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Quick Take: Will Northrop Overrun Aground?

By Rich Smith – Updated Apr 5, 2017 at 5:34PM

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Rising costs endanger an obsolete concept.

There's an old saying that armies are always planning to fight the last war. But is that really such a bad thing? As far as I can tell, the U.S. Navy is still gearing up to win World War II, which was at least three wars ago (depending on who's counting).

According to a report that Reuters put out yesterday, the Navy's latest big-ticket boondoggle is an aircraft carrier named the USS Gerald R. Ford -- "CVN 78" to its Navy buddies. Originally billed by Northrop Grumman (NYSE:NOC), its builder, as a bargain at $11 billion, the Government Accountability Office now thinks the Ford could easily cost taxpayers a dozen billion bucks.

So, $12 billion for a class of warship that, in the age of cruise missile-tipped submarines and aircraft has often been referred to as a "floating target?" Seems to me this money could be better spent retooling the concept of the super-expensive supercarrier to better survive in a world where Boeing (NYSE:BA), Lockheed (NYSE:LMT), and Northrop itself are all working to make manned combat aircraft a thing of the past.

Foolish takeaway: If these cost overruns keep up, the Pentagon might start thinking the same thing.

Fool contributor Rich Smith does not own shares of any company named above. The Motley Fool has a disclosure policy.

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Stocks Mentioned

The Boeing Company Stock Quote
The Boeing Company
BA
$131.26 (-5.37%) $-7.45
Lockheed Martin Corporation Stock Quote
Lockheed Martin Corporation
LMT
$413.07 (-2.13%) $-9.01
Northrop Grumman Corporation Stock Quote
Northrop Grumman Corporation
NOC
$478.82 (-3.55%) $-17.64

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