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Navy Greenlights 2 War Drone Prototypes for Its Aircraft Carrier Fleet

By Rich Smith - Updated Oct 10, 2016 at 1:52PM

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The race to build America's next combat drone begins.

Much about the Navy's new carrier-based stealth drone project still remains shrouded in darkness. Image source: Getty Images.

At long last, it's official. The U.S. Navy is building a new war drone for its aircraft carriers -- and in fact, it may be building two of them.

Either this, or that

Officially named the "MQ-25A Stingray" when announced back in July, the new drone is expected to be a stealthy "flying wing," capable of penetrating enemy air defenses to launch devastating attacks with cruise missiles. Either that...or it will be a bumbling, oblong-shaped fuel tanker, capable of flying in flow circles over its mother ship, and pumping gas into real fighter jets.

That's where the debate was left last July, with the Navy unable to decide precisely what it wants from a carrier-launched drone. At the time, I opined that Lockheed Martin (LMT -0.34%) and Northrop Grumman (NOC -1.15%) were likely to offer prototypes specializing in stealth. Lockheed Martin is well known as the maker of F-22 and F-35 stealth fighter jets. Northrop Grumman built the Navy's first carrier-capable jet drone, the batwinged X-47B. Both companies were likely to play to their strengths, and advocate for the Navy choosing a stealthy design that -- even if initially assigned only tanker roles -- could "evolve" over time into a true carrier-capable combat jet.

At the same time, rival drone operators Boeing (BA -5.07%), which builds the Navy's popular ScanEagle, and General Atomics, most famous for its Air Force Predators, would probably bid to build an MQ-25A that looked more like a "traditional" aircraft, eschewing stealth in favor of cheapness and fuel-tank capacity. That's where we left the debate four months ago.

And that's precisely where we remain stuck today.

When in doubt, hedge your bets

Late last month, buried in the flurry of end-of-fiscal-year contract awards, the Pentagon announced that it is funding two carrier-based drone concepts -- one each from the two competing camps. On the "stealthy" side, Lockheed Martin was awarded $43.6 million "to conduct risk reduction activities in support of the MQ-25 unmanned carrier aviation air system, including refinement of concepts and development of trade space for requirements generation in advance of the engineering and manufacturing development phase of the program."

Simultaneously, the Pentagon hired Boeing to do exactly the same work on a (presumably non-stealthy) Stingray design for $43.4 million.

What it means to investors

The U.S. Pentagon shoveled $14.5 billion in new contracts out the door in the final week of fiscal year 2016, so it's possible I have missed mention of similar development contracts to General Atomics and/or Northrop Grumman. In fact, given Northrop's successful experience building and flying the X-47B, I admit to some shock at not finding Northrop at the top of the Pentagon's MQ-25 short list. But I've read through the contract announcements twice, and don't think I've missed any official announcements.

Even so, if you're an investor in Northrop Grumman stock, don't panic! Just because your company didn't receive money for "risk reduction activities" doesn't mean Northrop Grumman has no chance of winning the MQ-25 contract. Nor do the two awards announced last month guarantee that Boeing or Lockheed Martin will have a "lock" on building the MQ-25 Stingray. To the contrary, no official Navy "Request for Proposals" to build the MQ-25 is even expected before next year, and no production models are expected before 2021.

At the same time, investors in Boeing and Lockheed Martin may take some comfort in the fact that they were the Navy's first choices to get the ball rolling on the MQ-25A Stingray. For better or worse, I'd have to say that right now, Boeing and Lockheed occupy the pole positions in this race.

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