U.S. Defense Secretary Lloyd Austin speaks at the B-21 Raider unveiling ceremony at Northrop Grumman's Air Force Plant 42 in Palmdale, California, on December 2, 2022. FREDERIC J. BROWN/AFP via Getty Images
The price of each B-21 bomber is likely going up
The Air Force has agreed to a higher cost ceiling after Northrop took a loss on fixed-price lots.
The price of the Air Force’s new bomber has been cleared for takeoff.
After taking a loss on the first lots of B-21 Raiders, Northrop Grumman has negotiated a higher cost ceiling on the next 19 aircraft, the company said in a June 18 release.
“Final terms, quantity, and pricing beyond the first 21 aircraft are subject to negotiation. The government and Northrop Grumman have established not to exceed pricing for an additional 19 aircraft. The average not to exceed value for the subsequent lots is above the average unit price of the five LRIP lots,” the company said.
Northrop has lost more than $1 billion on those first aircraft, which are part of five Low Rate Initial Production contracts whose fixed-price clause forces the company to eat cost overruns.
The company says the program remains “on track to meet its key performance parameter” for average procurement unit cost: $550 million in 2010 dollars. (That’s $692 million in 2022 dollars and likely over $700 million today.) This cost target is based on the Air Force ordering at least 100 of the aircraft.
Air Force officials don’t have an updated unit cost yet, said service spokesperson Ann Stefanek.
When Northrop bid on the B-21 program, the company lacked a mature design yet accepted a fixed-price production contract that has cost it $1.17 billion so far. That’s a mistake company officials won’t repeat, CEO Kathy Warden said in January.
But it suited Air Force negotiators, who will receive the first lots of stealthy bombers more cheaply than they expected.
The Air Force has requested $2.7 billion for the program in fiscal 2025, down from $4 billion projected last year.
After the stealth bomber took its first flight in November, the Pentagon gave Northrop a green light to start production of the B-21. Details about the stealthy aircraft remain scarce, but Air Force officials have said that flight testing is on track and “proceeding well.”