Northrop Grumman Gets Long-Range Bomber Contract From U.S. Air Force

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

The Air Force said that 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.

According to the Air Force, 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.

Based on current LRS-B independent cost estimates, the Air Force projects the APUC for the program will be approximately a third of the previous B-2 stealth aircraft.

NOC closed Tuesday trading at $180.60, up $0.31 or 0.17%. In after hours, the stock further gained $11.52 or 6.38%.