October 27, 2015

Air Force awards Long Range Strike Bomber contract

Stuart Ibberson Editor

The Air Force announced Oct. 27 that it has awarded the Long Range Strike Bomber contract to Northrop Grumman.

The announcement was made jointly by Secretary of Defense Ash Carter, Secretary of the Air Force Deborah Lee James, and Chief of Staff of the Air Force Mark A. Welsh III.

The other competitor for the contract was a combined team of Boeing and Lockheed Martin.

“The Air Force has made the right decision for our nation’s security,” said Wes Bush, chairman, chief executive officer and president, Northrop Grumman. “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.

In announcing the contract award, the Air Force Secretary explained that the new bomber is necessary because the average age of the B-52 is 50 plus years, and the average age of the B-1 is 27 plus years. With advances in anti-aircraft and surface-to-air missile technologies the bomber force has to stay further and further away from the combat zone.

The new bomber “will operate in tomorrow’s threat environment, and be able to launch from the Continental United States and hit targets anywhere in the world.”

“The LRS-B is critical to national defense and is a top priority for the Air Force,” she said. “We face a complex security environment. It’s imperative our Air Force invests in the right people, technology, capability and training to defend the nation and its interests — at an affordable cost.”

Welch made mention of the open architecture nature of the mission systems.

“This will enable us to maintain competition throughout the life of the program,” he said.

While neither team has specifically said where work on the new bomber will be done, aerospace analysts have said Southern California, and Air Force Plant 42 in Palmdale, Calif., will more than likely handle the bulk of the new aircraft’s assembly.

Northrop Grumman built the B-2 in Palmdale, and Rockwell International (now Boeing) built the B-1B bomber there as well.

There are no official estimates of exactly how many jobs will be created, both competing teams told the Los Angeles County Economic Development Corp. that the contract would mean up to 1,100 new jobs at the winner’s Palmdale facility; and David Blanco with the LAEDC said the contract could create 5,500 jobs for local subcontractors.

Sacramento lawmakers have been proactive in the hopes whoever wins the contract will bring the work to California.

In July of 2014, legislators passed a raft of tax breaks and credits that would help Lockheed Martin, and in August of 2014, they passed the same series of tax benefits for Northrop Grumman.

Initial reports indicate the LRS-B is intended to replace the B-52 fleet, possibly replace the B-1B Lancer fleet and compliment the B-2 Spirit bomber fleet.

The new bomber is intended to be a heavy-payload stealth aircraft capable of carrying thermonuclear weapons and initial capability is expected in the mid-2020s. Officials have also stated that it must one day be capable of flying as an unmanned aircraft.

The initial request for proposal was released July 9, 2014. The Air Force currently plans to buy 80-100 LRS-B aircraft at a cost of $550 million each.

The Long Range Strike Bomber contract is composed of two parts. The contract for the Engineering and Manufacturing Development, or EMD, phase is a cost-reimbursable type contract with cost and performance incentives. The incentives minimize the contractor’s profit if they do not control cost and schedule appropriately. The independent estimate for the EMD phase is $21.4 billion in 2010 dollars.

The second part of the contract is composed of options for the first five production lots, comprising 21 aircraft out of the total fleet of 100. They are fixed price options with incentives for cost. Based on approved requirements, the Average Procurement Unit Cost (APUC) per aircraft is required to be equal to or less than $550 million per aircraft in 2010 dollars when procuring 100 LRS-B aircraft. The APUC from the independent estimate supporting today’s award is $511 million per aircraft, again in 2010 dollars.

The Air Force revealed in September 2015 that the program was much further advanced than had been previously acknowledged publicly and more than usual before a contract is awarded.

Officials said final requirements had been locked down since May 2013 and that both competing teams had mature proposals with prototyping activities and wind tunnel tests, although a demonstrator has not been built yet.

One of the biggest challenges facing the winning team and the Air Force is, in this day of sequestration and budget cuts, is to avoid the cost overruns that have plagued many previous big-ticket programs.

In order to combat this problem, the Air Force had two independent cost analyses done on the program -both from outside the program office.

Prime examples are the F-22 fighter jet and the B-2 stealth bomber. The Air Force initially wanted 648 F-22s at a cost of $139 million per plane. They eventually got 188 aircraft at a unit price of $412 million.

And before that, the Pentagon wanted 132 B-2 Spirit combers at a cost of about $500 million each. In the end, the Air Force bought 21 aircraft at a cost of $2.1 billion each.

Based on current LRS-B independent cost estimates, the Air Force projects the APUC for the program will be approximately a third of the previous B-2 stealth aircraft.

“We believe this is a reasonable and achievable estimate. If we remain disciplined and keep program requirements stable, we should beat this estimate,” said Dr. William A. LaPlante, the assistant secretary of the Air Force for Acquisition.

“The program acquisition strategy has carefully integrated lessons learned from previous programs and considered all elements of life cycle costs in its design for affordability,” LaPlante added. “We are primed to deliver this capability in the most affordable, efficient way possible.”

It is expected that the losing team will file a protest which could delay the actual contract award by several weeks or months.

Boeing and Lockheed Martin released a joint statement following the announcement.

“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.”

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