Boeing, Lockheed Martin Protest Air Force Contract Award To Northrop Grumman

The Air Force expressed confidence in its October 27 selection of Northrop Grumman, saying in a statement that the service "followed a deliberate, disciplined and impartial process to determine the best value for the warfighter and taxpayer".

The companies claimed the selection process failed to properly reward the Boeing-Lockheed team's proposals to break the trend of ballooning defense program costs.

Boeing announced Friday that it is protesting a massive Air Force contract, worth up to $60 billion, to build the Long Range Strike Bomber.

Northrop's fifth-to-fourth Gateway is based on the Freedom 550 that is developed as part of the Joint Capabilities Technology Demonstration (JCTD) programme, which was sponsored by the Office of the Secretary of Defense (OSD). That is relatively high, Callan added, but "we absolutely believe that the Air Force assumed there would have been a protest" of the contract. Dow member Boeing was flat at $147.94 while Lockheed Martin shed 0.9 percent at $216.63. The Air Force reckons that each new bomber will cost $564 million, a few $42 million below a prior estimate. The selection process was "fundamentally flawed", Boeing said in a statement.

Given the colossal size of the Northrop contract ($55 billion and probably more), this is no surprise: We fully expected Boeing and Lockheed to fight the decision.

Northrop Grumman Corporation (NYSE:NOC) VP of strategic communications, Randy Belote, responded to Boeing Co.'s (NYSE:BA) dispute over the long-range strike bomber program.

Selecting Northrop Grumman as the builder of the next bomber ensured it will have a hand in the military's aircraft procurement for decades.

"This is shaping up to be a replay of the tanker award when Boeing challenged the way in which Northrop was awarded a future Air Force program", he said. Boeing and Lockheed immediately said they wanted answers on how the competition was scored with regard to price and risk. In winning the work last week, Northrop overcame the world's two largest defense companies and secured a financial lifeline stretching into the 2020s. "It seems like the government did not correctly calculate the costs, nor did (it) assess correctly the risks of the proposals". The executive stated that the company's record shows how it's better than the other airplane manufacturers.