An unarmed Minuteman III intercontinental ballistic missile launches during an operational test at Vandenberg Air Force Base, Calif., on Aug. 2. (Senior Airman Ian Dudley/U.S. Air Force via Reuters)

A high-stakes competition to rebuild a critical component of America’s aging nuclear arsenal has been narrowed down to two companies, as the Air Force awarded Boeing and Northrop Grumman contracts to continue work on a successor to the Minuteman ground-based intercontinental ballistic missile.

The two companies were awarded $349.2 million and $328.6 million contracts, respectively, for improving upon the key strategic deterrent. The decision Monday effectively rejected a bid by Bethesda-based Lockheed Martin, which also had competed for the work.
Boeing and Northrop now have three years to develop the next ground-based nuclear missile, after which a single company is to be selected to run the program.

“The Minuteman III is the enduring ground-based leg of our nuclear triad. However, it is an aging platform and requires major investments to maintain its reliability and effectiveness,” Air Force Gen. Robin Rand, commander of the Air Force Global Strike Command, said in a statement.

Ground-based missiles produced under the Minuteman program have been at the center of the U.S. military arsenal since the late 1950s, and today there are about 400 of them deployed around the continental United States. They make up one leg of the United States’ nuclear triad, which includes the capability to launch nuclear missiles from the air and sea.

The United States is in the process of drawing down its stock of nuclear warheads under the terms of international non-proliferation agreements. Meanwhile, the missiles that would be used to deliver what warheads remain are in need of replacement to incorporate advances in control, navigation and targeting systems

“This is a ’60s-era missile. . . . Just think of where we’ve come since the ’60s or the ’70s,” said Bob Wood, a defense industry expert with New York-based PA Consulting Group.

In addition to overhauling the Minuteman, the Pentagon is slated to replace its older Ohio-class submarines sometime after 2020. And a contract decision for missiles that can be launched from a B-52 or B-2 bomber is slated for later this week.

Frank Kendall, who was the undersecretary of defense for acquisition, technology and logistics in the Obama administration, said modernization efforts on all three legs of the triad have been beset by delays.

“There is no time to lose,” Kendall said in an email. “The Department has already delayed these programs more than I am comfortable with.”

The redesign contract awarded Monday is part of a nuclear recapitalization plan that was conceived early in the Obama administration.

“President Trump ran for the White House saying he was going to modernize the U.S. nuclear arsenal, and now he is following through on the Obama administration’s plans to do just that,” said Loren Thompson, a defense consultant whose firm gets funding from several of the firms involved in the competition.

Trump, citing the need for a “historic” rebuilding of the armed forces, signed an executive order Jan. 27 that included a review of the country’s nuclear arsenal. It is unclear whether that review has produced any major policy changes so far. But in early August, Trump took credit for “renovating and modernizing” the U.S. nuclear arsenal, saying in a tweet that “it is now far stronger and more powerful than ever before.”

Whoever ultimately wins the Minuteman competition could reap dividends for decades to come. “The replacement of Minuteman missiles eventually could be a $100 billion program, so staying alive in the competition was crucial to all of the competitors,” Thompson said.

Boeing has been in charge of the Minuteman program since its inception in the late 1950s, but Northrop has also provided technical support to U.S. missile programs.

Now Northrop wants to unseat its better-established rival.

“The company is likely drawing from its flight systems, cyber technology, and command and control resources.” Howard Rubel, an analyst with investment bank Jefferies, said in a note to investors Monday.

The Defense Department’s decision Monday comes as a blow to Lockheed Martin, which had put together a star-studded list of subcontractors that included defense manufacturer General Dynamics to build the missile’s various control systems, Bechtel to control its launch systems, and Orbital ATK and Aerojet Rocketdyne to jointly handle propulsion.

Lockheed is still smarting from a major loss two years ago on a contract to build the B-21 stealth bomber, which was awarded to Northrop Grumman.

“We are disappointed with the outcome of the Ground Based Strategic Deterrent competition, and we look forward to a debrief about the selection with the Air Force,” Sydney Owens, a Lockheed Martin spokeswoman, said in an email. “We are confident our proposal delivered an affordable GBSD solution that meets all mission requirements. We remain fully committed to supporting the Air Force on our existing strategic deterrence programs.”

Asked whether Lockheed Martin would protest the decision, Owens responded: “We will determine next steps following a debrief from the Air Force.”