Wednesday, October 28, 2015

U.S. Air Force Awards Bomber Contract To Northrop Grumman

The LRS-B will replace the B-2 Spirit Bomber pictured above. Credit: Northrop Grumman

MELBOURNE, Florida - The U.S. Air Force announced on Tuesday the contract award of the nation's new Long-Range Strike Bomber (LRS-B) to Northrop Grumman Corporation which will bring a much needed boost to the local economy on Florida's Space Coast.

“The LRS-B is critical to national defense and is a top priority for the Air Force,” said Secretary of the Air Force Deborah Lee James. “We face a complex security environment. It’s imperative our Air Force invests in the right people, technology, capability and training to defend the nation and its interests - at an affordable cost.”

According to the Air Force, future threats will evolve through the introduction of advanced air defense systems and development of more capable surface to air missile systems. The LRS-B is designed to replace the Air Force’s aging fleets of bombers - ranging in age from 50+ years for the B-52 to 17+ years for the B-2 - with a long range, highly survivable bomber capable of penetrating and operating in tomorrow’s anti-access, area denial environment. The LRS-B provides the strategic agility to launch from the United States and strike any target, any time around the globe.

The Long Range Strike Bomber contract is composed of two parts. The contract for the Engineering and Manufacturing Development, or EMD, phase is a cost-reimbursable type contract with cost and performance incentives. The incentives minimize the contractor’s profit if they do not control cost and schedule appropriately. The independent estimate for the EMD phase is $21.4 billion in 2010 dollars.

The second part of the contract is composed of options for the first 5 production lots, comprising 21 aircraft out of the total fleet of 100. They are fixed price options with incentives for cost. Based on approved requirements, the Average Procurement Unit Cost (APUC) per aircraft is required to be equal to or less than $550 million per aircraft in 2010 dollars when procuring 100 LRS-B aircraft. The APUC from the independent estimate supporting today’s award is $511 million per aircraft, again in 2010 dollars.

"The Air Force has made the right decision for our nation's security," said Wes Bush, chairman, chief executive officer and president, Northrop Grumman. "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.

Based on current LRS-B independent cost estimates, the Air Force projects the APUC for the program will be approximately a third of the previous B-2 stealth aircraft.

Impact On Brevard County's Local Economy

In 2013, Northrop Grumman announced that it would restructure some of its operations into Centers of Excellence, with the largest move being from its Bethpage, N.Y. facility to Melbourne, Florida.

In exchange for bringing 1,000 jobs to Florida, the defense company received an economic development incentives package which included an exemption from Brevard County school property taxes, a $1.15 million grant over five years from the City of Melbourne, $2 million from Brevard County, and $16 million from the State of Florida. However, Northrop Grumman did make a $135,000 donation to Brevard County Public Schools on the same day that the contract award was announced.

According to the Economic Development Commission of Florida's Space Coast, Northrop Grumman plans to invest approximately $500 million in new capital investments which includes the construction of an additional approximately 500,000 square foot facility at the Melbourne International Airport.

“This is great news for the Space Coast and Central Florida," Senator Bill Nelson said.  "It will mean an additional 1,000 high-paying engineering jobs over and above Northrop Grumman’s 2,600 Melbourne employees.”

Secretary of Defense Ashton Carter introduces Secretary of the Air Force Deborah Lee James and Air Force Chief of Staff Gen. Mark A. Welsh III, during a press briefing to announce the award of the long range strike bomber contract in the Pentagon, Oct. 27, 2015. Credit:  U.S. Air Force / Scott M. Ash