Air Force awards Long Range Strike Bomber contract (Part II)

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.

“Over the past century, no nation has used air power to accomplish its global reach — to compress time and space — like the United States,” Defense Secretary Ash Carter said during a Pentagon briefing announcing the contract. “Today, it’s vital to innovate and reinvest in the people, strategies and technologies that will allow America’s military to be dominant in the second aerospace century.

I’ve made such innovation a hallmark of my commitment to the future of America’s military.

“Building this bomber is a strategic investment in the next 50 years, and represents our aggressive commitment to a strong and balanced force,” Carter continued. “It demonstrates our commitment to our allies and our determination to potential adversaries, making it crystal clear that the United States will continue to retain the ability to project power throughout the globe long into the future.”

Northrop Grumman released a statement following the announcement.

“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.

Additionally, the company set up a website: www.americasnewbomber.com immediately following the announcement.

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 open architecture will help ensure competition throughout the life cycle of the program, and make it easier to modify the platform as technology advances and the threats evolve,” he said.

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 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.

“In addition, as the chief mentioned, our acquisition strategy also incorporates open mission system standards, OMS standards,” said William LaPlante, assistant secretary of the Air Force. “They allow future competition of LRS-B components and subsystems. This enables us to more swiftly integrate new capabilities to address changes in technology, technology advances, changes to threat. Also open mission systems sustain competition throughout the life cycle of the aircraft, therefore keeping affordability in the long term throughout the life cycle.”

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.

Local lawmakers were quick to praise the decision.

“Building this project in California will significantly bolster our manufacturing workforce, potentially providing more than 1,000 new jobs,” said California Assemblywoman Sharon Runner, R-Antelope Valley. “I look forward to Northrop Grumman taking advantage of these laws to bring much needed jobs to the Antelope Valley and get Californians back to work.”
Palmdale City Mayor Jim Ledford lauded the decision.

“This is a big win for not only Palmdale, but for Southern California as well,” said Ledford. “With so many defense contractors and sub-contractors here, this means good jobs a boost to our economy. Having Edwards Air Force base, the premier flight test facility in the world, make the connection seamless.

“A lot hard work went into making this a reality,” Ledford said. “Our thanks go to Bill Allen and the Los Angeles Economic Development Corporation business assistance and development office, Congressman Steve Knight, Assemblyman Tom Lackey, as well as County Supervisor Michael D. Antonovich and his Chief of Staff Kathryn Barger for their tireless efforts,” he said.

Reaction from analysts was generally positive with Byron Callan, an analyst with Capital Alpha Partners, saying the contract could exceed the top estimates of 100 aircraft.

“Assuming this program can hit its unit price objectives, we could see more than 100 bombers being procured but that might not be known until a new Administration puts forth its own defense plan for fiscal years 2018-2022. Some independent observers project a need for 150-175 bombers,” Callan wrote. And with the LRS-B likely to compete with the F-35 for funding, this could set the stage for some tough funding decisions for the Air Force.

“If more LRS-Bs are purchased than now planned or there are cuts to DOD spending plans over the next 10 years, we expect that F-35 would be cut at the expense of LRS-B,” he said.

Loren Thompson, a defense-industry consultant and analyst with the Lexington Institute, called the selection a “stunning upset.”

“Northrop beat a team with much greater financial resources and recent production experience. For instance, Boeing and Lockheed Martin delivered more than 300 military aircraft last year. Northrop delivered nine, none of them manned jets,” he said “I’m skeptical that Northrop can execute the bomber program on the aggressive schedule the Air Force has set forth, but any way you slice it this is a huge win.”

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 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.”

More Stories From This Author