DoD Tactical Aircraft Procurement, FY1986-2016 Worst. Recapitalization. Ever.
400 (Units Procured) (Funding in '15 $Bns)
10 12
300 200 100 0 Units Funding
0 2 4 6 8
their fi rst fi ghter design in many decades. All of their other combat aircraft are McDonnell Douglas platforms, with the last F/A-18E/F/G scheduled to be delivered in 2017 and the last F-15 in 2018. An LRS-B loss means they will exit the combat aircraft business.
The other LRS-B com-
10 years at least, and there are no combat aircraft programs between LRS-B and then. If you believe that government fi at (such as the Last Sup- per) shapes the industry, you might think that the days of the mega-merger are over. In 2011, key DoD leaders including Ashton Carter (now Defense Secretary, and also present at the original Last Supper as an assistant secretary of defense) made it clear that there would be no more top tier defense mergers. To coin an oxymoron, there’d be no second Last Supper. LRS-B, in this view, is just one of many DoD compe- titions.
But if you believe the industry is actually shaped by mar-
ket forces, the implications of LRS-B are far more profound. Whoever loses LRS-B will lose the capability to be a combat aircraft prime. They almost certainly won’t be around to bid on F-X or F/A-XX. They could also decide to sell their other defense as sets. Last Supper-like edicts may be feasible when it comes to platform integrators, but if a company doesn’t have a military aircraft integration capability, how could DoD consider them “top tier?”
From Three Primes to Two Look at the situation from the standpoint of the partici- pants. Boeing, tied with Lockheed Martin for its LRS-B bid, has a thriving commercial jetliner business, with associ- ated military derivatives. Yet Boeing’s X-32 JSF entrant was
petitor, Northrop Grum- man, delivered its last combat aircraft, a B-2, in 1997. Despite its dwin- dling industrial capac- ity and output, it can still be classed as a military airframe prime because it has preserved some legacy capabilities along with high-end UAV work.
They also created the most recent bomber, the B-2, which will likely have design features in common with the LRS-B. In tandem with its LRS-B efforts, Northrop Grumman has announced design work on sixth-generation fi ghter design concepts. If Boeing loses and Northrop Grumman wins, that would increase the latter company’s appeal as an acquisition candidate. If Boeing were to acquire Northrop Grumman’s Aerospace unit, they would get LRS-B, along with an F-35 share. DoD could stop this acquisition, but that would just mean killing Boeing as a combat aircraft prime. But if Northrop Grumman loses LRS-B, its combat airframe work will be restricted to a few more years of F/A- 18E/F/G co-prime work, and its relatively small share of the F-35 program. Investors may well decide that the company’s other assets are worth more than the sum of their parts, making it a strong breakup possibility. While DoD may be able to stop a mega-merger, it may fi nd it harder to stop the company from selling individual units. Without LRS-B, there’d be no defi ning center that DoD could identify as core to the company. In short, the LRS-B decision will likely also bring a downselect from three military airframers. No dinner-table edict can change that. After all, the defense industry, like any industry, is shaped more by market realities, not by govern- ment fi at.
21 — Aerospace & Defense Manufacturing 2015
FY86 FY88 FY90 FY92 FY94 FY96 FY98 FY00 FY02 FY04 FY06 FY08 FY10 FY12 FY14 FY16
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