Boeing Hits Ballistic Turbulence in Bidding Wars For Big $85-Billion Pentagon Contract Plans For Nuclear Modernization

Like they say There's a lot of moving parts - in some news last week that might have flown under-the-radar with all the other big news-grabbing headlines on Wednesday in Washington. It's another day now to catch up on the GBDS.
The Ground-Based Strategic Deterrent program
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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 United States’ 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.

LINK > Washington Post 25 July 2019_________________________________________________________________________________

Undersecretary for Acquisition Ellen Lord told the Senate Armed Services Committee in May.
"After 25 years of primarily drawing down and sustaining the nuclear forces we built during the Cold War, repeated decisions to defer recapitalization of our nuclear forces have caught up to us," she said.

"The U.S. must make a choice: Either we continue to invest in modernizing and replacing these systems or we accept the loss of our ability to deter the most severe threats to our nation and our allies and partners."

Reference: http://www.msn.com
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Boeing drops out of massive Pentagon nuclear missile program, citing unfair competition
Boeing’s decision to drop out of the ballistic missile program significantly complicates the Pentagon’s earlier plan to renegotiate 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 dispute arose from Northrop Grumman’s 2018 acquisition of a company called Orbital ATK, a dominant producer of rocket motors. . .

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 the United States’ 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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Here are details reported in the Wall Street Journal:

By Doug Cameron  Updated July 25, 2019 1:43 pm ET        
LINK > https://www.wsj.com

"Boeing Co. BA -0.89% said it won’t bid for a huge Pentagon contract to replace the nation’s land-based nuclear missiles, just a day after Chief Executive Dennis Muilenburg touted the aerospace giant’s suitability for the job. Mr. Muilenburg on Wednesday told analysts and reporters on an earnings call that the contract was a big opportunity for Boeing. 

“We are focused on leveraging our work to date on GBSD to deliver this essential national security capability,” he said after Boeing reported its biggest-ever quarterly loss.

Boeing also said it could slow or stall production of the MAX if it doesn’t return to commercial service by late this year.
> Boeing was the only big defense company to report a drop in its military order backlog during the June quarter.
 

>Boeing’s defense arm had been on a roll, last year winning three big Pentagon projects including an Air Force training jet and helicopter and a Navy drone.
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> Some analysts said the mounting financial cost to Boeing of the grounding of its 737 MAX aircraft was undermining its ability to pursue big military projects.

> The company has so far disclosed about $7 billion in additional costs and compensation to cover the crisis enveloping the MAX since global regulators grounded the plane in March following the second of two fatal crashes in less than six months.

> Shares in Boeing fell 3.7% to $348.09 on Thursday.

> Shares in Northrop Grumman gained 3.4% to $354.72.

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In a letter to Air Force acquisition chief Will Roper dated July 23 and reviewed by The Wall Street Journal, Boeing said it believes Northrop Grumman had an unfair advantage to win the contract because of its control of the country’s main producer of rocket motors, secured through its acquisition of Orbital ATK Inc. in 2018.

According to information from the report below, Orbital ATK has 13,000 employees and a backlog of more than $15 billion in contracts. It was formed in 2015 after the merger of Orbital Sciences and ATK.

 

 

BACKGROUND:

U.S. Air Force Selects Northrop Grumman as Partner

on Ground Based Strategic Deterrent Program

FALLS CHURCH, Va. – Aug. 21, 2017 – The U.S. Air Force has selected Northrop Grumman Corporation (NYSE: NOC) as one of two companies to mature designs for the Ground Based Strategic Deterrent (GBSD) program, the nation’s next Intercontinental Ballistic Missile (ICBM) system.
The company was awarded a $328 million contract to execute the Technology Maturation and Risk Reduction (TMRR) phase of the GBSD program.
“We look forward to the opportunity to provide the nation with a modern strategic deterrent system that is secure, resilient and affordable,” said Wes Bush, chairman, chief executive officer and president, Northrop Grumman. “As a trusted partner and technical integrator for the Air Force’s ICBM systems for more than 60 years, we are proud to continue our work to protect and defend our nation through its strategic deterrent capabilities.”
To learn more about Northrop Grumman’s GBSD program visit: www.northropgrumman.com/gbsd.

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BLOGGER NOTE:

Northrop Grumman has had a robust regional presence in Northern Utah since 1968, allowing the company to partner directly with its ICBM customer to ensure 24/7 mission availability, reliability, readiness and affordability for one of the country’s most vital deterrent programs.

The company’s facilities in Clearfield, Ogden, Salt Lake City and Hill Air Force Base (AFB) each continue to contribute to the thriving Northern Utah community in a variety of ways, in support of fueling a robust economy and strong pipeline of future talent needed to support these, and other future mission-critical programs.

Northrop Grumman is a leading global security company providing innovative systems, products and solutions in autonomous systems, cyber, C4ISR, strike, and logistics and modernization to customers worldwide

Reference: https://news.northropgrumman.com/news/releases 

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HERE IN MESA and Gilbert/Chandler          

Orbital ATK and Arizona Governor Ducey Announce Expansion of Mesa, Arizona, Operations

Warehousing and Production Improvements Will Double Capacity for Company s World-Renowned Bushmaster Family of Medium Caliber Cannons Capital Investment Grows Facility Capability While Also Creating New Jobs DULLES, Va.Mar. 29, 2018-- Orbital ATK ...

Categories: Innovation Systems, Orbital ATK Archive 

 

Governor Ducey, Orbital ATK Announce Expansion of Aerospace Engineering Operations in Gilbert, AZ

GILBERT, Ariz.Mar. 18, 2016-- Arizona Governor Doug Ducey and Orbital ATK, one of the world s leading aerospace and defense technology firms, today announced the expansion of the company s engineering operations in Gilbert, Arizona. The expansion will ...

Categories: Innovation Systems, Orbital ATK Archive

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BACKGROUND:

Northrop Grumman to buy aerospace manufacturer

Orbital ATK

By Christian Davenport and   Aaron Gregg

September 18, 2017 

"The Pentagon increasingly views space as the next great battle front. North Korea is flexing its muscle by firing test missiles and developing its nuclear arsenal. And NASA has seeded the private sector with billions of dollars in contracts, as the industry focuses more on small satellite technology.

All which helps explain why Northrop Grumman, one of the nation's largest defense contractors, announced on Monday that it planned to acquire Dulles-based Orbital ATK, by paying $7.8 billion in cash while assuming $1.4 billion in debt. . .

The surprise move gives Falls Church-based Northrop some sought-after capabilities — from missile defense, to small satellites and even a rocket — allowing it to enter new markets at a time of increased tension globally.

There is “very little overlap” between the two companies, Northrop chief executive Wes Bush said Monday during a conference call with analysts.

. . . Northrop has long been a leader in the defense industry and is currently developing the B-21 Raider, the long-range stealth bomber, for the Air Force, after beating out a Boeing-Lockheed Martin team for the contract. It manages a large cyber division and works to develop the technology behind autonomous systems and radars, while also building large satellites.

The acquisition, should it be approved by regulators and Orbital ATK’s shareholders, would give Northrop access to Orbital ATK’s small satellite division at a time when the Pentagon, and others, are seeking to put up constellations of small satellites that could beam Internet to remote areas and provide Earth observation capabilities. Orbital also has been developing the technology to service satellites in space, allowing them to operate much longer.

In recent years, the Air Force has pledged to move more forcefully to defend its assets in space — the communication, GPS and spy satellites that act as its “eyes and ears” above ground. Some in Congress, however, feel that the Pentagon is not moving aggressively enough and has called for the creation of a dedicated Space Corps, a new military branch that would focus exclusively on space. . .

Whatever happens, Orbital’s expertise building small satellites would better position Northrop.

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Boeing's exit from missile competition may force Pentagon
to overhaul $85B project

James Langford 1 day ago

"Boeing's decision to drop out of the bidding for a next-generation missile contract it believes is weighted in a rival's favor may force the Pentagon to reconfigure the $85 billion weapons project.

The Ground-Based Strategic Deterrent program is intended to be a successor to about 400 existing Minuteman III intercontinental ballistic missiles, introduced in the 1960s, and the Air Force said earlier this month it hoped to award a contract to either Boeing or Northrop Grumman in 2020. The new missiles are a vital piece of President Trump's goal of modernizing the U.S. nuclear triad, which also includes sea- and air-based weapons.

Boeing, however, worried that Northrop's purchase of Orbital ATK and its solid rocket motors business would give it an unfair advantage, Inside Defense reported.
The motors, versions of which were used on the space shuttle, power ballistic missiles' flights to their target, and Boeing doesn't produce them.
"We've evaluated these issues extensively, and determined that the current acquisition approach does not provide a level playing field for fair competition," Jerry Dreiling, a spokesman for Boeing, said in a statement to the Washington Examiner.
"We've been skeptical about the acquisition strategy since the beginning," he added. "A massive generational winner-take-all could have seriously negative implications for the losing side of the industrial base."
> Boeing supporters in Congress "will no doubt be fired up about this," Schweizer said, and are likely to summon Defense Department representatives to a hearing to explain the strategy. A Pentagon spokesman didn't respond to a request for comment on Friday . . .
Stipulations imposed on Northrop Grumman by the Federal Trade Commission before signing off on the $7.8 billion purchase of Orbital in 2018 may prove to be another wrinkle, Schweizer said. Worried that the merger would give Northrop an incentive to either withhold rocket motors from competitors or raise prices, the agency required the buyer to agree that it would create a firewall between Orbital and its other businesses and sell the rocket motors on a nondiscriminatory basis.
Should new Defense Secretary Mark Esper intervene, the award would, at a minimum, be delayed beyond the late 2020 target date, Schweizer said. "Moreover, because Congress opposes sole-source awards, it could well get involved."
Northrop Grumman CEO Kathy Warden, however, was optimistic about the project earlier this week, highlighting her company's decades of work on missile systems.

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