Boeing and Lockheed Martin protest Air Force bomber decision

  • By Dan Catchpole Herald Writer
  • Friday, November 6, 2015 4:23pm
  • Business

EVERETT — The Boeing Co. and Lockheed Martin are challenging the Pentagon’s decision to tap competitor Northrop Grumman to build a new stealth bomber, a contract worth up to $80 billion.

The Boeing-Lockheed Martin team filed formal protests Friday with the U.S. Government Accountability Office, which has 100 days to rule. Defense analysts say there is a real chance the decision will be overturned.

The outcome will likely affect how much work for the U.S. Air Force’s new, composite-material bomber is done in Washington.

The companies were bidding to build 100 long-range strike bombers, which would first enter service in the 2020s. The Defense Department awarded the contract to Northrop Grumman late last month.

The selection process was “fundamentally flawed,” Boeing said in a statement.

It did not give enough credit to the Boeing-Lockheed team’s efforts to cut costs, reversing the historical trend of ballooning defense program costs, the company said.

Also, the process did not give enough weight to the bidders’ abilities to make good on their proposals, Boeing said.

Northrop Grumman chief spokesman Randy Belote defended the company’s bid and the Air Force’s selection process in a statement Friday.

“Northrop Grumman offered an approach that is inherently more affordable and based on demonstrated performance and capabilities,” he said.

Belote also took a swipe at the competition: “Our record stands in contrast to that of other manufacturers’ large aircraft programs of the last decade.”

It is likely a reference to Lockheed Martin’s F-35 fighter and Boeing’s KC-46 aerial-refueling tanker. Both programs have had costly problems and delays during development. However, the F-35’s struggles dwarf those of the KC-46, which flew for the first time in late September.

Boeing got the Air Force contract for the KC-46 after successfully protesting the Defense Department’s 2008 selection of Northrop Grumman and Airbus to build a new tanker.

Challenging defense program contract decisions are “the new norm,” said Mark Gunzinger, a former Deputy Assistant Secretary of Defense and now a senior fellow at the Center for Strategic and Budgetary Assessments in Washington, D.C. He is also a former Air Force bomber pilot.

There are fewer big contracts now, so the stakes are higher, he said. “Over the past 50 years, there was an average of five or six military aircraft in development. Now, there is one” — the KC-46.

The Air Force’s requirements for the bomber and the competing bids have all been kept secret, as were the deliberations of the selection team. So it is not possible to say if Boeing and Lockheed will succeed, he said.

Awarding the contract was delayed several months as the selection team deliberated. The Air Force wanted to make sure it made the right decision, he said.

If Northrop retains the contract, he said, he would bet that the bomber would be assembled at its facility in Palmdale, California. Central Florida is another possible contender for final assembly, he said.

If Boeing manages to overturn the decision and win a new round, St. Louis is the most likely site for final assembly, Gunzinger said.

That is where Boeing Defense, Space &Security is headquartered and where Boeing assembles its F/A-18 fighter.

The challenge has a small but real chance that the Government Accountability Office “would overturn the program award and reopen the competition,” defense analyst Byron Callan wrote in a note Friday.

Loren Thompson, a defense consultant who works closely with Lockheed, said that the Boeing-Lockheed team has a good case to argue.

If Northrop keeps the contract, the Air Force “will pay more for the bomber than it needed to, and there are huge risks associated with the outcome that nearly guarantee the plane will not be delivered on time,” he wrote in a Forbes column Friday.

Even if the Boeing-Lockheed team doesn’t get the contract, substantial work for the bomber would likely be done in aerospace plants and shops in Western Washington.

Boeing was a major subcontractor for Northrop Grumman’s B-2 stealth bomber program. And Northrop is a major subcontractor for Lockheed’s F-35 fighter and Boeing’s F/A-18 and E/A-18 fighter programs.

And the Air Force wants its first bomber built since the Cold War to be largely made with composite materials. Metro Puget Sound is widely seen as the leader in composite-material aerospace manufacturing, said Richard Aboulafia, an industry analyst and vice president at The Teal Group.

Boeing will make the all-composite wing for the 777X in Everett, where the plane will be assembled, which should burnish the area’s reputation for working with the advanced materials.

The contract gave a lifeline to Northrop, which has not made a big manned airplane since B-2 production ended in the 1990s.

At the same time, it cast doubt on Boeing’s future in making strictly military airplanes. Its F/A-18 line is expected to end production in the next few years. That potentially leaves the company making two manned military aircraft — the P-8 sub hunter for the U.S. Navy and the KC-46 tanker for the Air Force. Both are based on commercial airplanes — the 737 and the 767, respectively.

Dan Catchpole: 425-339-3454; dcatchpole@heraldnet.com; Twitter: @dcatchpole. Herald wire services contributed to this story.

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