October 27, 2015

Northrop Grumman wins Long Range Strike Bomber deal which will start at $21 billion and go up to at least $80 billion

The Pentagon on Tuesday awarded the most fiercely-fought weapons contest in more than a decade to Northrop Grumman Corp., a $21.4 billion initial deal to build new long-range bombers for the U.S. Air Force.

Northrop Grumman was selected over a Boeing Co. and Lockheed Martin Corp. team to build the first 21 jets to replace aging B-52 and B-1 war planes. The contract eventually could be worth $80 billion and provide 100 planes total. The first aircraft are due to enter service around 2025.

The new radar-evading bomber is designed to fly undetected over potential adversaries such as Russia or China that have upgraded their air defenses. The plane is capable of firing conventional and nuclear weapons, becoming the third leg of the nuclear triad alongside submarine and land-based ballistic missiles



Pentagon officials in recent weeks have provided a few details on what the Air Force has called one of its top three priorities, alongside the Lockheed-built F-35 fighter and Boeing-built KC-46A refueling tanker.



The contract is broken up into two parts — the cost-plus incentive fee development contract awarded today, and a separate agreement on the first five low-rate initial production lots that will be fixed-price incentive fee. Those first five lots will cover the production of 21 bombers.

The service requested that two independent government cost estimators look at the program. The two groups projected that each bomber will cost $511 million in 2010 dollars on average if 100 planes are built, Air Force officials told reporters on Tuesday — substantially less than the original $550 million target cost set by then Secretary of Defense Robert Gates. This translates to $564 million per plane in fiscal year 2016 dollars.

LRS-B’s projected unit cost is higher compared to the B-1, but significantly lower relative to the $1.5 billion price tag of Northrop’s B-2, according to an Air Force handout. The expected development cost overall for LRS-B is also lower than for the B-2, at $23.5 billion.

SOURCES- Wall Street Journal, Defense News

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