Brian Bradley
NS&D Monitor
4/17/2015
The forthcoming contract award for the Long Range Strike-Bomber (LRSB) could impact the losing team’s different business divisions, and handicap that team’s influence on Capitol Hill, according to industry experts. For Boeing, a loss could even precipitate an exit from the defense aircraft market, one official said. “They’ve lost so much on the combat aircraft front for the past few years that they’re going to have to make a decision: Either become a pure play commercial jetliner company, or a largely pure play, or buy Northrop Aerospace if they win,” Richard Aboulafia, Vice President of Analysis at the Teal Group told NS&D Monitor this week. Boeing’s recent losses include the F-35 contract to Lockheed Martin and a roughly $4 billion contract in 2013 which would’ve sent about 36 F-18s to the Brazilian Air Force. Saab and its Gripen NG fighter jet won the latter.
Michael Blades, Senior Analyst for Aerospace and Defense at Frost & Sullivan, agreed with Aboulafia about Boeing’s possible exit from the combat aircraft industry, pointing out that Boeing has a civilian sector to fall back on. “As new builds will require stealth, and with Boeing already relying on Lockheed for the stealth technology in its LRSB design, it seems to me the only company really at risk of leaving the combat aircraft business is Boeing,” Blades wrote in an email to NS&D Monitor this week. “I think the government will do what it takes to ensure there are at least two companies in the US industrial base that can build stealthy fighters and/or bombers. Boeing, with its commercial business, doesn’t rely on DoD dollars as much as the other two companies.” A Boeing-Lockheed Martin team is competing with Northrop Grumman to win the LRSB contract, whose award is expected sometime this summer. Out of the three defense giants, only Northrop and Lockheed employ stealth design teams. A Northrop win could also translate to Lockheed trimming its design capabilities, affecting Lockheed’s competitiveness, Aboulafia said.
What if Northrop Loses?
If Northrop loses the bomber contract, one drone program could keep the defense giant afloat in the combat aircraft industry, according to Blades. Northrop is competing with Lockheed, Boeing and General Atomics for the Navy’s Unmanned Carrier-Launched Airborne Surveillance and Strike (UCLASS), which will be a combat aircraft “if Congress gets its way,” Blades said. Northrop and Lockheed could be attractive bidders for that contract because of their stealth abilities. But Aboulafia predicted Northrop could devolve into a collection of assets should LRSB elude it. Nevertheless, smaller opportunities might exist in the black procurement realm for any LRSB loser, Aboulafia said. “That’s not the same as really being in the combat aircraft business, and designing something for production,” he said. “Boutique programs where you build five, 10 airframes at most—that’s just sort of a different skill set, but nevertheless, it does keep you in the game somewhat.” Lockheed won a contract for the unmanned RQ-170, “The Beast of Kandahar,” and Northrop won the unmanned RQ-180. It was recently revealed that both programs started out classified. Smaller classified procurements might not pump enough lifeblood to keep the LRSB loser’s combat aircraft business alive. “Now, is it enough to keep you in the game until sixth-gen fighters appear, say, the end of next decade, in the late 2020s?” Aboulafia asked about classified procurement awards. “That’s asking a lot.” The Navy plans to debut the sixth-gen fighter around 2028 to replace the F/A-18E/F Super Hornet, and the Air Force plans to roll out its version to replace the F-22 in 2032.
Will Lobbying Affect Industrial Base?
Away from the production line, the contract winner will almost certainly have a greater presence at the Washington bargaining table. “This town has a market just like any other right?” Aboulafia said. “Congress is a market. DoD is a market. You have a high-prestige, high-dollar-value, high-technology program like this, it gives you a lot more clout, and I think that maybe is the biggest knockout effect.”
Which Team Has the Edge?
While the LRSB winner will presumably secure greater influence in Washington, Blades thinks DoD will ensure a competitive combat aircraft industrial base, in part, by distributing the bomber and UCLASS contracts to different companies. A UCLASS award is expected in the second quarter of Fiscal Year 2017. The Navy is expected to procure the first six to 24 initial units at a cost of $3.7 billion. Northrop’s RQ-180 and X-47B, a demonstration unmanned combat aircraft, gives the company a foot in the UCLASS door, which could bode well for the Boeing-Lockheed team on LRSB, Blades wrote. “It is unlikely that NGC will get both significant new starts,” he wrote. “If UCLASS lingers too long or gets cancelled, then I think NGC has the edge just because Lockheed will be wrapped up in the F-35. Regardless, whoever wins, I believe the ‘losing’ company will still be a participant in the system of systems requirements as a subcontractor. I think the DoD will do what will ensure an industrial base for combat aircraft with at least two competitors, Lockheed and Northrop. Besides, if there is no competition then innovation will get stifled and that would go against [DoD’s] new [Better Buying Power] BBP 3.0.” The BBP is an initiative aimed at strengthening the department’s buying power, improving industry productivity and providing a more affordable warfighter, in part, by promoting competition. Aboulafia thinks the two LRSB teams are in a dead heat. “From an industrial base standpoint and in terms of capabilities and skills, it really makes strong arguments either way,” he said.
Frank Kendall, Under Secretary of Defense for Acquisition, Technology and Logistics, said during a press briefing last week said DoD will have the opportunity to compete bomber technologies to “a degree we would not have had on earlier or other programs before,” underscoring the “modular” approach the department was taking regarding the bomber. Kendall could have been referring to the “system of systems” character of the LRSB, meaning the bomber will be able to launch and/or operate with unmanned systems in a coordinated attack or swarming scenario for deep-strike missions, Blades wrote. “The system of systems aspect means that one company could win the main platform contract while another (or others) could win contracts for the other pieces of the system, in my opinion,” he wrote.
After President Obama’s Fiscal Year 2016 budget request described the LRSB as “optionally manned,” Maj. Gen. Garrett Harencak, Air Force Assistant Chief of Staff for Strategic Deterrence and Nuclear Integration, this week during a House Armed Services Strategic Forces Subcommittee hearing indicated the Air Force was planning to debut the system with human pilots. “I’m not saying that sometime in the future they cannot” be unmanned, Harencak said during the April 15 hearing. “What we have to deal with is the capabilities we currently have and what we foresee to be that capabilities in the future. We believe that from a nuclear aspect, it’s important to the triad. But I think it’s important to realize that should the great day come when nuclear weapons disappear from the world, and if that happens tomorrow we’d still need to build a long-range great bomber because we must have a capability again to range with long-range persistent high volume capability to destroy targets and allow no sanctuary anywhere to go. So that is currently best accomplished with a cranium in the cockpit.”
Will More or Less than 100 LRSBs Be Procured?
An Air Force spokesperson wrote in an email to NS&D Monitor this week that the service plans to procure the initial production lots for LRSB. “The contract award this summer will include fixed-price commitments from industry for each of the first five production lots,” service spokesperson Ed Gulick told NS&D Monitor. “This represents approximately one-fifth of the future LRS-B fleet and the most expensive aircraft in the procurement phase of the program.” But DoD’s stated “system of systems” approach indicates that fewer “motherships” should be required, according to Blades. This could translate to DoD procuring “considerably less” than 100 LRSBs. DoD has stated it is looking to acquire 80-100 bombers at a cost of no more than $550 million per unit. Another factor that could result in a vast reduction of LRSBs is the need to keep both the F-35 and UCLASS production lines running. Also, new aircraft incorporating advanced technologies—such as the F-35 and B-2, whose production number dropped from a planned 75 to 21 at an ultimate cost of $737 million per plane in 1997 dollars—often cost more than estimated. Blades also said the prospects of DoD hitting its cost target are “highly doubtful. It may cost that for production, but when you average RDT&E costs across the number of aircraft, the total cost will likely be much more. And there are also costs associated with developing the system of systems aspect.”
Aboulafia said it’s possible DoD will push to build more than 100 LRSBs, especially as their will-be predecessors, B-52s, start retiring in the 2040s.”There’s never been an aircraft program which has had the total number of builds predetermined successfully,” he said. “You look back decades and everything is wildly divergent from reality. The only thing you can hope for is it’s a real production program and not just the boutique, ‘Let’s build 21 planes’ program. That’s the most you can do.”
