Brian Bradley
NS&D Monitor
3/6/2015
The procurement timeline for the Long Range Strike-Bomber (LRSB) has been pushed back from the spring to summer, and the Air Force will most likely opt to award a cost-plus contract to develop the aircraft, Dr. William LaPlante, Air Force Assistant Secretary for Acquisition, told House lawmakers this week. Northrop Grumman and a Boeing-Lockheed Martin team are competing for the contract. LaPlante this week submitted written testimony to Congress indicating the timeline extension, and LaPlante said during a March 4 House Armed Services Seapower and Projection Forces Subcommittee hearing that the LRSB will most likely be a cost-plus contract. “My belief on the LRSB is … that we are doing a little bit more cutting-edge,” LaPlante said during the hearing. “It’s not based on a commercial item, and so I think more likely, it’s going to be in the cost-plus regime.” He noted that the Defense Department usually employs cost-plus contracts when procurement involves newer technologies, while fixed-price contracts are usually based on more proven existing commercial items.
LaPlante comments provided one of the clearest glimpses into procurement of the largely classified LRSB program, whose contracting process has been mostly shrouded in secrecy. “If you’re in a fixed-price contract, it’s really important to have a good estimate of what you think it’s going to cost,” LaPlante said. “If you’re wrong on that, let’s say you’re wrong 50 percent one way or the other, somebody is going to really get hurt, right? If the contractor ends up 50 percent over in a fixed-price, they’re very hurt and they may not survive, the program may not survive. [On a mis-awarded cost-plus contract], we would get rightfully criticized to say, why are you giving a windfall, buying something for twice the price at a cost? So you really want to have a good idea on the cost estimate and the development.” The Air Force is planning to buy 80 to 100 LRSBs at a unit cost of $550 million, with an initial operating capability in the mid-2020s.
Sequestration Not a Factor for LRS-B?
Answering a question from Rep. Madeleine Bordallo (D-Guam) about sequestration’s possible effects on LRSB development, LaPlante said that while potential impacts loom, the Air Force has protected and will continue to insulate the program from the deepest effects of sequestration. He said his predecessor, David Van Buren, along with the previous Deputy Chief of Staff for Strategic Plans and Requirements, established the unit cost, in 2010 dollars, as a requirement, which is now driving the program’s design. “Industry has to design to that number and we’re going to assess against that number. That’s why we did it,” he said. “We have not changed the requirement once.”
LaPlante said changing program requirements often causes acquisition failures, and that the LRSB acquisition method guards against the common mistake of outlining too many requirements for a program, which can delay procurements. After that, even more money is sometimes spent to shorten timelines, starting a destructive investment cycle, LaPlante said. The Air Force has firmly fixed the cost requirement for the LRSB, he added.
Procurement experts have questioned whether the Pentagon will be able to meet the unit cost requirement, which House Defense Appropriations Subcommittee Chair Rep. Rodney Frelinghuysen (R-N.J.) during a Feb. 27 hearing noted was low historically compared with other bomber acquisitions. The Air Force bought 21 B-2s from 1987 to 2000 at a unit cost of $737 million. Frelinghuysen also said history indicates the Air Force will procure fewer aircraft than currently estimated. “The unit cost is based on a contract to buy 80 to 100 aircraft,” Air Force Chief of Staff Gen. Mark Welsh responded. “If we buy 10, the unit recurring fly-away cost will be much higher.” Flyaway costs discount research and development spending.
Welsh said the number of aircraft his service plans to acquire is partly based on a one-third reduction of fighter squadrons, dropping the number of sorties. “It will take us 80 to 100 bombers to provide the sortie rates and the weapons capability that can complete a major theater fight,” Welsh said in response to a question by House Defense Appropriations Subcommittee Ranking Member Rep. Peter Visclosky (D-Ind.). Making his case, Welsh juxtaposed the age of the fleet with the future. “If we don’t replace the bomber fleet, eventually, by 2035 to 2040, we will have 16 B-2s, or we will have a 100-year-old airplane flying by the middle of the century with a B-52,” he said. “That makes absolutely no sense, Congressman. None.”
Air Force Could See $10B Cut
Overall, the Air Force requested about $122 billion for FY 2016, approximately $10 billion above the budget cap, and Frelinghuysen voiced his commitment to enforce the 2011 Budget Control Act as long as it remains law. "As we build our Fiscal Year 16 bill, we’d like to have your input," he told Welsh and Air Force Secretary Deborah Lee James. “But make no mistake…we do have to cut $10 billion with you, or we will cut $10 billion without you."
