Updated 1:33 p.m., Feb. 16 with rejection of protest - Boeing is considering its options following the denial of a protest over the military's decision to award a lucrative contract to a rival contractor. The U.S. Government Accountability Office says it has found no issues with the Air Force’s move to award the contract for the Long Range Strike Bomber to Northrop Grumman.
Boeing's St. Louis-based Defense, Space & Security division still claims the Air Force's evaluation of the competing proposal was "fundamentally and irreparably flawed."
The engineering, manufacturing and development phase of the deal is estimated to be worth more than $20 billion
Updated 10:30 a.m., Nov. 6 with protest information
Boeing is protesting the Pentagon's decision to award a lucrative contract to rival defense supplier Northrop Grumman.
The U.S. Government Accountability Office is being asked by Boeing and Lockheed Martin to review the decision. Boeing and Lockheed Martin partnered in the hopes of landing the multi-billion contract for the Long Range Strike Bomber.
The decision to go with another company is seen as a blow to Boeing's Defense, Space & Security unit, which is based in St. Louis.
Updated 4:00 p.m., Oct. 28 with analyst Richard Aboulafia's comments.
The Air Force has selected Northrop Grumman to build its next generation bomber designed to replace its aging fleet. The maker of the B-2 stealth bomber beat out a Boeing-Lockheed Martin team to win the highly classified, $80 billion project.
The Associated Press reports that the decision is an important step in the Pentagon's plan to modernize the U.S. strategic nuclear force. The last model of the B-52 still in the Air Force fleet dates to 1962. The stealth bomber would also replace the B-1 bombers, which have been flying since the 1980s.
The new plane, which is expected to enter the force in the mid-2020s, would initially have a conventional-only bombing role but eventually would also be nuclear capable.
Boeing, which has its Defense, Space and Security unit in St. Louis, is considering protesting the Pentagon's decision. A joint statement from Boeing and Lockheed Martin said they will have further discussions with the Air Force before deciding the next steps. According to Reuters, Boeing plans to "rigorously deliberate" whether to protest the contract, with a decision likely within two weeks, the head of the company's defense division said.
The bidding process took months longer than the Air Force had first anticipated, in part because the bids went through additional scrutiny through the Office of the Secretary of Defense. Richard Aboulafia, a vice president of analysis with the Teal Group, said that and the secrecy of the program may make it hard for the companies to win a protest.
"Things are a lot more complicated because this is a completely blacked-out program," he said, "That is to say there is so much secrecy it might be almost impossible to successfully execute a full fleshed-out protest."
A protest is likely to take a year or two. If it should fail, Aboulafia said Boeing will be left with a choice about its Defense, Space and Security unit.
"They can go back to being primarily commercial jet-liner company they were before they purchased McDonnell-Douglas back in 1997 or they can put in a bid for Northrop Grumman’s military aircraft unit," he said.
But the price of such a purchase has just gone up, said Aboulafia. Northrop Grumman's stock rose following news of the contract.
U.S. Senator Claire McCaskill (D-Mo) told reporters Wednesday that she is disappointed by the news and she will look into the Air Force's decision-making process.
"I certainly am not going to complain about a fair, competitive process.....I'll be taking a look at the competition, making sure that there wasn't any unfairness, that it was done in a way that was fair to Boeing and Lockheed," she said.
The Air Force has said it will buy up to 100 of the new bombers for $550 million each. The Congressional Budget Office estimates the cost at $348 billion over 10 years, and others have said it could approach $1 trillion over 30 years.
