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Northrop won bomber bid on costs

Both Northrop Grumman and Boeing’s bids for the US Air Force’s long-range strike B-21 bomber met technical requirements, but a top USAF acquisition official tells reporters that the deciding factor came down to costs.

During a 26 October event outside Washington, Lt. Gen. Arnold Bunch elaborated on the Government Accountability Office’s recently released bomber protest decision document. Although bids from both companies offered capable aircraft and the estimates came in far lower than the USAF expected, Northrop’s proposal beat out Boeing.

“If we weren’t comfortable that technically it could be done then we would have done something different,” Bunch says. “But we felt comfortable with the technical approach of both that they could both do it, then it comes down to the cost.”

The Air Force budgeted to an independent cost estimate rather than to a contract value for the bomber programme, Bunch says. That decision was driven by language drawn up on Capitol Hill, which directed the Air Force to fund to an ICE and then try to beat that cost, he adds.

In the GAO document, Boeing alleged that Northrop could offer a lower bid because they would use low-skilled workers and “unrealistically low labour rates”. However, the GAO backed the USAF’s decision, stating that it saw no evidence that the Air Force failed to account for technical risk in its cost analysis.

Northrop’s proposal does come with “moderate risk”, meaning their approach could stretch the programme’s schedule, increase cost or degrade performance. Close government monitoring could ameliorate those risks, but Bunch also believes that the programme’s incentive-based structure will improve Northrop’s execution.

A fixed price for the low-rate initial production lots should also push Northrop to move the programme along quickly, he adds.

“We believe the way we’ve structured the incentive program, that puts the emphasis on controlling cost and controlling the schedule to get the capability out there,” says Bunch. “We put a lot of emphasis on incentive structure, that’s where we believe drives the behavior and get the things done.”

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