WASHINGTON — For months the defense industry has been held hostage, watching closely as the Pentagon weighs a decision that will shape the aerospace world for decades to come.

The Air Force is poised to announce who will build its next-generation bomber, and the competition is steep. The two teams represent three of the five top defense contractors in the country: Northrop Grumman, builder of the B-2 stealth bomber, and a teamed joint offering of Boeing and Lockheed Martin. A contract was due first in the summer, then early fall. But now there are whispers it the contract could slip into October.  

New information shared last week reveals what is behind the delay. The Air Force is using an unusual acquisition strategy, led by a shadowy office, to procure the bomber. Meanwhile, the competing designs are vastly more mature than previously known, to a level nearly unheard of in a pre-award program.

State of Play
The Long Range Strike Bomber (LRS-B) program remains shrouded in mystery, but these revelations last week helped paint a clearer picture of a capability that will project power and deter threats well into the 21st century. We now know the new aircraft will be significantly stealthier than the B-2, capable of carrying both conventional and nuclear weapons, and optionally manned. Initial operating capability is slated for the mid-2020s, with nuclear certification planned two years after that. 

In anticipation of the award, the Air Force has begun revealing additional details. During a Sept. 1 meeting, officials confirmed the service has two robust designs in hand that are unusually well-developed for a pre-award program. Current designs are complete down to the level of individual access panels, the officials revealed, according to a Congressional Research Service analysis by J.J. Gertler.

The next challenge will be integrating the mature technologies, the officials apparently said. They pointed in particular to integration of the engines and the placement of antennas onto the airframe as areas of potential risk, according to one source who attended. The officials apparently did not elaborate but are likely worried these components, which typically give off signatures, could compromise the stealth of the aircraft's stealth. 

The Air Force has not disclosed concrete plans for the aircraft’s range, payload or size. Bombers are traditionally large aircraft with much longer unrefueled range than fighters aircraft, which enables provides the ability to rapidly strikes on targets on the other side of the globe. But with advances in aerial refueling technology, does the new bomber really need organic long range? Will the aircraft be as large as the B-2, which weighs is more than 300,000 pounds loaded? And what is the range vs. payload trade-off? 

Retired Lt. Gen. David Deptula, former deputy chief of staff for ISR, said he sees an LRS-B with an unrefueled range radius of 2,500 nautical miles. This provides "sufficient range capability to counter any of the anti-access capabilities that are emerging from the Russians or the Chinese," Deptula said.

As to size, the briefers were apparently cagey during the meeting. However, they indicated a UCLASS-size design was too small and the B-2 design was too large. Cost could also constrain the size of the aircraft, one source said.

No mention was made of speed during the briefing, although the combination of long range, large payload and cost constraints strongly suggest LRS-B will be subsonic.

The advanced testing, unusual this early in the acquisition process, is in part because the bomber program is being handled by the Rapid Capabilities Office (RCO), a small group inside Air Force acquisitions that handles secretive programs. As its name implies, the RCO follows a different acquisition path than the rest of the service, with more freedom in how it procures technologies.

The officials also revealed details about the procurement roadmap during the briefing, Gertler wrote. Initial acquisition will take place in five low-rate production lots totaling about 20 aircraft, and two to three test aircraft will precede the production lots.

As to cost, The target price is $550 million a copy 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 that are available now, rather than launching new developments. At the same time, the Air Force will use an open architecture approach, similar to that already being demonstrated on the F-22, U-2 and B-2 programs, to design a plane that can be easily upgraded with new technologies over its lifetime.

But the credibility of the Air Force when it comes to cost has recently been called into question. The service has scrambled to do damage control after reports emerged last month of massive cost discrepancies in its 10-year cost estimates for the bomber. Members of Congress, including Senate Armed Services Committee Chairman John McCain, R-Ariz., have raised concerns over the errors; the Air Force says they should have no impact on the bottom line.

Despite recent challenges, top service officials emphasize the need to begin recapitalizing the Air Force’s aging fleet of B-1 and B-52 bombers — and fast. The B-52 was designed in the late 1940s and built in the early 1960s, while the B-1s began flying in the 1980s. The Air Force also builds the younger B-2 but only has 20 in inventory. Consequently, the average age of the bomber force is roughly 39 years. 

The Air Force has said it is targeting a production line of 80 to 100 planes to replace the B-52s and B-1s, which the service plans to retire in the mid-2040s. With proper maintenance and modernization the Air Force can operate these planes until 2044, but as the aircraft age it will be increasingly difficult and costly to ensure they can carry out their missions.

"The idea that we would run a Formula One or a NASCAR race with a car built in 1962 is ridiculous, but we're going to war with airplanes built in 1962," Air Force Chief of Staff Gen. Mark Welsh said during an Aug. 24 press conference. "We have got to modernize the Air Force. It's just an imperative."

Industry Fallout
Whatever the outcome, some contend the Air Force’s choice has foresee dramatic implications for the industry. If Northrop wins, Boeing potentially exits the combat aircraft manufacturing market. Most of the company’s products are commercial derivatives, like the KC-46A tanker, and its two remaining military aircraft lines are coming to a close. The last Navy F/A-18 will be delivered in 2018, and the final Air Force F-15 will be delivered in early 2019. After that, the company’s St. Louis factory in St. Louis may be shuttered. 

Boeing must win LRS-B to survive long enough to compete for the Sixth Generation Fighter program, some analysts said. Winning a contract to build the Air Force's new fleet of trainers could keep St. Louis afloat, Teal Group analyst Richard Aboulafia said, but as one of several competitors, Boeing can't bank on a positive outcome.

The Navy could opt to extend the F/A-18 line for as long as 10 years, suggested senior fellow with the Center for a New American Security Jerry Hendrix, senior fellow with the Center for a New American Security suggested. For St. Louis, this could bridge the gap between now and the sixth-gen fighter, he said. 

On the other hand, if Boeing wins, Northrop's investors may push to break up the company. Northrop has a stake in several major military aircraft acquisition programs, including the F-35 joint strike fighter, but is not prime on any.

"They would say, 'this thing is worth more than the sum of its parts,'" Aboulafia said. "Raytheon would love radars; Boeing would probably love that share of the joint strike fighter."

Another potential scenario if Northrop wins: Boeing tries to buy Northrop's aerospace unit. Once Northrop has completed the LRS-B design, divesting the business to another party might make sense to investors.

Conversely, some analysts saiduggest the LRS-B decision would not cause immediate shockwaves across the industry.

No matter who wins, the losing team is unlikely to be shut out of the business of designing and producing combat aircraft, said Byron Callan, an analyst with Capital Alpha Partners, noting UCLASS, T-X and the Sixth Generation Fighter programs are in the pipeline.

None of the firms involved need an LRS-B victory to stay in business, and none have signaled they would want to rethink their business strategies based on the outcome, he said.

"I sincerely doubt that the DoD would approve a Lockheed Martin or Boeing buy of Northrop Grumman Aerospace," Callan said. "They're getting the benefits of competition in LRS-B, and I think they most certainly want to preserve the benefits of competition on some of these programs going forward."

Still, analysts are divided as to how much weight the service is giving to the health of the industrial base in its final decision.

Northrop could have the industrial base argument on its side: A Northrop win would spread the Air Force's top three priorities — Lockheed Martin's F-35, Boeing's tanker and the new bomber — among the three contractors. In contrast, a Lockheed-Boeing win would mean Lockheed essentially controls all Air Force combat aviation production.

But Mark Gunzinger, a senior fellow at the Center for Strategic and Budgetary Assessments, said it's unlikely the Air Force will make the final cut based on industrial base concerns.

"I think that considering the health of the defense industrial base writ large is an important factor," Gunzinger said. "That said, I don't think they are going to make a decision on this capability based on the industrial base."  

What’s Next?
Given the significance of the LRS-B to both Northrop and Boeing’s future in the defense aerospace world, a bid protest seems inevitable. The Air Force is doing all it can to insulate the contract award from a protest, which could not only delay the program’s start, but also set up a nasty public relations fight. In addition to the ongoing testing, sources said the Pentagon has been trying to protest-proof the contract, adding to the delay.

However, some say the Air Force may not have much to worry about on that front. Both Hendrix and Aboulafia indicated the loser may be less likely to protest due to the highly classified nature of the program.

Northrop and Boeing-Lockheed have been tight-lipped about their offerings as well as contingency plans, with Boeing-Lockheed citing an Air Force wish to keep the program under wraps.

"‎Boeing and Lockheed Martin have produced and supported essential US airpower capabilities since the earliest days of military aviation," a spokesperson said. "We believe that all adds up to the expertise in design, production and support that would make LRS-B successful, from day one to the end of its service life many decades from now."

A Northrop representative was more succinct: "As the only company to ever design, build, field and sustain a stealth bomber, Northrop Grumman is well positioned on this program."

Going forward, the Air Force will have to do a better marketing job for the program, explaining why LRS-B is worth the cost and resources, Callan said.

"Inevitably, it's going to be a lightning rod, and it's going to compete for dollars against other Air Force and DoD program priorities," Callan said. "I'm not sure if the Air Force has fully sold this, DoD fully sold this to Congress, and taxpayers at large."

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