The U.S. Air Force has awarded Northrop Grumman a contract to begin development of the closely guarded Long Range Strike-Bomber (LRS-B), a program expected to eventually cost some $80 billion. The losing team of Boeing and Lockheed Martin said it awaited an explanation of the service’s decisionmaking process.

Expected to enter service in 2025, the LRS-B will replace aging Boeing B-52 Stratofortress and Rockwell B-1B Lancer bombers. It will be capable of delivering both nuclear and conventional weapons, and operate for a time with 20 B-2 Spirit stealth bombers that Northrop and later Northrop Grumman produced in the 1990s.

In an eagerly anticipated announcement they made late on October 27 after US financial markets closed, Air Force officials described a two-part contract award. An engineering and manufacturing development (EMD) phase will cost an estimated $21.4 billion in Fiscal Year 2010 dollars, the cost benchmark the service is using for the program. Officials would not say how many flying aircraft will be built during EMD, having earlier indicated that about four prototypes are planned. The EMD phase will be followed by procurement options for the first five production lots of 21 bombers out of a total desired fleet of 100. The EMD phase contract is a cost-reimbursable incentive agreement, which transitions to fixed-price options “with incentives for cost” for the five production lots.

“The average procurement unit cost per aircraft is required to be equal to or less than $550 million per aircraft in 2010 dollars when procuring 100 LRS-B aircraft,” said William LaPlante, assistant secretary of the Air Force for acquisition. “This was a key performance parameter established by then Secretary of Defense Robert Gates, a move specifically designed to ensure that we made the bomber affordable.”

Independent estimates place the average procurement unit cost of the LRS-B at $511 million per aircraft in FY2010 dollars over the full course of the production run, LaPlante said. The cost per aircraft in present-day dollars is $564 million, amounting to some $56 billion in overall procurement cost.

“We believe these estimates are reasonable and achievable,” said LaPlante, who added: “If we remain disciplined and keep program requirements stable, we believe we can beat these estimates in the future.” The independent analyses were conducted by the Air Force’s cost analysis agency and the Office of the Secretary of Defense’s cost assessment and program evaluation group, which produced estimates within two percent of each other, officials said.

Following their brief presentation at the Pentagon, Air Force officials provided little more information, giving clipped answers to reporters’ questions. Asked how much money has been spent on the program already, they said only that Congress has appropriated $1.9 billion between Fiscal Years 2011 and 2015. The competing proposals represented “full up aircraft,” but the officials declined to identify the winning engine manufacturer or any other suppliers. “We won’t go into any details relative to specific components or subcontractors due to classification and enhanced security,” said Lt. Gen. Arnold Bunch, Air Force military deputy for acquisition.

Bunch said service officials would be available to debrief the Boeing-Lockheed Martin team as early as October 30. Any protest by the team would be filed with the Government Accountability Office, which would have 100 days to uphold or deny the contract award.

Responding to the announcement, the Boeing-Lockheed Martin team proclaimed itself disappointed. “We will have further discussions with our customer before determining our next steps," the team said. "We are interested in knowing how the competition was scored in terms of price and risk, as we believe that the combination of Boeing and Lockheed Martin offers unparalleled experience, capability and resources for this critically important recapitalization program."

Northrop Grumman provided a similarly brief statement. “The Air Force has made the right decision for our nation’s security,” said chairman, CEO and president Wes Bush. “As the company that developed and delivered the B-2 Spirit stealth bomber, we look forward to providing the Air Force with a highly-capable and affordable next-generation Long-Range Strike Bomber. Our team has the resources in place to execute this important program, and we’re ready to get to work.”