Nov. 29, 2018

Boeing’s T-X trainer won the competition for USAF’s jet trainer with a $9.2 billion bid. Photo: Office of the Secretary of the Air Force

Oct. 5, 2018—

With a trio of recent big-ticket contract wins, Boeing is back in the small military-aircraft game—but with bids so far below cost estimates that competitors are scrambling to figure out if the company low-balled its offers—as it did with the KC-46 tanker—or really does have some new manufacturing magic up its sleeve. The big one was the T-X advanced trainer contract, which the Air Force estimated at about $16 billion, but which Boeing and its partner, Saab of Sweden, won with a $9.2 billion bid. That’s nearly $10 billion below estimates of just a few years ago. In fact, the actual total could be considerably less.

The Air Force also tapped Boeing to build the UH-1N helicopter replacement to support missile fields and ferry around VIPs. Offering the Leonardo MH-139, Boeing got the contract for $2.38 billion—some $1.7 billion less than USAF was expecting to pay for up to 84 helicopters. Boeing had already scored a Navy deal to build an unmanned carrier-based aerial tanker, the MQ-25 Stingray. Valued at around $13 billion, that deal is for 72 airplanes.

Collectively, Boeing won up to $25 billion worth of new military aircraft business in the last weeks of the fiscal year—beating out principal competitor Lockheed Martin.

As a result, Boeing’s St. Louis facilities, where its F-15 and F/A-18 work is winding down, will remain open and the company will retain design and engineering talent specializing in small military aircraft. Boeing will thus remain a viable contender for future competitions, such as the Air Force and Navy’s next-generation air dominance combat aircraft.

During the T-X competition, all the competitors acknowledged that the trainer competition would come down to a “low-price shootout.” Margins were so low that Northrop Grumman CEO Wes Bush pulled his company out of the race to concentrate on projects where “best value,” rather than price, was key.

But in selecting the Boeing-Saab offer for T-X, Air Force acquisition chief Will Roper insisted that “best value” was indeed the discriminator. He noted that the $9.2 billion total would cover as many as 475 aircraft, while the Air Force requirement remains just 351 airplanes. Because the Air Force wants to “go faster” in some years when its budget will allow it to buy more T-Xs, the contract was structured to allow some larger nonconsecutive lots.

Asked how the Air Force can be confident that Boeing will perform, given the fact that it has already eaten nearly $3.5 billion in losses on the fixed-price KC-46 tanker program, Roper said “every program is different” and is weighed “on the merits of the proposal.”

Roper chalked up the exceptionally low bid to “early dialogue” between the Air Force and industry to make sure competitors were “exactly” clear on what the service wanted most, and what it would and wouldn’t pay extra to get.

“What you’re seeing is the benefit of fierce competition,” Roper said.

Asked if Boeing’s “Black Diamond” proprietary manufacturing technology—touted as eliminating vast amounts of touch labor and rework—clinched the deal, USAF top uniformed acquisition official Lt. Gen. W. Arnold Bunch Jr. said “we won’t speculate on how industry did it.”

Roper allowed that the Air Force is required to apply “historical” cost estimation techniques in developing its expected should-cost on a program like the T-X, but said the competition was structured to allow for new techniques that could drive prices lower. Industry tends to “look ahead” to new technologies, he noted—but he didn’t explain what convinced the Air Force that Boeing could deliver at that price.

Darryl W. Davis, former head of Boeing’s Phantom Works advanced development shop—which designed the T-X—said at the aircraft’s St. Louis rollout in 2016 that the jet had been “tailored” specifically to the Air Force’s stated requirements. Davis said the jet was designed with minimal performance margins, and only in those parts of the envelope where the Air Force would give extra credit for them.

Lockheed Martin—considered the other leading T-X contender—offered an improvement on the T-50 trainer it designed and built with Korean Aerospace Industries. Boeing was the only major airframe house to offer a clean-sheet design.

Coincidentally, the T-X award was announced just a week before a major interagency, interdepartmental study of the defense industrial base was released by the White House. The report noted that the number of companies in several key industries is dwindling, hurting competition and restraining innovation. Boeing had made it known the St. Louis operation was in peril without a T-X win.

Roper and Bunch denied such considerations played a role in the T-X decision.

The Air Force said it was not yet sure what nomenclature would be applied to the new airplane. The first squadron of aircraft for evaluation is due by 2023, and initial operational capability should follow in 2024.


The awarding of T-X means most of the Air Force’s major acquisition programs are now in place, with contractors selected and development underway. What’s next? USAF must execute the programs under contract as efficiently as possible before gearing up for a new round of modernization in the mid-2020s.

Back in 2011, the Air Force identified its top three procurement programs—the B-21, F-35, and KC-46—saying it was willing to trade people, operations, maintenance, and other programs to keep them on track. All three were deemed “existential” to the service’s future. Northrop Grumman, Lockheed Martin, and Boeing, respectively, are the prime contractors on those programs.

Later, USAF added a second tier of must-have programs: replacement for the E-8 Joint STARS, T-X, a new Combat Search and Rescue Helicopter, and the UH-1N replacement. The Presidential Aircraft Replacement program—a new Air Force One—rounded out the top eight.

The Air Force set apart replacements for the venerable Minuteman ICBM and AGM-86 Air-Launched Cruise Missile; programs now known as the Ground Based Strategic Deterrent and Long-Range Stand-Off missile, respectively.

Under then-Secretary Deborah Lee James, the Air Force suggested that, given its heavy load of required conventional renewal, modernizing its two legs of the strategic nuclear Triad might be something Congress should consider separately, with a dedicated and segregated funding stream. The idea went nowhere, even though the Navy secured such an arrangement for its Trident nuclear submarine program. Those programs are now the Air Force’s top acquisition priorities.

Lockheed Martin-Sikorsky got the CSAR helicopter contract and Boeing took home the Air Force One contract. The Air Force has now officially canceled the Joint STARS replacement in favor of a still-undefined “network”’ approach with no central platform.

Focus will now shift to the nuclear projects. Boeing and Northrop Grumman are the designated finalists for the Minuteman replacement, and one will be chosen in 2020 to develop and build the missiles for deployment in the late 2020s. Lockheed Martin and Raytheon are duking it out to provide the LRSO.

A winner will be chosen in 2022.

Under Pentagon pressure, the Air Force is also pushing hard on several hypersonic missile programs in the near-term. Roper has said flight tests of the Hypersonic Conventional Strike Weapon (HCSW) will take place next year and that his intent is to get some kind of first-version hypersonic capability fielded quickly, within the next two years or so.

Lockheed Martin has much of the hypersonics work under various research and development contracts, although Raytheon is also involved, and Northrop Grumman has hinted that it has hypersonic projects in the pipeline, as well. Boeing, which built the X-51 demonstrator that first sustained air-breathing hypersonic speeds, is at least pursuing the field with independently funded projects.

Into the mid-2020s, the Air Force’s headline program will be the Next Generation Air Dominance system. Bunch and Roper told reporters at the AFA symposium in September that the NGAD is still in the experimental and investigative prototyping stage, as USAF examines a variety of solutions that will in all likelihood wind up not being a single aircraft like the F-22, but a “portfolio” approach, or “family of systems.”

Citing his previous work at the Strategic Capabilities Office, Roper said quick solutions typically “start with what you have.” Air Force leaders have said unequivocally that the threat from peer competitors in the 2030 time frame will mean the F-22 and F-35 must be supplemented with new capabilities.

That could be a new airplane, new air-to-air missiles, cyber weapons, unmanned “wingmen,” directed energy, something else or “all of the above,” but to be operational in 2030, a program will have to get underway soon.

The Air Force has also begun to realize that its big-wing intelligence, surveillance, and reconnaissance aircraft—such as the E-3 AWACS and RC-135 Rivet Joint—are becoming too tempting and too vulnerable as targets in a battlespace where adversary missiles are increasingly smart and long-ranged.

The Joint STARS cancellation is the first official acknowledgement of this reality, and the service will likely seek network-style successors for the other platforms as well. Decisions about whether to sustain such programs will come to a head in the mid-2020s, when USAF will have to decide whether to invest in major service life extensions for those aircraft or pursue something new.

Likewise, USAF knows that it has an Achilles’ heel in its dependency on large aerial tankers. Its ability to project power depends on tankers to extend the range of its smaller combat aircraft, and the tankers, too, are a tempting target with limited capabilities in self-protection.

The service’s strategy of recapitalizing its KC-135 and KC-10 tankers with KC-46s and a “still to be determined” platform seem now to be leaning toward a stealthy tanker that can actually accompany strike aircraft into enemy-defended airspace. That airplane, too, will be needed in the 2030-2035 time frame, so a contract would have to be awarded in the mid-2020s to have something ready in time.

Finally, the Air Force knows that its fleet of MQ-9 Reaper hunter-killer remotely piloted aircraft can’t survive a battlespace defended by a peer adversary. Service leaders acknowledge a stealthy successor is needed but have been mum about plans, suggesting one may already be in the works. The RQ-170 Sentinel is such an aircraft, but industry officials have said only a handful were produced. They were intended to be special mission aircraft rather than comprising operational fleets.