To Sen. McCain: Why SASC Should Not Change B-21 Acquisition Rules

The Senate Armed Services Committee (SASC) has placed language in the 1,600 pages of its draft of the National Defense Authorization Act that would fundamentally alter how standard acquisition policies apply to the Air Force’s B-21 Long Range Strike Bomber.

The Air Force has meticulously followed all of the rules and regulations mandated by Congress as the service worked its way through a multi-year prime contractor selection process for what was known as the Long Range Strike Bomber (LRSB). Throughout the process, Congress has been kept fully informed of the service’s plans through regular briefings.

Unfortunately, SASC’s proposal would change the rules—and reduce funding— after the program has finally gotten underway. If the SASC language is approved the end result is likely to be confusion, delays, and cost growth. This language should be removed prior to enactment of the NDAA. While SASC’s desire to strengthen Congressional oversight of this critical program is laudable—their proposed change to current law is not the correct approach.

Sen. John McCain, SASC chairman, has said he “will not authorize a program that has a cost-plus contract,” and has cited commercial development of cell phones as an example of the kind of development he would like to see. Such a sentiment is one we all share, unfortunately the reality of costly weapon-development programs is such that Northrup Grumman, Lockheed-Martin, and Boeing are unwilling to invest the type of capital required to build a half-billion dollar aircraft with one potential buyer. The same cannot be said of cell phones where there is a global market.

The specific changes added to the NDAA would reduce the program’s funding authorization to the program’s contract price. This would prevent the Air Force from having the flexibility it may need to work with Northrup-Grumman, the prime contractor, to modify the requirements and cost of the platform that is ultimately fielded. While fixed-price contracts are understandably appealing, designing and building the B-21 has very little in common with building the KC-46—the key example of a large fixed-price acquisition program.

A platform like the KC-46 tanker aircraft requires limited modification to an existing aircraft, which allows the builder, Boeing, to more accurately predict the cost of building each aircraft. Boeing also has more than one potential client since the aircraft can be sold to friends and allies. The B-21, however, is a completely new design that will attempt to keep costs down by incorporating some existing technologies while also including new design features and technologies. It also has only one potential customer, the US Air Force.

Defense contractors cannot shoulder all of the risk of designing and fielding advanced systems. Gone are the days where aircraft designers could afford to build prototypes and then seek to convince the Air Force to buy the aircraft. Development costs and the risks of not winning a contract are simply too high today.

The combat aircraft of today are simply too complex and integrate too much information technology for fixed-price acquisition to be a viable option for development and acquisition. Given that there is only one customer for a plane like the B-21, it should come as no surprise that defense contractors are unwilling to shoulder all of the cost risk. (Breaking D readers will remember the RAND Corp. study that found fixed-price contracts rarely saved anyone any money. The Editor)

Because of this, the draft NDAA provision is strongly opposed by the President and the Defense Department. These the changes would be an, “unprecedented and extremely damaging reversal of the approved acquisition strategy for the B-21 program.”

In a recent editorial, an esteemed group of former military leaders that included five previous Secretaries of the Air Force and six previous Air Force Chiefs of Staff opposed efforts to derail the bomber program. They argued, in part, that:

“Maintaining program funding stability for B-21] is also critical. Good acquisition practices require ensuring sufficient funding is available for program development, as inadequate budgeting can induce a spiral of schedule delays and cost growth. Cutting funding needed for development of the bomber at this early stage could paradoxically run the risk of increasing program cost—exactly the outcome we all seek to avoid.”

Attempting to create a de-facto fixed-price contract for the B‑21 program, a move with no historical precedent, is not the correct solution to strengthening an already frustrating acquisition process. Rather than harming the B-21 program (a capability clearly needed to defend the nation and her allies), perhaps it is time for Congress to consider implementing some of the recommendations made in the more than 150 acquisition reform studies conducted over the past decade. There is certainly no shortage of well-researched solutions.