Boeing Bows Out of $85B Military Bid
Boeing is having a hell of a week, and that’s not even usually news anymore. The aerospace supplier, who has been buried under the weight of its issues with the Max jet for months, saw its stock price tank when markets got wind of discussions to possible scale down or even discontinue Max production.
But, alas, there is more money to lose for Boeing and this time it relates to a coveted military project that the aerospace company was in the running for. And it wasn’t just any contract. The winner-take-all award is set to be the largest contract awarded in 2020.
Last week marked the deadline for bid submissions for a contract to replace the military’s Minuteman III missile system. Boeing has participated in the military’s program as a Minuteman supplier since 1962, and the company was expected to bid on the project along with competitor Northrop Grumman.
But last week Boeing confirmed that it would bow out of the process, leaving Northrop Grumman as the lone bidder for the $85 billion project.
Boeing said in July that it would have trouble competing on price since Northrop Grumman had purchased solid rocket motor maker Orbital ATK in 2018 – and Orbital ATK just happens to be the top producer of the solid fuel rocket motors generally used in the missiles.
Boeing concluded it faced a tremendous disadvantage, and said in the statement that “the current acquisition approach does not provide a level playing field for fair competition.”
Boeing had reportedly, and repeatedly, asked the Air Force to “mitigate Northrop’s anticompetitive and inherently unfair cost.” But, eventually saying the Air Force did not address its concerns, Boeing decided not to submit a proposal, leaving Northrop alone – a position that concerns some considering a one-bid deal could result in inflated costs. One analyst said he thinks this could case the Air Force to reconsider the acquisition strategy altogether.
Modernizing the country’s nuclear arsenal is projected to cost $1.2 trillion over 30 years.
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