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Air Force halts funding for Boeing’s ballistic missile replacement

An unarmed test launch of a Minuteman III intercontinental ballistic missile early Tuesday, Oct. 2, 2019, at Vandenberg Air Force Base in California. (J.T. Armstrong/AP)

The Air Force has halted funding for Boeing’s $349 million ballistic missile development effort, effectively clearing the way for a Northrop Grumman-led team to become the only bidder for one of the Pentagon’s most expensive weapons production programs.

The move is an apparent response to Boeing’s recent announcement that it will drop out of the Ground Based Strategic Deterrent program, an $85 billion project to replace the nation’s Minuteman III ballistic missiles. The Defense Department appears unwilling to pay Boeing to develop a next-generation ballistic missile when the company is refusing to submit that missile for review.

A Boeing representative said the company is disappointed in the Air Force’s decision not to allot more funding for its missile.

“The Boeing team has delivered substantial value under the contract, achieved all contract milestones on time and received strong performance feedback from the Air Force,” company spokesman Todd Blecher said in an email.

An Air Force spokeswoman emphasized that the contract has not been canceled, but declined to comment on the service’s arrangements with defense contractors.

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The episode signals trouble ahead for a Pentagon plan to rebuild the nation’s nuclear infrastructure, which started under President Barack Obama and was embraced by the Trump administration as part of a broader set of efforts to rebuild the military.

The U.S. military’s stock of nuclear warheads has been drawn down in recent decades under the terms of nonproliferation agreements. But the missiles and launch platforms that would theoretically be used to deliver those warheads from air, land or sea are too old and badly need to be replaced, former officials say.

The “nuclear triad” ― which includes ground, air and sea-launched missiles ― is meant to deter a potential enemy such as Russia, China or North Korea from launching a nuclear first strike by sending a message that whichever nation moves first would be immediately destroyed.

The ballistic missile program’s recent troubles add to a laundry list of obstacles facing the nuclear triad recapitalization plan.

A separate effort to buy new air-launched cruise missiles faces opposition from newly empowered congressional Democrats, who worry that they could fuel an arms race. And the Navy is having problems with the Columbia-class nuclear submarine that is to make up the sea-based launch capability, as faulty welding has caused problems with the submarines’ missile tubes.

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There is a concern that the falling-out between the Air Force and Boeing could give Northrop Grumman too much influence over the Pentagon’s missile programs moving forward.

“From a taxpayer’s point of view, when there are multiple companies competing for something, it’s going to drive prices down,” said Dan Grazier, a retired Marine Corps captain who now works with the nonprofit Project on Government Oversight, a watchdog group. “It bothers me immensely that so many of these systems go to a sole-source provider, because there is no incentive to control costs.”

The squabble among Boeing, Northrop and the Air Force grew out of a weapons development competition that started years ago.

In 2017 the Air Force started paying Boeing and Northrop to develop competing missiles, hoping to weigh the two offerings and negotiate a fair price. That same year, Northrop spent $7.8 billion to acquire a company called Orbital ATK, which is a dominant producer of rocket motors. Boeing unsuccessfully petitioned the Pentagon and the Federal Trade Commission to block the acquisition.

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Having failed to block its competitors from teaming up, Boeing subsequently announced that it would decline to participate in the next phase of the competition.

More recently, Boeing has been lobbying the Pentagon and Congress to force a teaming arrangement that would give it some portion of the missile work. Boeing had previously asked Northrop to join forces and was refused.

The Air Force’s decision to halt funding could be a sign that it doesn’t want to force a teaming arrangement.

Teal Group aerospace analyst Richard Aboulafia said he thinks the Air Force has “made it clear that they don’t want Boeing to be a part of the bid,” adding: “It was always kind of a forlorn hope that [Boeing] would get some kind of mandatory carve-out.”