It’s clear that Boeing, which designed, built, and serviced every Minuteman missile since the venerable launcher became the backbone of the U.S. nuclear arsenal, does not like any of the options available to it under the Air Force’s current procurement for the Ground-Based Strategic Deterrent (GBSD).
That’s why the company quit the competition to build the next generation of nuclear-tipped intercontinental ballistic missiles (ICBM) before the first Fourth of July fireworks flew this year.
Given its unwillingness to bid directly against a rival with an in-house rocket-propulsion business, what, exactly, WOULD Boeing like?
The company has declined to say, but Loren Thompson, a Boeing-funded think-tanker blogging at Forbes, recently floated the idea of a forced partnership between the Minuteman pioneer and its sole rival for the GBSD business, Northrop Grumman.
Though careful not to burn the upstart — “[n]ot that Northrop doesn’t know what it’s doing” — Thompson prominently burnished the formidable resume of the incumbent, which “possesses most of the expertise” in constructing and maintaining the type of solid-fueled ICBMs the Air Force wants.
It amounts to a trial balloon for a new procurement strategy: one with roots in the voluntary joint bid contained in the Air Force’s current GBSD solicitation, which service acquisition officials dutifully smithed over the past three years.
A voluntary joint-bid is a waste of everyone’s time and money, Boeing Defense, Space & Security chief Leanne Caret told the Air Force by letter last month. What chance, she asked, would that currently nonexistent joint proposal have against a carefully tailored bid that Northrop Grumman, owner of the former Orbital ATK rocket business, has been refining for years?
There’s an imperfect analog for a forced GBSD partnership: the unlikely coupling of Boeing and Lockheed Martin’s space launch businesses in 2006 to form United Launch Alliance.
A poor market for commercial space launches played perhaps the biggest role in the merger, but the Air Force’s determination to maintain a redundant pair of space launch systems (among other things) ultimately helped drive the competimates into one anothers arms.
With United Launch Alliance, Boeing and Lockheed wound up with perhaps less revenue than either might have preferred — though perhaps more than either might have been stuck with, if not for customer fiat.
Back to the present, unless the Air Force’s plans change radically, there won’t be two different GBSD rockets. So, if the service does force a joint bid, Boeing might have to settle for a Pentagon guarantee that the company be allowed, as Caret put it in her letter, “to leverage the work that we are performing under the [GBSD technology development] phase to help support this critical national security mission.”
The Air Force has been silent about the future of the GBSD program, and it remains to be seen what leverage Boeing will work, in the meantime. The first GBSD missile is due to drop into its silo in 2030.
Text of a letter to Will Roper, Assistant Secretary of the Air Force for Acquisition, Technology and Logistics, from Leanne Caret, President, Chief Executive Officer, Boeing Defense, Space & Security.
July 23, 2019
The Honorable Will Roper
Assistant Secretary of the Air Force for Acquisition, Technology and Logistics
SAF/AQ, 1060 Air Force Pentagon
Washington, DC 20330-1060
Re: Ground Based Strategic Deterrent (GBSD) Engineering and Manufacturing Development Procurement
Dear Assistant Secretary Roper,
It has been The Boeing Company’s great privilege to support the Intercontinental Ballistic Missile (ICBM) program since its inception in 1958. The GBSD program to recapitalize the ICBM fleet has been a top priority for Boeing for more than five years, supported by hundreds of millions of dollars in company investment. As stated in my letter of July 8, 2019, however, Boeing reached the difficult conclusion that the competition for the Engineering and Manufacturing Development (EMD) phase of the GBSD program, as it was then structured, did not provide a level playing field on which both offerors can fairly compete and, for that reason, had decided not to proceed as an offeror.
While I appreciate the discussions we have had since that time, the final RFP issued on July 16 does not address Boeing’s core concerns with the competition. After thorough evaluation, it is with great regret that I inform you that Boeing does not intend to submit a prime offer in the GBSD EMD procurement.
Throughout the procurement process, Boeing has been transparent with the Air Force about its concerns with the competition. The final RFP released on July 16 made only modest changes to the draft RFPs that had been previously released. As relevant to the concerns Boeing had raised, the final RFP extended the proposal submission deadline by 60 days, from 90 days after the RFP’s issuance to 150 days, and allowed offerors to submit “an alternative proposal in addition to their principal proposal,” that could include “a single, combined proposal” from both competitors. Regrettably, these RFP amendments do not address the principal barriers to full, fair and open competition raised in my July 8 letter.
First and foremost, Boeing has repeatedly informed the Air Force, beginning with our response in April 2018 to the Air Force’s first Request for Information (RFI), that the GBSD EMD competition must address the unfair advantage that Northrop holds as a result of its control of Solid Rocket Motors (SRMs), the essential component of the GBSD missile system. Notwithstanding these repeated communications, the final RFP takes no steps to mitigate Northrop’s anticompetitive and inherently unfair cost, resource and integration advantages related to SRMs. As I said in my July 8 letter, we lack confidence in the fairness of any procurement that does not correct this basic imbalance between competitors.
Second and relatedly, we have explained that—in order for the FTC Consent Decree governing Northrop’s acquisition of Orbital ATK to be meaningfully enforced—the DoD-appointed FTC Consent Decree Compliance Officer must conduct a thorough review of Northrop’s SRM proposals well in advance of their release to prime offerors to ensure that Northrop is treating both offerors equally in the supply of SRMs. We still have not received an indication from anyone in the US Government that such a review would take place.
Moreover, as detailed in my July 8 letter, Boeing has already been placed at a disadvantage in the development of its proposal by Northrop’s initial unwillingness to enter into a Proprietary Information Agreement (PIA) containing a detailed firewall plan, as the Consent Decree requires. Although this PIA was finally signed on July 3, the unnecessarily protracted process of getting it in place delayed by at least eight months our ability to send an RFP to Northrop for the supply of SRMs and begin the lengthy and iterative process of receiving a proposal and negotiating the terms and pricing under which SRMs would be provided. The final RFP’s extension of the due date for proposals by 60 days is not sufficient to address this impact to Boeing, falling far short of the time that we have been delayed by this issue.
The final RFP’s amendment to allow offerors to submit an alternative proposal, including a single, combined proposal (in addition to their prime proposals), is not a workable solution to these issues. Because the final RFP does not address Northrop’s inherent advantage as a result of its control of SRMs, Northrop retains the ability to compete on unequal terms against either a Boeing or a joint “alternative” proposal—and as a result, would not be incentivized to devote the significant resources required to develop such a proposal. In addition, given the eight months that it took to negotiate an appropriate PIA related to the procurement of SRMs, it is not realistic to expect that, in the midst of an ongoing competition, the parties could separately develop a joint proposal in the five months before proposals are due that could effectively compete with their prime proposals, which have been in development for more than two years during the Technology Maturation and Risk Reduction (TMRR) phase of the program.
In sum, while we understand the Air Force’s interest in preserving its chosen acquisition path, the modest changes it has made to the final RFP are not adequate to address the fundamental issues with the fairness and integrity of the GBSD EMD competition that resulted in Boeing’s decision not to submit a prime proposal. We continue to stand ready to support this important program. As we have discussed, we believe there are other procurement structures that could provide this capability more rapidly at less cost, and we will look for ways to leverage the work that we are performing under the TMRR phase to help support this critical national security mission.
Very respectfully,
Leanne Caret
CC: Hon. Ellen M. Lord, Under Secretary of Defense for Acquisition and Sustainment
Maj. Gen. Shaun Q. Morris, Air Force Program Executive Officer for Strategic Systems
Mr. Jeremy Bodin, Procurement Contracting Officer, U.S. Air Force, Hill AF Base
