Northrop Grumman Wins Air Force's Long Range Strike Bomber Contract

Story by DefenseNews
Written by Lara Seligman, Andrew Clevenger and Aaron Mehta

WASHINGTON – Northrop Grumman has won the contract to build the US Air Force’s next-generation Long Range Strike Bomber (LRS-B), an industry-shaping award that breathes new life into the world's sixth-largest defense company.

After US financial markets closed Tuesday evening, Defense Secretary Ash Carter and Air Force leadership announced that Northrop beat out the team of Boeing and Lockheed Martin for the contract, which is expected to top $55 billion over the life of the program. It's the largest military aircraft contract since Lockheed Martin won the Joint Strike Fighter (JSF) more than a decade ago.

Northrop now has the Pentagon's blessing to build a new fleet of aircraft to replace the Air Force’s aging B-52s and B-1s. As builder of the B-2 stealth bomber, Northrop beat out a joint Lockheed Martin-Boeing team in a closely watched competition that has lasted months longer than anticipated.

Speaking at the announcement, Air Force Secretary Deborah Lee James said the bomber would "allow the Air Force to operate in tomorrow's high-end threat environment" and praised the work that went into the selection, in a move that sounded like a preemptive shot to any attempt by Boeing and Lockheed to challenge the award decision.

James said service acquisition officials “carefully considered” the offers from both teams, with the entire process carried out “with a high level of transparency with our industrial partners… we believe our decision represents the best value for our nation.”

The contract is broken up into two parts — the cost-plus incentive fee development contract awarded today, and a separate agreement on the first five low-rate initial production lots that will be fixed-price incentive fee. Those first five lots will cover the production of 21 bombers.

The service requested that two independent government cost estimators look at the program. The two groups projected that each bomber will cost $511 million in 2010 dollars on average if 100 planes are built, Air Force officials told reporters on Tuesday — substantially less than the original $550 million target cost set by then Secretary of Defense Robert Gates. This translates to $564 million per plane in fiscal year 2016 dollars.

LRS-B’s projected unit cost is higher compared to the B-1, but significantly lower relative to the $1.5 billion price tag of Northrop’s B-2, according to an Air Force handout. The expected development cost overall for LRS-B is also lower than for the B-2, at $23.5 billion.

The Air Force did not say the value of the contract announced on Tuesday.

At the announcement, service officials revealed:

*According to Lt. Gen. Arnold Bunch, the military acquisition deputy, the two bomber teams offered up proposals with all industrial partners included — meaning providers for subcomponents such as engines have already been decided. However, Bunch said that information would remain secret for security reasons.
*Risk-reduction efforts cost $1.9 billion from FY11 to FY15.
*A tentative date for initial operating capability is 2025, although Gen. Robin Rand, commander of Global Strike Command, indicated that could change.
*While many have referred to the bomber as the “B-3” as shorthand, Rand’s office will have final say on the designation, which has not been reached.
*Air Force officials will make themselves open to Boeing and Lockheed as early as Friday for an explanation of why Northrop was selected, Bunch said.

Read more: http://www.defensenews.com/story/defense/2015/10/27/northrop-grumman-wins-usaf-bomber-contract/74661394/