Ruling on $80 Billion Bomber to Be Declassified, Air Force Says

  • GAO findings in bid challenge may be public by late September
  • Boeing-Lockheed team disputed the contract award to Northrop

A declassified version of a ruling that upheld Northrop Grumman Corp.’s victory in a competition to build the next U.S. bomber, a project valued at as much as $80 billion, could be completed by the end of September, the Air Force said.

The U.S. Government Accountability Office backed the selection Feb. 16 in a 55-page decision, rejecting a challenge from the competing bidder, a team of Lockheed Martin Corp. and Boeing Co. But the GAO’s findings haven’t been made public in keeping with the largely classified nature of plans to produce the military’s first new bomber since the Cold War and one of the biggest U.S. weapons systems of the next decade.

The GAO hasn’t yet received a redacted version that removes paragraphs and pages that the Air Force deems classified and the contractors contend are business-sensitive. Northrop, shut out of prime contracts for U.S. warplanes since the B-2 bomber in the 1980s, was chosen by the Air Force in October.

“We have checked back with the Air Force regularly to see if they have a non-classified copy we can publicly post, but so far they have not provided one,” GAO spokesman Chuck Young said in an e-mail.

For Bloomberg Intelligence’s company primer on Northrop, click here.

Lieutenant General Arnold Bunch, the Air Force’s top uniformed acquisition official, said in an interview that “we’re actively engaged with the GAO” and “we’re working it pretty hard right now” so “I don’t think you’ll have to wait a whole lot longer.”

Declassifying the GAO’s decision would be a major step toward improving transparency and public understanding of how the Air Force made its selection. Service officials contend they’ve released more information about the new B-21 bomber than at the comparable periods for its predecessor, the B-2. Still, the service has refused to disclose the value of Northrop’s contract, including how much money has been set aside for bonus fees.

“Within the next month to two months we’ll probably have something out unless something changes,” but Northrop, Boeing and Lockheed Martin still have to review the redacted document, Bunch said.

‘Upward-Spiraling Costs’

While the grounds that Boeing and Lockheed cited in challenging the bomber award in November haven’t been made public, the contractors’ public statements alluded to the soaring costs that plagued Northrop’s B-2.

“The cost evaluation performed by the government did not properly reward the contractors’ proposals to break the upward-spiraling historical cost curves of defense acquisitions, or properly evaluate the relative or comparative risk of the competitors’ ability to perform,” Boeing and Lockheed, the world’s two biggest defense contractors, said at the time.

Bunch cited a different lesson from the B-2: “that we should have released more information sooner.”

“We went back and pulled records as to when information was released on the B-2,” such as when congressional committees were first briefed and an artist’s rendition of the aircraft was released. In these and other cases, the service has released comparable information much sooner, Bunch said.

Per-Unit Cost

Senator John McCain, chairman of the Senate Armed Services Committee, has unsuccessfully sought public disclosure of the Northrop contract’s price. Much of the underlying cost information has been released, he said in a statement last month.

“The Air Force has already disclosed the per-unit cost of the B-21 -- $556 million in fiscal 2016 dollars,” produced an artist’s conception of the aircraft and released a list of top suppliers, said McCain, an Arizona Republican.

The service also has released its $23.5 billion estimate for the development phase of a program that may cost as much as $80 billion depending on how many bombers are eventually built.

The Air Force has a stake in releasing a version of the GAO decision.

The service has maintained that “we did a very deliberate, thorough, detailed, source selection,” Bunch said. “My hope is that when the GAO report -- the redacted version -- is released, that our” statements “will be backed up by what the GAO found.”

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