Bloomberg News

Long-Range Bomber’s Development Would Get $12 Billion From U.S.

March 06, 2014

The U.S. Air Force’s five-year plan calls for spending $11.8 billion to develop a new long-range bomber, one of the Pentagon’s top weapons projects, according to military budget figures.

The aircraft would replace Northrop Grumman Corp. (NOC:US)’s aging B-2 stealth bombers. The Defense Department sees it as vital to reaching far-flung, heavily defended locations worldwide. Northrop may compete with the two biggest federal contractors, Lockheed Martin Corp. (LMT:US) and Boeing Co. (BA:US), which plan to bid as a team.

While the Air Force has said it may build as many as 100 of the bombers in a program potentially topping $55 billion, the service’s new five-year plan released this week didn’t include production funds for those aircraft.

Development spending would more than double to $914 million in fiscal 2015 from this year, according to service budget projections obtained by Bloomberg News. It would steadily climb in the next several years, from $1.6 billion in fiscal 2016 to $3.5 billion in 2019, the figures show.

Still, compared with projections made last year the Long-Range Strike Bomber was nicked by cuts of 12 percent or more from fiscal years 2015 to 2017 before experiencing gains, said Kevin Brancato, a Bloomberg Government analyst. The new projection for the first time included funding for fiscal 2019.

The Air Force has refused to disclose many details about its plan to replace Northrop’s B-2. That stance may be changing.

Two Teams

Air Force Secretary Debra James said this month that two teams are working on “pre-proposal types of activities, preparing to take the next step in competition on the Long-Range Strike Bomber.”

A request for proposals, the formal start of competition, probably will be issued later this year, James said at Bloomberg Government’s Defense Transformation conference.

The new bomber would generate billions of dollars for the contractor chosen to build it. Bethesda, Maryland-based Lockheed, the biggest U.S. government vendor, and Chicago-based Boeing, which is No. 2, said in October that they planned to bid on the project as a team.

Northrop Grumman, based in Falls Church, Virginia, hasn’t yet announced an intention to bid. Randy Belote, a spokesman, said in an e-mailed statement this month that the company “is very interested in working with the Air Force on the B-2’s successor.”

$550 Million

The Air Force’s top uniformed official said at an industry conference in Washington yesterday that the bomber will cost more than the service’s advertised $550 million per-plane price tag.

“We get a lot of questions” on unit cost,’’ said Lieutenant General Charles Davis, according to the publication Defense News. “Is it going to be $550 million a copy? No, of course it’s not going to be $550 million a copy once you add in everything.”

The new bomber may cost as much as $81 billion for the 100 planes planned, 47 percent more than the $55 billion price the service has listed, analysts have said.

The Air Force based its $550 million estimate on the value of the dollar in 2010, and it represents only the production costs for an aircraft that won’t be deployed for at least a decade.

Including research and development, the bomber would cost as much as $810 million apiece in this year’s dollars, according to calculations by three defense analysts cited by Bloomberg News.

To contact the reporter on this story: Tony Capaccio in Washington at acapaccio@bloomberg.net

To contact the editor responsible for this story: John Walcott at jwalcott9@bloomberg.net


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Companies Mentioned

  • NOC
    (Northrop Grumman Corp)
    • $126.26 USD
    • 1.14
    • 0.9%
  • LMT
    (Lockheed Martin Corp)
    • $167.13 USD
    • 4.15
    • 2.48%
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