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The Air Force announced today the contract award of engineering and manufacturing development and early production for the Long Range Strike Bomber, or LRS-B, to Northrop Grumman Corp. 

Air Force Secretary Deborah Lee James said the LRS-B is critical to national defense and is a top priority for the Air Force. “We face a complex security environment,” she said. “It’s imperative our Air Force invests in the right people, technology, capability, and training to defend the nation and its interests – at an affordable cost.” The future threat will evolve through the introduction of advanced air defense systems and development of more capable surface to air missile systems. The LRS-B is designed to replace the Air Force’s aging fleets of bombers – ranging in age from 50+ years for the B-52 to 17+ years for the B-2 – with a long range, highly survivable bomber capable of penetrating and operating in tomorrow’s anti-access, area denial environment. The LRS-B provides the strategic agility to launch from the United States and strike any target, any time around the globe. “The LRS-B will provide our nation tremendous flexibility as a dual-capable bomber and the strategic agility to respond and adapt faster than our potential adversaries,” said Gen. Mark A. Welsh III, Chief of Staff of the Air Force. “We have committed to the American people to provide security in the skies, balanced by our responsibility to affordably use taxpayer dollars in doing so. This program delivers both while ensuring we are poised to face emerging threats in an uncertain future.”

The Long Range Strike Bomber contract is composed of two parts. The contract for the Engineering and Manufacturing Development, or EMD, phase is a cost-reimbursable type contract with cost and performance incentives. The incentives minimize the contractor’s profit if they do not control cost and schedule appropriately. The independent estimate for the EMD phase is $21.4 billion in 2010 dollars. The second part of the contract is composed of options for the first 5 production lots, comprising 21 aircraft out of the total fleet of 100. They are fixed price options with incentives for cost.  Based on approved requirements, the Average Procurement Unit Cost (APUC) per aircraft is required to be equal to or less than $550 million per aircraft in 2010 dollars when procuring 100 LRS-B aircraft. The APUC from the independent estimate supporting today’s award is $511 million per aircraft, again in 2010 dollars.