Ahead of Long Range Strike-Bomber Announcement, Aerospace Industry Looks for Clues

Updated 2:08 p.m. ET Tuesday

WASHINGTON — The day before the Pentagon is expected to announce who will build the US Air Force's next-generation bomber, the aerospace industry is desperately reading the tea leaves for clues about who the winner may be.

Pentagon leaders are widely expected to announce the winner of the Long Range Strike-Bomber (LRS-B) contract, one of the most tightly held secrets in the building right now, after markets close Tuesday evening. The contract, which is expected to top $55 billion over the life of the program, pits three giants in the aerospace world against each other, with Northrop Grumman, builder of the B-2 stealth bomber, competing against a joint Boeing-Lockheed Martin team.

The final hurdle was reportedly cleared Friday, when Pentagon weapons buyer Frank Kendall briefed senior leaders on the decision, Bloomberg reported Monday.

The Pentagon is keeping a tight lid on the development program, and both industry teams have been silent ahead of the contract award. But whatever the outcome, the Pentagon's LRS-B decision will shape the aerospace industry for decades to come.

Experts, looking for any indication that one side has the edge, are split over which team the Pentagon will choose. Analysts contacted by Defense News spoke on background to talk openly about the contract award. Some experts predict a clear win for Boeing-Lockheed Martin, which many say had the advantage from the start in terms of financing and expertise.

As proof that the world's two largest defense firms have the deal locked up, one analyst pointed to a recent reshuffling of Northrop's senior management, as Gloria Flach, corporate vice president and president of its electronic systems sector, was named the new COO — passing over Northrop aerospace head Tom Vice. That could be a sign Vice failed to land the bomber contract, the analyst argued.

However, a major realignment at Northrop has been in the works for some time, including the consolidation of four business segments down to three.

Other experts, meanwhile, believe the Pentagon would be crazy to put all of its eggs in the Boeing-Lockheed basket. A Boeing-Lockheed win would mean Lockheed essentially controls all Air Force combat aviation production, including the controversial and costly F-35. Boeing, meanwhile, produces the KC-46 tanker.

A Northrop win would spread the Air Force's top three acquisition priorities — F-35, Boeing's KC-46 tanker and the new bomber — evenly among the three contractors.

However, it not clear how much the industrial base concern factors into the final decision.

"I think that considering the health of the defense industrial base writ large is an important factor," Mark Gunzinger, a senior fellow at the Center for Strategic and Budgetary Assessments, told Defense News last month. "That said, I don't think they are going to make a decision on this capability based on the industrial base."

Kendall has previously indicated that the industrial base won't be a factor in the decision.

All the experts contacted by Defense News agree that the losing side will assuredly launch a contract protest in hopes of stealing away the win.

The target price is $550 million per plane in 2010 dollars. That unit cost is a key performance parameter for the program, meaning that a company can be disqualified if its price fails to reach that goal. To help achieve that price point, the Air Force is looking to draw on available mature technologies rather than launching new developments. At the same time, the Air Force will use an open-architecture approach to design a plane that can be easily upgraded with new technologies over its lifetime.

When the contract is awarded, it will come in two parts — a development contract that is cost-plus incentive fee, and an agreement on the first five low-rate initial production lots that is fixed-price incentive fee. Those first five lots will cover the production of 21 bombers.

LRS-B is unusually mature for a program at this stage of development, said Lt. Gen. Arnie Bunch, the Air Force's deputy assistant secretary for acquisition. The program has completed preliminary design review and manufacturing readiness review, and the platform designs are "at the subsystem level," he said Oct. 21 at a Pentagon briefing.

"We have established a high level of tech maturity, higher I would say than any other developmental program that we've tried to initiate at this stage for a new aircraft," Bunch said, emphasizing that one key aspect of the program is that the requirements have remained stable since 2011. "These stable requirements and a mature platform design make us very confident in the cost and the execution of the program as we get ready to initiate."

Part of the reason the LRS-B program is so advanced at this stage is due to being handled by the Rapid Capabilities Office, a small group inside Air Force acquisitions that handles secretive programs such as the X-37B space plane. Right now, there is no plan to change the LRS-B program management, Bunch said, but the Pentagon may re-evaluate as the program moves forward.

The teams have already built component prototypes and scale models for testing, officials have previously said. Air Force acquisition chief William LaPlante indicated during the briefing that the plane could begin flying relatively soon after selection.

"People say, when will we actually start flying something?" LaPlante said. "If you count the first test article, it's not necessarily that long from now — but I'm not going to say anything more about that now."

Aaron Mehta contributed to this report. 

Email: lseligman@defensenews.com

Twitter: @laraseligman

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