The U.S. Air Force‘s announcement Tuesday that it has chosen Northrop Grumman to build the Long-Range Strike Bomber commits the U.S taxpayer to a trillion-dollar burden. The award merits comment on two levels: as part of the overall trillion-dollar burden, and, discussed later, the business significance as an individual award.
The contract is for $800 million per plane – or $80 billion for the whole fleet. Piece by piece, the Department of Defense (DoD) is contracting for an entirely new Cold War “strategic triad.” In the original Cold War, the government needed – and paid enormously for – a strategic triad of nuclear bombers, nuclear submarines (and/or nuclear carriers), and nuclear missiles to threaten the Soviet Union if necessary with nuclear retaliation.
It seemed for some decades that with the demise of the Soviet Union, the Cold War was over. But, today, we are doing it again – even though no one knows how to pay for it all. I have discussed in prior pieces how the Navy is already moving ahead on a new generation of nuclear carriers and submarines, and how observers have estimated the whole package at a trillion dollars.
Apparently the justification for this, at least currently, is the aggressiveness of Vladimir Putin, Russia’s leader. But, Russia is hobbled by an economic recession, exacerbated by Western sanctions over Ukraine and the fall of oil prices. A trillion dollars seems high for dealing with Russia.
Significantly, the Air Force describes the “Long Range Strategic Bomber” (LRS or LRS-B) as not just for nuclear warfare, but also for conventional missions. But look at the announcement and the prior information. This is a high-tech stealth bomber costing $800 million apiece. Would we have used this in Afghanistan? No. Would we have used this against the insurgency in Iraq? No. Would it be flying now against ISIS? No. It is too expensive: it is built for longer distance than necessary for these wars; and, it is stealthy and high tech, which are not needed for the kinds of wars we have been fighting. Let’s face it, we are buying the LRS-B just in contemplation of the Cold War, part II.
Let us lo at some aspects of the business significance. First, there may well be both a protest at the Government Accountability Office and in the courts, such as there was for the refueling tanker; and, also, a fight in Congress. The losers, Lockheed Martin and Boeing, have powerful support from the members of Congress representing their facilities. Lockheed did recently have to settle federal charges about illegal lobbying with taxpayer money. That will hardly slow it down.
Second, there will be a round of speculation about the award. Actually, the implications of Northrop Grumman getting it are less than the other way. Northrop Grumman needed the award to keep its production facilities going. Lockheed can survive quite well with the costly F-35, and Boeing has its commercial nonmilitary business.
Some will wonder if one of the other companies might buy Northrop now that it has this attractive contract. But, recently, Lockheed acquired Sikorsky Helicopter, which constituted about as much reduction in competition as the DoD can handle just now. Since the acquisition, Frank Kendall, the Undersecretary of Defense for Acquisition, Technology and Logistics, issued a statement basically warning that DoD would oversee closely any further consolidations. So Northrop Grumman may be left to itself.
Third, in April 2015, Kendall revealed that the individual technologies for the LRS-B will be competed. That means chances for other competitors to have the chance to compete for sustainment and upgrade features. While Northrop Grumman gets to gnaw on the big meaty bone, there will be some snacks for others.
This article was written by Charles Tiefer from Forbes and was legally licensed through the NewsCred publisher network.