is going to keep their workforce busy for 10 to 15 years."
Todd Harrison, director of defense budget analysis and a senior fellow for the international security program at the Center for Strategic and International Studies, said today's source selection is only the beginning in the long road ahead for the bomber program.
"Despite all of the technological maturity that the Air Force has been touting for this program, the reality is that this marks the beginning of development, not the end," he told National Defense. "The big challenge ahead is to take all of those technologies and integrate the components into an overall operational aircraft and that integration period that they're just beginning involves a lot of risk."
Though there has been speculation regarding how this decision might affect the industrial base, Harrison said it is too soon to tell. "Right after source selection it's too soon to tell what this is actually going to do to industry other than there's a lot of potential for a shakeup" among the top defense primes.
A protest by the Lockheed, Boeing team would only add to this uncertainty, he noted. "If there is a protest, it's just going to delay the whole process and we won't see any real movement in industry until the protest is resolved."
"Regardless of the winner, this is great for the industrial base," said Mark Gunzinger, a senior fellow at the Center for Strategic and Budgetary Assessments. "There has been a dearth of major military aircraft programs," he said, adding that the service has been working to establish a new bomber program for at least 15 years. The procurement of this combat aircraft compared to what the Defense Department has funded in the past "is going to be a huge shot in the arm for the defense industry at large, not just Northrop," he said.
Topics: Aviation, Tactical Aircraft