Initial Development Phase Worth More Than $21 Billion To The Company

Northrop Grumman has beaten out a Boeing/Lockheed Martin team and won the contract to build the Long Range Strike Bomber, Deborah James, the Secretary of the Air Force, announced Tuesday afternoon.

The plane is expected to achieve Initial Operational Capability in 2025, according to the Pentagon. The Air Force will eventually acquire 100 of the LRSB at a cost of at least $55 billion.

"The capabilities of the LRSB will ensure the United States is able to hold any target on the globe at risk," said Defense Secretary Ash Carter, "while providing our combatant commanders critical operational flexibility across the full range of military operations."

Secretary James said that the process of selecting Northrop Grumman was "deliberate and disciplined."

"Our team of professionals carefully considered the offeror's proposals in accordance with the source selection criteria. We believe that our decision represents the best value for our nation," James said.

James said that the cost estimates for the LRSB were developed by independent cost experts. "Experts outside of the program used historical data points to prepare independent cost estimates for the program. Our goal in the Air Force will be to beat these independent cost estimates through the application of 'should cost' initiatives," she said.

Assistant Secretary of the Air Force for Acquisition Dr. William LaPlante said that there are two parts to the contract announced Tuesday; a procurement portion for the first 21 aircraft that include fixed-price options with incentives for cost.

The average procurement costs will be less than or equal to $550 million per aircraft in 2010 dollars, LaPlante said. He said that according to the independent cost estimates outlined by Secretary James, the initial aircraft are expected to cost about $511 million in 2010 dollars for each airplane. LaPlante said the initial development costs will be about $21.4 billion for the first group of airplanes.

The other portion of the contract is for the Engineering and Manufacturing Development (EMD) which also includes cost and performance incentives.

Officials would not disclose information about capabilities, the engines or other details about the airplane due to security concerns, and it is not yet clear even what it will look like. Development costs have been hidden in the Pentagon's "Black Budget" during the contract competition.

(Image from Pentagon video)

FMI: www.af.mil, www.northropgrumman.com