A deal to increase production of the Air Force’s B-21 bomber could be reached by March, Northrop Grumman’s CEO said. But a looming government shutdown could hinder talks, as one did last fall.
Kathy Warden said no agreement has been reached about the $4.5 billion in reconciliation funding approved last year to speed up next-generation bomber production, but that she was optimistic for a deal in the next few months. As of last year, the company has taken a roughly $2 billion hit trying to accelerate the program and cover material costs.
“We continue to work closely with the Air Force on plans to increase the production rate of the program. Our priority is to establish a mutually beneficial agreement that accelerates the delivery of this game-changing capability to our nation,” Warden said during the company’s fourth-quarter earnings call on Tuesday. “Funding for this acceleration has been approved as part of the reconciliation bill, and I am optimistic that we will come to an agreement with the Air Force this quarter.”
It’s unclear whether those talks would be stalled by the partial government shutdown that would begin on Saturday if the Senate fails to reach agreement on funding for several federal agencies, including the Defense Department.
In October, Warden acknowledged that the then-ongoing government shutdown had “held up” discussions on an increased production agreement with the Air Force.
A Northrop Grumman spokesperson did not immediately respond to a request for comment on the potential effects this time around.
Douglas Royce, a senior analyst with Forecast International, a sister brand of Defense One, said he didn’t see the looming shutdown as a major factor for Northrop Grumman in accelerating production.
“There’s always uncertainty around shutdowns, and theoretically the non-essential workers at DOD involved in any discussions on accelerations will stop talking until it’s over,” Royce said. “If it’s a short shutdown, no impact. And even if there were no shutdown, it’s not a given that the two sides come to an agreement.”
Warden said during the call that an agreement for increased production would help the company’s bottom line, but also require more investment in facilities.
“So, as we sit here today, we are still working through the finer points of that deal and its financial implications for the company,” Warden said. “We do expect to invest $2 billion to $3 billion over a multi-year period.”
The Air Force has planned to buy 100 B-21 bombers, but some officials have made the case for nearly 150 aircraft. Warden said Northrop was awarded the low-rate initial production contract for Lot Three and the advanced procurement funding for Lot Five late last year.
An Air Force spokesperson confirmed to Defense One the service received milestone decision authority approval for those awards and executed them in December.
Warden also said the company is investing in work on future defense programs, such as components for the sprawling Golden Dome missile defense system, its Project Talon drone wingman, and the Navy’s next-generation fighter jet.
“We want to be in a position to have cash on hand to invest more in supporting those because, again, they’re well aligned with the administration’s priorities in homeland defense, crewed
fighters and uncrewed vehicles to name just a few,” she said.
But Warden added that it’s unclear when contracts will be awarded for those programs.
“As we sit here in January, we have not yet seen those opportunities progress toward contract, and we believe that will happen over the next 24 months,” Warden said. “The timing of that is what is much more difficult to predict as we sit here.”
Last week, congressional appropriators allocated nearly $900 million for development of the Navy’s next-generation fighter, dubbed F/A-XX, bucking the Pentagon’s plans to underfund the effort and focus on the Air Force’s F-47 instead. The annual defense appropriations bill, which includes the aircraft development funding, is one of the budgets being held up in the Senate.
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