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  • Penalty for breaking Northrop's B-21 contract is '$300 million'

Penalty for breaking Northrop's B-21 contract is '$300 million'

The US Air Force says it would cost the US government upward of $300 million to breaks its cost-plus contract with Northrop Grumman to develop the B-21 strategic bomber.

It might then take “20 to 30 months” to hold another competition between Northrop and the losing Boeing/Lockheed Martin team to secure the "fixed-price" development contract that outspoken Senator John McCain and other US lawmakers want.

USAF military deputy for acquisition Lt Gen Arnold Bunch was pressed on the matter several times during a Senate hearing on 8 March, since the "taxpayer" would have to pay any cost overruns Northrop might incur during the development phase. Northrop, however, will receive pay incentives if it meets or beats cost and schedule targets.

The ranking member of the Senate Armed Services airland subcommittee Joe Manchin says past cost-plus contracts that overran their cost and schedule targets, namely the Northrop B-2 and Lockheed Martin F-35 and F-22, have left “such a bad taste in everybody's mouth” and are “not real popular here”.

“I still believe it's the best choice for the contract type with the risks associated,” Bunch responds. “We are on contract with a company that's gone out and put suppliers on contract and on order, and they've started their business case.”

The air force awarded the contract to Northrop in October and recently settled a dispute with Boeing and Lockheed Martin over the source-selection process.

The service revealed the long-range strike bomber’s B-21 designation along with an artist’s rendering at an Air Warfare Symposium in Florida last month.

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US Air Force

McCain has threatened legislation that would undo the B-21 contract unless the air force replaces it with fixed-price terms, like the Boeing KC-46A programme. The air force says Boeing is running at a 25% loss on that contract because of problems encountered during development.

Service secretary Deborah Lee James testified last month that “noteworthy failures” of fixed-price developments contracts include the McDonnell Douglas A-12 Avenger II, Tri-Service Standoff Attack Missile (TSSAM), US Army Future Combat System, Lockheed C-5 Galaxy and Boeing C-17.

“Unlike the KC-46, the B-21 has no anticipated commercial or foreign military sales market to offset any unexpected development costs,” says James, while pointing to the B-2, F-22 and F-35 as cost-plus failures. “Some of these programmes were cancelled without delivery of any war-fighting capabilities.”

Bunch says it is too late to adjust the B-21 contract type with Northrop. He would not disclose the exact contract value, but government estimates put the cost of B-21 development at $23 billion.

The total requirement for 100 stealth bombers to replace the Boeing B-52 and B-1B is worth an estimated $80 billion, with initial operational capability expected in the "mid-2020s".

Bunch says Congress has been told the contract value in a classified briefing, but the service is worried about potential adversaries like Russia and China “connecting the dots” by making the dollar value public. Seven top-tier suppliers including engine maker Pratt & Whitney were revealed on 7 March.

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