Oct. 28–WASHINGTON — Northrop Grumman Corp., maker of the B-2 bomber, beat out a team made up of Boeing Co. and Lockheed Martin Corp. to develop and build a next-generation long-range strike bomber.
The decision is a blow to Boeing and places its future as a combat jet maker in doubt.
Boeing can file a formal protest against the decision, a process that can take several months. In a statement, Boeing said company officials would discuss the decision with the Air Force before deciding on its response.
That decision casts a shadow over the future of many of the 14,500 Boeing employees in the St. Louis area; Boeing’s defense unit is headquartered in north St. Louis County. Orders for the F-15, F/A-18 and E/A-18 fighter jets, all made here, may run out by the end of the decade. Analysts had considered St. Louis a likely manufacturing location had Boeing won the bomber contract.
Boeing still has a shot at another military jet contract. It is teamed with Saab, the Swedish maker of the Gripen fighter jet, to bid to build the replacement for the Air Force’s T-38 trainer jet. But the team faces competition from four other bidders for the $12 billion contract.
The bomber announcement ends months of anticipation and marks the biggest contract award by the Pentagon in over a decade, a deal valued by analysts at up to $80 billion if the Air Force buys all 100 stealth bombers now planned.
Air Force Assistant Secretary Bill LaPlante told a news conference the contract was valued at $21.4 billion in 2010 dollars for engineering and manufacturing development for the first batch of 21 aircraft.
He said the average procurement cost for the bombers was $564 million per aircraft for 100 bombers in 2016 dollars.
This marks the Air Force’s second drive to start replacing its aging B-52 and B-1 bombers in recent years. Former Defense Secretary Robert Gates canceled the first program in 2010 because he thought it was too ambitious and expensive.
The Air Force kicked off the current competition in July 2014 and had hoped to select a winner this spring, but the award has been delayed several times.
Air Force officials did not say why they considered the Northrop Grumman bid superior to the Boeing-Lockheed Martin proposal.
For the defense companies that sought the contract, the stakes were high. Boeing has built most of the Air Force’s bombers, including the B-52. And it collaborated with Lockheed Martin on the F-22 stealth fighter. Northrop Grumman built the B-2 bomber fleet, which was originally planned to include 132 planes but was scaled back to 21 at the end of the Cold War.
Defense analyst Richard Aboulafia of the Teal Group said Boeing might respond by making a bid for the combat aircraft assets of Northrop Grumman.
Boeing’s alternative would be to return to its roots as a commercial aircraft maker, the position it held before buying McDonnell Douglas in the 1990s.
Air Force officials said they did not consider the need to maintain an “industrial base” in making the contract award. But Aboulafia said the prospect of losing Boeing as a fighter-maker might encourage the Navy to press for more F/A-18s in order to keep Boeing in the business longer.
Boeing’s other fixed-wing defense contracts — such as the new tanker for the Air Force — are built on commercial airline platforms. Besides the trainers, Boeing is also bidding on a new airborne surveillance, battle management and command and control aircraft called JSTARS, which is valued at $9 billion.
Boeing and Lockheed Martin are likely to protest the bomber decision, given the high stakes involved and the dearth of new programs in the current budget climate, said defense consultant Jim McAleese before the announcement was made.
After making a protest, Boeing wrestled away from rival Airbus in 2011 the contract to build the Air Force’s new aerial refueling tanker.
Aboulafia said such a protest would be hard to win, given the highly classified nature of the bomber program. “The Air Force has spent lots of time protest-proofing its black programs,” he said.
Sen. Roy Blunt, R-Mo., said he fully supported the bomber program although he was also disappointed in the decision.
“As a member of the Senate Appropriations Subcommittee on Defense, I will closely scrutinize this critically important investment … and will ensure the Air Force conducted a fair, objective, and thorough competition,” Blunt said in an emailed statement.
Reuters, Associated Press and Chuck Raasch of the Post-Dispatch contributed to this story.
Jim Gallagher — 314-340-8390
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