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B-21
Northrop Grumman is pressing the U.S. Air Force to increase the pace of B-21 procurement and the overall buy as it takes a charge on the program to change manufacturing processes to be ready for a ramp up in production.
Company CEO Kathy Warden outlined this approach May 28, about one month after the company disclosed the cost hit for the manufacturing changes. While Air Force officials have said they would want to see an increase to the 100-aircraft program of record, that change has not been codified yet, so it is a financial bet the company is making now.
“We made some process changes that would allow us to accelerate the rate at which we build the B-21,” Warden says. “This is ongoing conversations that we’ve been having with the government that we believed made sense to make these process changes, and we continue to work with the government to outline the merits of moving forward in the build process as they contemplate what they would like that plan to be on a go-forward basis.”
The B-21 program has “opportunities and risks” that are being evaluated regularly, and the charge was a part of that process. With aircraft now being built, there is more learning and experience to base the assumptions on.
Beyond the process change, Northrop Grumman has repeatedly pointed to inflation as a cost concern for the early stages of the B-21 program. This was key to the $1.56 billion charge disclosed last year. The company’s low-rate initial production (LRIP) contracts were agreed upon with a certain level of inflation expected, but that level ended up being too low based on the COVID-19 pandemic and subsequent supply chain issues.
“The greatest challenge we have so far, by far, has been our inflation assumptions,” Warden said during the Bernstein Strategic Decisions Conference. “When we bid the program back in 2016, we had built a financial deal construct around inflation over the period of time that we would be executing, and they indeed ended up being higher.
“So I know it’s hard to reconcile—how can we hear a program is doing so well, and yet the financial outcomes wouldn’t indicate that. That is largely the disconnect between those two items,” Warden said.
The company has said it expects some relief in the form of not-to-exceed pricing for an additional 19 aircraft beyond the first five LRIP lots.
Because the program is highly classified, there have not been significant updates since the first aircraft flew and began testing in November 2023. The status of subsequent deliveries beyond the first test aircraft has not been detailed.
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