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Home / Business / Boeing, Northrop, Saves Over $ 85 Billion Nuclear Rocket Program

Boeing, Northrop, Saves Over $ 85 Billion Nuclear Rocket Program




The test firing of an unarmed ballistic missile in May from Vandenberg Air Force Base in California. (Aubree Milks / AP)

There was a $ 85 billion elephant in the room at this year's Air Force Association conference, an annual fair where thousands of uniformed airmen gnaw shoulders with suit-clad defense contractors who hooked the latest advanced weapons.

Those who entered the conference hotel in National Harbor, Md., Were welcomed by a huge blue banner that sprayed with the Northrop Grumman logo and the words "LEGENDARY DETERRENCE" – a not-so-subtle reference to the company's ballistic missile ambitions.

Northrop is convinced to take over a massive Air Force nuclear program called the Ground Based Strategic Deterrent, or GBSD, which will request a team of contractors to replace the US military's aging stockpile of Minuteman III intercontinental ballistic missiles. But Boeing's Arlington-based defense business, which has handled the Minuteman program since 1958, has launched an aggressive lobbying campaign to defend its interests.

Northrop "is on its way to just one opportunity," Boeing GBSD program director Frank McCall warned in an interview Wednesday at the fair.

"There has never been a time in Minuteman's history when the Air Force was not supported by either company," he said, adding that he believes the Pentagon takes "an approach to all winners" that is "unique in the history of intercontinental ballistic missiles . "

The ground-based missiles constitute a stage of the United States Nuclear Triad, which aims to be ready to deliver warheads at a moment's notice from air, land or sea. They are meant to deter other countries from launching a nuclear strike by sending a message that any first-shot will be destroyed immediately.

The various components of the triad are extremely expensive to build and maintain. For the new ground-based missiles, the Pentagon faces a difficult dilemma as it tries to get the best solution for the best price.

The Air Force had hoped to evaluate several competing alternatives. But Boeing, believed to be the only viable competitor other than Northrop, says it will not participate unless the Air Force changes its approach.

With Boeing out, the Northrop-led team seems to be Pentagon's only option, which can make it difficult for the government to negotiate a reasonable price.

There is a common dilemma for weapons buyers from the Department of Defense, who have the impossible task of operating a competitive marketplace when there are at best two or three potential suppliers for the most expensive weapons systems. The US defense industry has consolidated to a worrying degree in the decades since the Cold War, say officials and analysts, with a handful of dominant suppliers exerting tremendous influence.

A White House report released last year found 300 cases where important defense products are manufactured by just one company, a "fragile" supplier or a foreign supplier.

Big money is at stake for Boeing and Northrop: The Department of Defense estimates the long-term costs of the program between $ 62 billion. and $ 100 billion. Both companies have formidable lobbying, spending $ 7.2 million and $ 8.3 million on Washington lobbyists in 2019.

Boey's management of the Minuteman program brought about 600 defense contracts totaling $ 8 billion in the first 30 years of the programs, according to estimates provided by the company. Northrop has traditionally taken a secondary role in managing complex system integration.

In 2017, Northrop and Boeing were awarded contracts worth $ 349.2 million and $ 328.6 million, respectively, to develop their own version of a next-generation replacement for Minuteman. In July, the air defense asked each company to submit a proposal, hoping to compare the two missile designs and negotiate a fair price.

Boeing quickly threw a wrench into that plan, announcing on July 25 that it would step out of competition because the Air Force's request for proposals allegedly favored Northrop.

Boese's concerns stem from Northrop Grumman's acquisition of a company called Orbital ATK for 2017 for $ 7.8 billion. Orbital ATK – which operates as a Northrop Grumman business unit called Innovation Systems – is a dominant manufacturer of rocket engines operating ballistic missiles. Aerojet Rocketdyne, the other US rocket engine manufacturer, is also partnering with Northrop.

Boeing has taken the matter to the Pentagon, as well as to the Federal Trade Commission, but has failed to block the deal.

We continue to be ready to support this important program, "wrote Leanne Caret, president of Boeing's Arlington-based defense business, in a July 23 letter seen by The Washington Post. "As we have discussed, we believe that there are other procurement structures that can provide this opportunity faster at less cost, and we will look for ways to leverage the work … to support this critical national security mission."

Boeing later contacted Northrop about the possibility of merging, but was rejected, a Boeing official said. So it came as little surprise Monday when Northrop released the list of companies it merges with, and Boeing is not included in it.

Air Force officials stood by their approach, but declined to comment on how they would proceed. [19659024] "We are very open to a number of proposals. … We are open to team relationships. We just don't want to dictate, Will Roper, the Air Force's assistant secretary for procurement, technology and logistics, told reporters Monday. "We think it should be decided by the industry and what they think is best value."

Shortly thereafter, Boeing countered that it was pursuing a multifaceted advocacy and lobbying campaign asking the government to force Northrop to cooperate.

"We believe there is a way to a better weapon systems solution that will allow us to field the solution faster than any company can handle on its own," said McCall, the Boeing official.

Analysts expressed concern about the current scheme, in which Northrop will almost certainly be the only bidder. Whether Boeing's proposal will solve the problem is less clear.

"I'd much rather see a direct competition between Northrop and Boeing," said Dan Grazier, a former Marine Corps captain who worked at Project on Government Oversight, a watchdog group. "The best practice for any procurement system would be a solid, honest, competitive prototyping where the government can weigh competing alternatives and get a competitive price."


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