Why Boeing boycotts Pentagon’s $85 billion contract?

Northrop Grumman Corporation was the sole bidder yesterday on a massive $85 billion military contract, after Boeing announced that it will not participate in the Pentagon’s program to replace the aging Minuteman III intercontinental ballistic missile (ICBM).

“Boeing is disappointed we were unable to submit a bid,” Elizabeth Silva, a company spokeswoman, said in a statement. “Boeing continues to support a change in acquisition strategy that would bring the best of industry to this national priority and demonstrate value for the American taxpayer.”

The US Air Force said that it indeed received only one bid, stressing that it will proceed with “an aggressive and effective sole-source negotiation,” according to Bloomberg, citing Air Force spokeswoman Cara Bousie.

Boeing’s announcement did not come as surprise, as in July the aerospace giant signaled that it might withdraw from the contract contest due to the lack of “a level playing field for fair competition,” and the Air Force’s failure to amend its acquisition strategy. The company pointed out that rival Virginia-based Northrop had acquired solid rocket motor manufacturer Orbital ATK, now known as Northrop Grumman Innovation Systems, which gave it a clear advantage.

Orbital ATK is one of just two US producers of the solid rocket motors needed to power an ICBM, including the Minuteman III. Meanwhile, the other producer, Aerojet Rocketdyne, is also on Northrop’s team of suppliers.

Boeing also wanted to file in a joint bid with Northrop, but the latter rejected the proposal and did not include its rival on the list of its main subcontractors for the Ground Based Strategic Deterrent (GBSD) program.

The Minuteman III missile system, which came into service in the 1970s, is one of the backbones of the US nuclear deterrence triad. The US is currently modernizing its nuclear arsenal, and it is expected to cost more than $1.2 trillion in the next three decades.