Boeing Backs Out of Nuclear Missile Competition, Prompting USAF Choices

An unarmed Minuteman III intercontinental ballistic missile launches during an operational test conducted from Vandenberg AFB, Calif., on April 26, 2017. Air Force photo by SrA. Ian Dudley.

Story updated on July 26, 2019 at 11:56 a.m. EST.

Boeing is abandoning its bid to build the next intercontinental ballistic missile amid an ongoing dispute with the Air Force about rocket propulsion. The Air Force had planned to choose between Boeing and Northrop Grumman to be the program’s sole contractor about a year from now.

By not bidding, Boeing is walking away from its six-decade legacy of Minuteman missile work and throws a wrench into the Air Force’s plans for a competitive selection. With only two vendors in the US solid rocket motor industrial base, the Air Force must now decide whether a single bidder is acceptable, or whether it must revise its request for proposals to satisfy Boeing’s objections.

In a July 23 letter from Boeing Defense CEO Leanne Caret to the Air Force, obtained by Air Force Magazine, Caret complained the service had failed to allay Boeing’s core concerns that the multibillion-dollar program would be a fair competition.

“The engineering and manufacturing development phase of the GBSD program, as it was then structured, did not provide a level playing field on which both offerors can fairly compete,” Caret wrote. “RFP amendments do not address the principal barriers to full, fair, and open competition.”

In August 2017, the Air Force issued technology-maturation contracts to Northrop and Boeing worth $329 million and $349 million, respectively. Not long after, Northrop announced it would acquire Orbital ATK in a $9.2 billion deal to boost its rocket expertise.

That acquisition troubled Boeing. In April 2018, Boeing officials said the program “must address the unfair advantage that Northrop holds as a result of its control of solid rocket motors, the essential part of the GBSD missile system,” Caret wrote.

Aerojet Rocketdyne is the only other US-based solid rocket motor supplier. Boeing and Northrop both worked with Aerojet and Orbital ATK before Orbital became Northrop Grumman Innovation Systems. Northrop is also building solid rocket boosters and motors for space assets.

Todd Harrison, an analyst at the Center for Strategic and International Studies, said Northrop’s dominance in the market could ultimately benefit the Air Force, though “this is all certainly not good news for Aerojet Rocketdyne.”

An Aerojet spokesman said July 26 the company’s facilities and personnel investments make it a strong candidate to remain in the GBSD program.

Caret said the final request for proposals “takes no steps to mitigate Northrop’s anticompetitive and inherently unfair cost, resource, and integration advantages.” Her letter noted that while the Northrop acquisition requires that a Federal Trade Commission officer must review Northrop’s motor proposals to ensure both companies have an equal supply of solid rocket motors, “we still have not received an indication from anyone in the US government that such a review would take place.”

Although the Air Force is allowing the companies to submit alternative proposals—including one that would allow the two companies to submit a joint proposal—Boeing says that isn’t enough to convince the company to funnel more time and effort into GBSD.

“Because the final RFP does not address Northrop’s inherent advantage as a result of its control of SRMs, Northrop retains the ability to compete on unequal terms against either a Boeing or a joint ‘alternative’ proposal—and as a result, would not be incentivized to devote the significant resources required to develop such a proposal,” Caret wrote.

“It is not realistic to expect that, in the midst of an ongoing competition, the parties could separately develop a joint proposal in the five months before proposals are due that could effectively compete with their prime proposals, which have been in development for more than two years,” she said.

Boeing indicated it will look for ways to repurpose the missile technology it has designed so far.

An Air Force spokeswoman told Air Force Magazine that the service is “still officially in source selection” and could not comment on Boeing’s decision.

The service has touted GBSD as a model for cost-conscious, flexible design. Overall, an independent Pentagon cost estimate projected developing, building, and fielding more than 600 GBSD missiles will cost at least $85 billion; a Defense Department spokesman declined to share a recently updated estimate because it is “predecisional.”

The news comes as GBSD faces opposition on Capitol Hill from some who seek to shrink its funding and look for ways to extend the current Minuteman III missile fleet’s life. A House Armed Services Committee spokeswoman told Air Force Magazine the panel will seek more information from Boeing and Northrop before deciding on any next steps.

A Senate Armed Services Committee spokesperson reiterated Chairman Sen. Jim Inhofe’s (R-Okla.) support for GBSD and said he "looks forward to seeing the program proceed without delay."

“Boeing’s dropping out of the program creates massive uncertainty at a crucial time for a procurement that was otherwise progressing remarkably well,” Rick Berger, a defense analyst at the American Enterprise Institute, said in an email. “There is a concerted effort afoot to kill GBSD, and this shakeup opens the door to more squabbling and unnecessary sniping just as the program [is] most vulnerable upon entering development.”

Now the Air Force faces a tough choice: It can adjust the competition’s parameters and risk delaying development and fielding, or stick with one prime and risk losing the benefits of competition. EMD is expected to cost around $25 billion, and the Air Force could lose leverage to drive down that price if only one contractor is involved.

Berger said the service could continue with Northrop alone, rewrite its final solicitation, or work to find a way to include Boeing in Northrop’s proposal—even though Boeing has rejected that idea.

Kingston Reif, disarmament and threat reduction policy director at the Arms Control Association, said a prime contractor dropping out of a bid of this scale was unprecedented. “In my view, this reinforces the need to defer the unnecessary and unsustainable GBSD program and more closely examine less expensive options for sustaining the ICBM leg of the triad via extending the Minuteman III,” Reif said.

Harrison said Boeing’s decision suggests the Air Force made “several missteps” in one of its largest acquisition programs and now faces a larger issue: running down the clock on the aging Minuteman III.

“Revising the acquisition strategy or even delaying the RFP would incur a significant delay in the program that could mean missiles start expiring a decade from now without replacements ready,” he said.