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Northrop Wins Air Force Long Range Strike Bomber Contract

long range bomberNorthrop Grumman (NYSE: NOC) has beaten out a team of Boeing (NYSE: BA) and Lockheed Martin (NYSE: LMT) for the highly-anticipated contract to build the U.S. Air Force‘s Long Range Strike Bomber plane, Defense Department officials announced Tuesday.

The service branch plans to purchase up to 100 of the bombers at a cost of $511 million per plane in 2010 dollars and $564 million per aircraft for 100 bombers in 2016 dollars, Air Force acquisition lead William LaPlante said at the press conference to announce the contract.

LaPlante also said the program’s engineering, manufacturing and development phase will have a total cost of $21.4 billion in 2010 dollars and $23.54 billion in 2016 figures.

Lt. Gen. Arnold Bunch, military deputy to the Air Force’s acquisition assistant secretary, said Boeing and Lockheed will receive a debrief on the selection Friday and will have 10 days to file a protest with the Government Accountability Office.

Air Force officials eye initial operating capability for the bomber in the mid-2020s and want the plane to carry nuclear and conventional weapons.

This initial award includes a cost-plus incentive fee development contract and a fixed-price incentive fee agreement on the first five low-rate initial production lots for 21 bombers.

With this award, Northrop will receive a boost to its aerospace systems segment that saw revenue remain flat in its second quarter for 2015 compared to the same period last year.

Northrop will release its third quarter financial results Wednesday morning and its shares spiked 5.57 percent to $191.25 in post-market trading as of 5:40 p.m. Eastern time.

Air Force Secretary Deborah Lee James said DoD brought in outside advisers to determine the LRSB program’s total cost and the LRSB bomber will eventually replace the service branch’s B-52 and B-1 bombers, which have been in the fleet for more than 50 and 70 years respectively.

Gen. Mark Welsh, Air Force chief of staff, said the service branch will take an open architecture approach for the bomber’s technology in the plane’s development process.


All competitors for the bomber program are also in the running in both the Air Force’s T-X trainer replacement program and Joint Stars recapitalization programs.

T-X program competitors include a team of Boeing and Saab against a group of Lockheed and Korea Aerospace Industries, as well as a consortium of Northrop with teammates BAE Systems and L-3 Communications (NYSE: LLL).

Italy-based Alenia Aermacchi is offering a variant of its M-346 Master fighter jet and a joint venture of Textron (NYSE: TXT) and AirLand Enterprises is also competing.

Northrop, L-3 and General Dynamics‘ (NYSE: GD) Gulfstream division are teammates in pursuit of JSTARS Recap against another group comprising Lockheed, Raytheon (NYSE: RTN) and Bombardier.

Boeing is pursuing JSTARS Recap with a modified version of its 737-700 commercial jet.

The Air Force awarded three contracts in August for JSTARS Recap’s pre-engineering, manufacturing and development phase to Boeing and the two contractor groups.

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