Boeing Drops Out Of $63B Defense Contract, Wants To Partner With Winner Northrop

KEY POINTS

Northrop Grumman on the verge of having a $63 billion contract
Boeing wants the USAF to force a partnership with Grumman
Northrop Grumman's Orbital ATK purchase under FTC scanner

Northrop Grumman has emerged the sole bidder for a $63 billion contract to replace 400 very old Minuteman 3 Intercontinental Ballistic Missiles, after Boing opted out. The U.S. Air Force confirmed Friday that Northrop Grumman was the only remaining bidder for the Ground-Based Strategic Deterrent (GBSD) program that could pan out for more than 20 years.

Boeing stood little chance against Northrop in winning the contract, which is expected to be awarded in the fourth quarter of 2020. Boeing dropped out after the company said that Northrop had “a grip on the solid rocket motors market,” reported SpaceNews.

Boeing attempted to convince the USAF to talk Northrop Grumman into a joint venture or “national team,” by forcing Northrop to include them in the bid. Boeing said “it continues to support a change in the acquisition strategy that would bring the best of the industry to this national priority.” Neither the USAF nor Northrop appears to be interested though.

According to a South Korean think tank Thursday, North Korea might hold talks with the U.S. after mastering the re-entry technology of its ICBM. Here, a photo taken by North Korea's official Korean Central News Agency (KCNA) shows launching of the Hwasong-15 missile which is capable of reaching all parts of the U.S., Nov. 30, 2017. KCNA VIA KNS/AFP/Getty Images

The Air Force is under criticism from congressional leadership for allowing the contract to fall to a sole bidder. Yet it would be tough to build a case for Boeing, which is burdened with enough trouble over fatal errors to its 737 Max aircraft system.

Northrop Grumman has its own share of controversy. The Federal Trade Commission is investigating the company for its June 2018 purchase of Orbital ATK, which gave Northrup too much of a leg up in the solid rocket market. The deal appeare to make good business sense as Northrop is involved in several projects that can benefit from Orbital ATK's technology.

The USAF has indicated that is has already completed an in-depth analysis that shows Northrop Grumman can produce the best product at a lower cost because they already own the technology to make it happen. The USAF is expected to file a report on the pros and cons of a deal within 60 days in accordance with the National Defense Authorization Act.