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Boeing drops out of nuclear missile program, leaving Northrop Grumman.

Byline: Aaron Gregg The Washington Post

Boeing says it will withdraw from a massive Pentagon program to replace America's ground-based nuclear missiles, citing concerns with how the Pentagon has handled the procurement.

The move makes Northrop Grumman the sole bidder for the program. Unless the Pentagon changes course, Northrop will be locked into a military program that should be worth tens of billions of dollars over several decades.

"After numerous attempts to resolve concerns within the procurement process, Boeing has informed the Air Force that it will not bid Ground Based Strategic Deterrent (GBSD) Engineering and Manufacturing Development (EMD) under the current acquisition approach," said Todd Blecher, a spokesman with Boeing's defense, space and security division. "We've evaluated these issues extensively, and determined that the current acquisition approach does not provide a level playing field for fair competition."

A spokeswoman for the Air Force declined to comment. A Northrop Grumman spokesman did not respond to a request for comment.

The Ground Based Strategic Deterrent program, known as GBSD, makes up the ground-based leg of the United States' nuclear strike capability. It is designed to replace the Minuteman III intercontinental ballistic missiles, which have been in use since the 1960s.

While the U.S. stock of nuclear warheads has been drawn down in recent decades under the terms of nonproliferation agreements, GBSD is part of a massive Pentagon plan to replace the hardware that would theoretically launch them in the event of a nuclear war. The nuclear recapitalization plan also includes General Dynamics' Columbia-class nuclear submarine and new cruise missiles to be supplied by either Lockheed Martin or Raytheon.

Boeing's decision to drop out of the ballistic missile program significantly complicates the Pentagon's earlier plan to re-negotiate the contract. In 2017 the Air Force limited the competition to Boeing and Northrop Grumman, effectively rejecting a bid by Lockheed Martin. Boeing and Northrop were awarded contracts worth $349.2 million and $328 million respectively to develop competing offers.

The Air Force had hoped to weigh both companies' competing options in order to get the best missile for the lowest possible price, according to a contract solicitation announced last week.

Now, the Pentagon will have to either start the procurement over under new specifications designed to bring Boeing back to the table or try to negotiate with Northrop Grumman despite having no competing options.

The dispute arose from Northrop Grumman's 2018 acquisition of a company called Orbital ATK, a dominant producer of rocket motors.

In a July 23 letter to top procurement officials, obtained by The Washington Post, Boeing defense CEO Leanne Caret said the Air Force's request for proposals "takes no steps to mitigate Northrop's anticompetitive and inherently unfair cost, resource and integration advantages" related to solid rocket motors.

The trade publication Inside Defense previously reported on the contents of the letter.

Caret also said Northrop had been unwilling to enter into an agreement that would prevent the sharing of confidential business information.

"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 earlier contracts] to help support this critical national security mission," Caret wrote.

Loren Thompson, a defense consultant who works with Boeing, said Northrop Grumman is now "headed for a monopoly" on the air, land and sea-based legs of U.S. nuclear strike capability. Northrop makes the solid rocket motors on the Navy's sub-launched missiles, and it also holds the contract to build the Air Force's B-21 bomber.

"One company would have a monopoly on the nuclear deterrent," Thompson said. "I just don't see Congress being comfortable with that."
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Title Annotation:Business wire_
Publication:Daily Herald (Arlington Heights, IL)
Date:Jul 26, 2019
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