Long Range Strike: 3 Lessons from Defense Contracting that Tell us the Air Force’s New Bomber is Ready to Move Forward

February 27, 2016 6:33 AM

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With the Government Accountability Office’s (GAO) decision to deny Boeing’s protest of the Long Range Strike Bomber (LRS-B) contract, work is ready to begin in earnest on developing the next bomber. The GAO’s ruling focuses primarily on whether the LRS-B award to Northrop Grumman followed applicable rules, regulations, and procedures, and whether it followed the criteria laid out in the request for proposals. Needless to say, this leaves a number of important questions unanswered, including whether the Air Force correctly designed the competition and the development and construction program that will follow. Answering such questions is complicated by the fact that most information about the LRS-B remains classified, and it is hard at times to winnow fact from fiction. As I’ve previously argued, the case for buying the LRS-B is compelling, but it is also important to address questions raised about the Air Force’s approach. Before proceeding, let me note that several of the contractors responsible for specific programs mentioned in this article are donors to the Center for Strategic and International Studies, where I work. These companies did not sponsor the research discussed in this article, and I and my research team review both our methodology and our findings with other experts and researchers to ensure the objectivity of our analysis.

The fact that the LRS-B development contract was not fixed-price, but rather cost-reimbursable has raised some eyebrows. A cost-reimbursable contract is an arrangement where the contractor is compensated for its costs, with at least some profit, even when costs grow up to a cost ceiling set in the c...

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