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The U.S. Air Force plans an award as soon as Tuesday for the contract to develop and produce its newest bomber, defense officials said, providing the first glimpse into a secretive program to bolster the nation’s long-range strike capability.
The final hurdle in the competition between Northrop Grumman Corp. and a Boeing Co.-Lockheed Martin Corp. team was cleared Friday, when Pentagon weapons buyer Frank Kendall briefed senior Defense Department leaders on the selection, the officials said. Kendall’s role in the contract was to approve the service proceeding with the award.
The Long-Range Strike Bomber will be one of the Pentagon’s biggest weapons systems of the next decade, with a price tag of about $80 billion if all 100 aircraft sought by defense officials are built. Joining the B-2 bomber known for its radar-evading “flying wing” design, the new plane is due to enter service in the mid-2020s as the successor to the 30-year-old B-1 and the Eisenhower-era B-52.
If the long-awaited announcement proceeds as planned, it will be made Tuesday after financial markets close, with a press conference by Air Force officers and possibly Defense Secretary Ashton Carter, according to the officials, who asked not to be identified because the contract deliberations are confidential.
Pentagon spokesman Navy Captain Jeff Davis declined to say Monday whether the Air Force planned an announcement Tuesday.
Secret Contest
The bomber is part of a family of secret, strike technologies including munitions; sensors needed to find targets; jamming capabilities to suppress enemy radar; and communications able to survive the shock and electromagnetic radiation from a nuclear blast. The first version will be piloted and carry conventional weapons, followed by a version that can carry nuclear warheads. An unmanned model may follow.
The contest has been shrouded in secrecy with high stakes for the bidders, the last three U.S. makers of large military aircraft. Defense officials haven’t revealed how much has been spent to hone designs and prototypes since 2011 under classified contracts.
“It’s the biggest airframe contract of the decade at a pivotal moment in the industrial base,” Richard Aboulafia, a defense analyst with Teal Group, a Fairfax, Virginia-based consultant, said in an interview. “You have 2.5 players and one contract. Mathematically, it’s fascinating.”
Contract Considerations
Air Force officials weighed three main capabilities in making their selection: a production cost projected at $550 million per plane, in 2010 dollars -- with no development funding included -- was given the same weight as payload and range for the competing designs, said Loren Thompson, a defense analyst with the Lexington Institute who has been briefed on the program. Boeing and Lockheed have contributed to the institute.
When awarded, the contract will have a cost-plus type engineering, manufacturing and development phase that includes incentives for controlling costs and a fixed-price-incentive contract for the first 20 of the planned 100 aircraft, Air Force officials have said.
The contest pits Boeing and Lockheed, the two largest U.S. defense companies, against far-smaller Northrop, which manufactured the B-2. The award “is only financially significant” for Northrop, although all of the contestants have a stake in the outcome, said Carter Copeland, a New York-based defense analyst with Barclays Plc.
Northrop shares could gain as much as 4 percent to 6 percent on a contest win, while a victory would add about 1 percent to 2 percent to Boeing and Lockheed stock, Copeland wrote in a note to clients Friday.
Hedge Funds Are Getting Their Gold Bets Wrong - Bloomberg Business
