When then-Defense Secretary Robert Gates finally green-lighted the Pentagon’s future stealth bomber in 2011, he noted that the future warbird “would be a long-range, nuclear-capable penetrating bomber. [It]will have the option of being piloted remotely, will be designed and developed using proven technologies — an approach that should make it possible to deliver this capability on schedule and in quantity.”
When he approved the future system, Gates set target pricing at $550 million per bomber in 2010 dollars, and said the U.S. would buy between 80 to 100 aircraft. Since then, the Air Force has stuck to the cost estimate, despite new technologies and potential new requirements that traditionally drive up program costs.
Four years later, the Pentagon is getting close to announcing the winning contractor for the bomber — either a design by Northrop Grumman or a competing design by Boeing and Lockheed Martin, with a mid-2020s initial delivery.
As the program gets underway, it will fall on Director of Cost Assessment and Program Evaluation Jamie Morin to determine whether the Pentagon can actually meet Gates’ targeted costs, and to ensure it does not become yet another program with major cost overruns.
“This is a responsibility of mine,” Morin said in an interview with the Washington Examiner. “One of the biggest things the department can do to enable [a new weapon system to come in on budget] is rigorous and credible cost-estimating up front. Many times the programs we see that have the biggest cost growth [happens] because we started the program off with a non-credible estimate of what it would take. There are particular pressures to do that when the budget is shrinking … There’s pressure on the military services to assume success and assume [in their cost estimates] that everything breaks in the best possible direction.
“That’s not normally reality in defense acquisition. So my team’s job is to be the umpire there and insist that we start programs with credible, rigorous cost estimates.”
Already cost speculation on the future bomber has swung wildly. Because the program is classified, there are few details to measure by. The Pentagon’s method of counting costs also complicates estimates.
The $550 million-per-bomber estimate is the average flyaway cost in 2010 dollars — if it’s bought in the numbers the Pentagon is planning for. Pricing the bomber in 2010 dollars complicates the understanding of the actual cost of the plane, because you have to adjust for inflation. It also does not include any of the research, development or testing costs — which could range from $20 billion to $25 billion, said Todd Harrison, senior fellow for defense budget studies at the Center for Strategic and Budgetary Assessments.
In its 2016 request, the Pentagon estimated research and development costs at $16 billion, up from $11 billion last year.
“And that is a conservative estimate,” Harrison said in a briefing to reporters in January.
Contacted Monday, Harrison said nothing about how his estimates on the bomber’s costs had changed. He said he still estimates that the program’s final cost will range from $80 billion to $90 billion. Depending on how many bombers the Air Force procures, when research and development are counted in the costs, the next-generation bomber could run between $800 million and $1 billion apiece — if the Pentagon is able to avoid cost overruns.
Morin could not discuss the details of the bomber program, but said of its projected costs, “I am in the wait-and-see mode. The Air Force is moving forward on that program. The assessment at [the Pentagon’s cost assessment office, CAPE] is going to be based on data and fact.”
Morin said that one factor in the program’s favor is that Gates set the price targets so early.
“It’s early in a program that can maximally shape its future cost structure. That’s when you are making your choices about what you are trying to do. It’s a lot harder to take costs out once you set those basic requirements. So that has the potential to be a success of this program.”
