Tuesday, October 27, 2015

Boeing, Lockheed lose $55 billion Air Force bomber contract to Northrop Grumman

Boeing's defense business lost big Tuesday, after competitor Northrop Grumman Corp. won a U.S. Air Force contract to build up to 100 advanced bombers worth $55 billion.
Secretary of the Air Force Deborah Lee James, in a Pentagon press briefing at the end of the day Tuesday, said the Northrop Grumman team had delivered a better proposal than the Boeing-Lockheed Martin team.
This means that the Puget Sound area won’t win work on what will be the last big military aircraft contract for many years. Had Boeing won, at least some of the manufacturing and engineering would have almost certainly been done in the Puget Sound area.
But on the other hand, by default the selection will make the Puget Sound area an increasingly significant segment of Boeing's military aircraft production.
Boeing is currently building the P-8A submarine hunter in Renton, and the KC-46 tanker in Everett. The two are based on commercial air frames, the 737 and 767 respectively.
Meanwhile Boeing already has shut down its C-17 factory in Southern California. It also is slowing production of the F/A-18E/F Super Hornet to two monthly in St. Louis, as the order book for the last of Boeing's fighter jets wanes.
Had Boeing and Lockheed Martin won the bomber contract, at least some of the work would likely have been done in St. Louis, as well as in the Puget Sound area.
The new stealthy long-range strike bomber will look a lot like the B-2 bomber built by Northrop Grumman, and that experience likely helped it win the contract.
The Air Force will pay Northrop Grumman $21.4 billion for the first 21 jets as part of the deal in 2010 dollars, which is when the contract proposals began.
While there has been speculation that the Pentagon might lean toward Northrop Grumman to help keep the smaller of the three companies an active military contractor, officials insisted during the press conference that was not part of the decision process.
(Steve Wilhelm - The Puget Sound Business Journal)

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