Defense official: “As a department you don’t want to get in the middle of business."

Updated March 1 with a Defense Department statement

WASHINGTON — If all goes as planned, the U.S. Air Force next year will start evaluating design concepts for a new intercontinental ballistic missile that will replace the aging Minuteman III.

Northrop Grumman and Boeing are developing competing designs of the “ground based strategic deterrent.” They expect the Air Force to settle on a concept by 2020. The GBSD is one of the pillars of the Pentagon’s effort to modernize U.S. nuclear forces. The development and procurement of the next-generation ICBM is projected to cost nearly $100 billion over the next decade.

A backstory in this program is that one of two manufacturers that would make the solid rocket motors for the GBSD, Orbital ATK, is about to merge with Northrop Grumman. For the current “technology maturation and risk reduction” phase of the program, Orbital ATK is supporting both prime contractors, Boeing and Northrop Grumman.

Orbital ATK’s competitor for the GBSD propulsion system, Aerojet Rocketdyne, also is aligned with both teams.

Northrop Grumman and Orbital ATK reported their intent to merge just weeks after the Air Force announced the selection of the two GBSD primes. Boeing and Northrop Grumman initially had been expected to compete the rocket motor work between Orbital and Aerojet. With Orbital under Northrop Grumman ownership, that type of competition would not be possible.

The Pentagon is not concerned, however. “There will still be two providers,” said Jerry McGinn, principal deputy director of Defense Department’s office of manufacturing and industrial base policy. McGinn did not elaborate on what potential arrangement could be made to ensure there is competition for propulsion systems even though one of the providers will be owned by a GBSD prime.

The Pentagon had a chance to review the merger of both firms, but a spokesman said the department would not comment specifically on its views on the merger, or whether competition in the GBSD program would be a deal breaker.

Defense Department spokesman Adam Stump said in a statement that DoD “generally opposes mergers that overly reduce or eliminate competition, limit innovation, raise credible threats to national security, and are not in the Department’s best interests. Each transaction is unique and will be evaluated on its own merits.”

The Northrop Grumman – Orbital ATK transaction “will be evaluated on its own merits,” he said. “We are not in a position to comment as the review is still in-process. We welcome any thoughts from industry on areas of concern, as part of our normal process.”

The Federal Trade Commission is the antitrust agency leading this investigation. “DoD is working closely with the FTC to conduct our due diligence,” Stump said.

Speaking on Monday at a New America event in Washington, McGinn said “it’s a balance” between market forces and the Pentagon’s desire to have multiple competitors in major programs.

“As a department you don’t want to get in the middle of business,” he said.

Carol Erikson, GBSD vice president at Northrop Grumman Aerospace Systems, told SpaceNews that the company is confident in its GBSD design as the competition moves forward. She declined to comment on the Orbital merger or on any other potential alliances with other suppliers. “Northrop Grumman previously announced that both Orbital ATK and Aerojet Rocketdyne are members of our GBSD team,” she said. “Other teammates are not being divulged at this time due to competitive reasons.”

In the current stage of the GBSD program, the technical maturation and risk reduction phase, she said, “We’re focused on bringing forward our systems engineering expertise,” she said. “We are supporting the Air Force by performing trades to identify the right balance between performance, cost and risk.”

The GBSD program is not just a missile replacement, Erikson said. “It’s looking at the entire system. It’s a new missile, new command, control and communications all wrapped in a cyber-resilient and nuclear surety environment.”

A Boeing spokeswoman said the company would not comment on potential supplier roles.

Northrop Grumman President and Chief Operating Officer Kathy Warden told analysts during a Jan. 25 earnings call that the Orbital ATK transaction should close in the first half of this year. “We believe our combination represents a powerful opportunity to better serve customers,” she said.