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Boeing and Lockheed protest USAF’s bomber award to Northrop

Boeing and Lockheed Martin’s bomber team has asked the US Government Accountability Office to review the US Air Force’s “fundamentally flawed” selection of Northrop Grumman for the $80 billion Long-Range Strike Bomber (LRS-B) programme.

The losing Boeing/Lockheed bomber team was debriefing last Friday about why Northrop was chosen for the development and eventual production of up to 100 low-observable, next-generation bombers, worth an estimated $564 million per copy. In a joint statement published on 6 November, Boeing and Lockheed say a formal bid protest has been submitted to the congressional watchdog.

The protest has been widely expected, even by USAF officials, regardless of who won, given the value of the contract and industrial impact to losing side. The development programme alone is estimated to cost $23.5 billion.

Boeing and Lockheed, the world’s two largest defence firms by annual revenue, reportedly tried to underbid Northrop on cost to try secure the “strategically important” bomber contract, and Northrop’s selection was seen by some analysts as an upset win. The big protest puts programme on hold for up to 100 days while the GAO reviews the source selection process and decides whether to sustain or deny the protest.

“Boeing and Lockheed Martin concluded the selection process for the Long-Range Strike Bomber was fundamentally flawed,” the companies explain. “The cost evaluation performed by the [US] government did not properly reward the contractors’ proposals to break the upward-spiralling historical cost curves of defence acquisitions, or properly evaluate the relative or comparative risk of the competitors’ ability to perform, as required by the solicitation.

“That flawed evaluation led to the selection of Northrop Grumman over the industry-leading team of Boeing and Lockheed Martin, whose proposal offers the government and the warfighter the best possible LRS-B at a cost that uniquely defies the prohibitively expensive trends of the nation’s past defence acquisitions.”

In rebuttal, Northrop described the source-selection process as “exceptionally thorough and disciplined” and expressed disappointment that the protest would hold up a programme “so vital to national security”.

“[The air force’s] process took into full account the parties' respective offerings and their relative capabilities to execute their offerings on schedule and on budget,” the company says. “Northrop Grumman offered an approach that is inherently more affordable and based on demonstrated performance and capabilities. Our record stands in contrast to that of other manufacturers' large aircraft programs of the last decade.”

The situation is reminiscent of the air force’s KC-X tanker fiasco in 2008, where Boeing successfully challenged tthe selection of the EADS/Northrop KC-45. Northrop eventually pulled out of a follow-on competition and Boeing’s 767-based proposal prevailed against the EADS (now Airbus Group) offering, resulting in the KC-46.

At stake for Boeing now is its future relevancy in the combat aircraft business that was inherited from a merger with McDonnell Douglas in 1997. There are concerns that F/A-18E/F Super Hornet and F-15E Strike Eagle production in St Louis, Missouri, could wrap up by the end of the decade without more firm orders. Boeing’s bomber legacy includes production of the B-52 through the 1950s and ‘60s, and the B-1B programme that it obtained through an acquisition of the original manufacturer, Rockwell.

Boeing can lean on its P-8A anti-submarine warfare and KC-46 tanker businesses, and shoot for a win on the upcoming $12 billion USAF T-X next-generation trainer aircraft programme. Lockheed is more secure, with production of the F-35 Lightning II stealth aircraft ramping up in Fort Worth, Texas, after more than 14 years of development.

Northrop’s fortunes without the bomber contract would be less certain, but it has a stealth-bomber legacy on its side. The company designed and built the B-2 “Spirit” – the only known in-service, low-observable bomber. Northrop has already launched an online campaign to keep the new bomber programme.

USAF officials say they took great care in ensuring the source-selection process was fair and can stand up to scrutiny, through peer reviews and other tests. LRS-B, run by the secretive Air Force Rapid Capabilities Office, has even been audited by the Pentagon’s inspector general. But whether the Northrop decision holds up to scrutiny by the GAO remains to be seen.

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