Newswise — The Pentagon awarded Northrop Grumman a $55 billion contract to build a Long Range Strike-Bomber (LRS-B). Boeing and Lockheed Martin were also competing as a team for the contract.
David King, an associate professor of management in Iowa State University’s College of Business, says this may be one of the few remaining major programs to build a manned aircraft. King, a retired Air Force officer, says the contract is significant for at least three reasons:
“First, it is significant in terms of dollars and timing. The contract is intended to purchase 80-100 aircraft to replace the B-52 (Boeing) and B-1 (Rockwell acquired by Boeing) bomber fleets with a total value between $55-80 billion. The B-52 design is over 60 years old and saw action in Vietnam, the Gulf War, and Operation Iraqi Freedom, and this could be the last contract for a manned bomber. As a result, it will have implications for the defense industrial base.
“Second, at face value Boeing had more experience producing aircraft and Lockheed Martin (F-22 and F-35) had experience with stealth, Northrop Grumman’s competitors were likely more capable and financially sound. However, Northrop Grumman has not won a recent aircraft contract (produced B-2 and F-14), and without the LRS-B contract it may no longer have been able to be considered a prime contractor for manned aircraft. By awarding the LRS-B contract to Northrop Grumman, the U.S. continues to have three prime contractors able to perform future aircraft upgrades or compete for new contracts. Had Northrop Grumman lost the contract, it would have likely led to downsizing, divestment or acquisition by a competitor. Even with winning the contract, either Boeing or Lockheed Martin may consider an attempt to acquire it through acquiring Northrop Grumman.
“Third, the decision may be protested. Defense firms can protest contract awards to the Government Accounting Office (GAO), and there is nothing in place to formally discourage protests. The number of protests by defense firms to the GAO has been growing as the dollar value of contracts that is open to protest was lowered to $10 million and there are fewer large contracts to win. For example, the recent first flight of the Boeing KC 46 tanker was delayed several years as protests led to the program not getting started. In what may prove to be an interesting twist of fate, Boeing’s win of that contract was largely assured when Northrop Grumman left the competing team led by Airbus.”
King adds that the LRS-B contract award will have wide-ranging implications for the firms involved and the capabilities of American armed forces. Once announced, several unknowns will be resolved, but it will also only increase the uncertainty for the losing firm(s) and the implications for the LRS-B program.
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