Supporters Say Price Is Right For U.S. Air Force B-21 Order Boost

As early cost estimates turn into real prices, a rare phenomenon for a defense acquisition program is becoming clear: The Northrop Grumman B-21 Raider is becoming less expensive.

In 2023, the U.S. Air Force expected to spend $19.1 billion over the first five annual lots of B-21 procurement. Two years later, the service is budgeting only $13.8 billion, a nearly 28% discount, to buy the same number of Raiders between fiscal 2023 and 2027.

• The Pentagon’s low-rate procurement budget for the program plunged $5.3 billion since fiscal 2023
• Defense officials slowed the B-21 ramp-up, heeding F-35 lessons

And now Northrop executives hope to cash in—not by raising prices, necessarily, although future lots within the five-year window for low-rate initial production remain open for negotiation. Instead, Northrop’s hoped-for reward would be a considerable boost to the Air Force’s deliberately slow production ramp-up, adding potentially dozens of jets to the last three years of the low-rate initial production (LRIP) phase.

Northrop CEO Kathy Warden previewed the company’s sales pitch for what could be dozens more B-21 orders ahead of the fiscal 2026 budget cycle set to begin next year.

“The performance that we are delivering gives them a capability that is in production now that is well below the cost target for the platform,” Warden told analysts on an earnings call Oct. 24.

The program’s semi-secret status makes precise tracking of cost performance difficult, but official information suggests early-production B-21s are at least tens of millions of dollars less expensive than the Air Force expected.

In 2010, then-Defense Secretary Robert Gates set the maximum price for each B-21 at $550 million. Following the contract award to Northrop in 2015, the service lowered the target to $511 million, citing the defense prime contractor’s winning proposal.

The Defense Department’s deflator formula adjusts that target average procurement unit cost for each aircraft in 2024 dollars to $730 million.

The Air Force refuses to release the number of aircraft it plans to buy in the LRIP process, citing classification rules. At the time of contract award in 2015, however, the service was more open, saying that 21 aircraft would be acquired over that five-year period.

If that number has not changed, then the Air Force now plans to spend an inflation-adjusted amount of $668 million for the first 21 Raiders instead of $733 million. And the $668 million figure likely includes additional costs such as an initial spares package.

It remains unclear why the Air Force proposed spending $19.1 billion in the five-year B-21 procurement budget cycle submitted in fiscal 2023, an amount equivalent to $909 million in average procurement unit cost for 21 aircraft.

But the path to reaching the $13.8 billion spending level in the Air Force’s fiscal 2025 program aligns with the original cost target while factoring in Northrop’s losses.

Northrop reported a $1.56 billion loss on B-21 production earlier this year. A full accounting of the loss is not available, but an intriguing link exists. If the Air Force still plans to buy 21 Raiders in the LRIP stage, the $65 million difference between the inflation-adjusted target cost and actual price of each aircraft adds up to $1.37 billion, nearly matching the $1.56 billion amount of Northrop’s reach-forward loss.

Air Force officials also said in 2023 that they renegotiated pricing terms with Northrop ahead of the award for the first lot of LRIP aircraft, a contract signed after the bomber’s first flight last November.

No further pricing changes are expected in the pending contract for the second lot of LRIP aircraft, Warden said. The second lot of annual production will be signed by year-end, she added.

Meanwhile, the service’s force structure plans are in flux. Air Force Secretary Frank Kendall put the Next-Generation Air Dominance (NGAD) program on hiatus in the summer to review costs and requirements. A separate study ordered by Congress, one that calls for Kendall’s team to lay out the service’s force structure plans through 2050, is past due. And Gen. David Allvin, the Air Force chief of staff, is putting the finishing touches on a sweeping strategy blueprint known as Force Design.

So a change in procurement plans for the B-21 is possible, Warden said.

“We know that the B-21 is in the mix as well,” Warden said. “It would be premature for me to suggest where that force structure review will end up. But I do think in the coming months we may get a better indication from the Air Force as to how they’re thinking about B-21 quantities in the long run.”

Northrop’s sought-after order boost would run counter to a decade-old plan by Air Force and government officials to minimize orders during the first five years of B-21 production.

William LaPlante, undersecretary of defense for acquisition and sustainment, explained the Air Force’s unusually patient procurement strategy for the B-21 program during a Rand Corp. event in February. “It was designed to be resilient to Washington turbulence,” LaPlante said.

Defense officials crafted the plan in the immediate aftermath of a Nunn-McCurdy Act breach by the Lockheed Martin F-35 program, he said. The effects of the Budget Control Act, which further capped F-35 procurement funding through budget sequestration, also informed the government’s B-21 strategy, he added.

In short, the cost overrun and budget caps slammed the brakes on the F-35’s production ramp-up. The program’s original plan called for Lockheed to deliver 297 aircraft over the first five years of production. After the dust settled, the company managed to hand over only 95.

“Our fear was you would reach a point where [the F-35] would go into a death spiral,” LaPlante explained. “They were not producing enough airplanes, [raising concerns] that Lockheed couldn’t get over the hump of learning. It never happened, thankfully. But we were worried.”

At the time, LaPlante served as principal deputy to the assistant secretary of the Air Force for acquisition, which gave him a front-row seat as the B-21 acquisition strategy came together in 2013-14. The plan called for avoiding the F-35’s aggressive, early production acceleration.

“So for B-21, there is no big ramp,” LaPlante added. “It’s like: ‘Stay away, budgeteers—don’t touch me.’ Because we want to make it resilient. I don’t want to be pejorative to budgeteers; it’s really about the turbulence. So you can learn, and you can try to design these programs to be survivable.”

But the slow pace of the B-21 ramp-up creates other risks. Some camps within the Air Force want to buy many more than 100 B-21s, the existing program of record. At the current pace, the Air Force does not expect to complete orders for that number of bombers until the mid-to-late 2030s. By then the stealth bomber may be competing for procurement funding with NGAD and other programs.

In testimony to Congress last April, Allvin said he was sticking to the original procurement plan for the B-21. But external pressures are growing on Air Force officials to reconsider the B-21 spending plan, especially in light of the ongoing NGAD program review.

“The B-21’s acquisition rate is just as important as the total number the Air Force ultimately buys,” says Mark Gunzinger, a former bomber pilot and the director of future concepts and capability assessments at the Mitchell Institute for Aerospace Studies. “Doubling planned B-21 buys would enhance deterrence in the near and midterm—it’s a no-brainer.”

Some Wall Street analysts agree that Northrop has an opportunity to add significantly to the B-21 production rate in the near future.

“If Northrop continues to execute on the program and it stays below the [Defense Department’s] internal cost estimates, we wouldn’t be surprised if the Air Force buys additional B-21s,” Melius Research analyst Robert Springarn wrote in an Oct. 24 note to clients. “Further, with the Air Force’s sixth-gen fighter program—Next-Generation Air Dominance—being reevaluated, it could free up additional funds for the B-21.”

—With Matt Jouppi and Michael Bruno in Washington