Six decades after its introduction, more than six dozen B-52s are still flying with the U.S. Air Force. Photo: U.S. Government.

First introduced in 1955, the Boeing (BA -1.91%) B-52 Stratofortress forms the backbone of America's airborne nuclear deterrent. Out of 160 strategic bombers operated by the U.S. military, nearly half (78) are B-52s. But after six decades in service in the U.S. Air Force, the ancient B-52 is showing its age -- and it's time to build a new strategic bomber. The question is "when."

And also "if."

Introducing LRS-B, the Pentagon's "$55 Billion Bomber" (if we're lucky)
Reviewing what we know about the Pentagon's plans to build a better bomber, the Air Force Times reported last month that plans are progressing. Three firms are known to be bidding on the project, known as LRS-B, or "Long Range Strike Bomber." These include an alliance between Lockheed Martin (LMT 0.22%) and Boeing on the one hand, and incumbent B-2 stealth bomber-builder Northrop Grumman (NOC -0.92%) on the other.

Northrop Grumman built the last stealth bomber -- the B-2. Will it build us a B-3, too? Photo: Northrop Grumman.

The Wall Street Journal reported Thursday that the Air Force has pushed the anticipated date of the LRS-B contract award into summer 2015, with the contract winner expected to begin delivering stealth bombers sometime next decade. Thus, a tight schedule has just gotten even tighter, with contractors losing three months between contract award and initial delivery in which to complete development and manufacture of the stealth bomber. According to AF Times, production should wrap up sometime around 2040.

And that's not the only problem LRS-B faces. AF Times says the Air Force wants to buy about 100 bombers for a total cost of $55 billion -- $550 million per plane.

Problem is, that's not likely to happen.

Boeing's version of what a Long Range Strike Bomber might look like. But will it look like anything? Source: Boeing.

Why not?
Let's take this step by step, beginning with the $55 billion estimate. That was first voiced in 2010, when the Air Force started talking about building LRS-B. But five years of inflation have already devalued those dollars to the point that what cost us "$55 billion" five years ago probably costs about $60 billion today.

Next, Todd Harrison, director of defense budget studies at the influential Center for Strategic and Budgetary Assessments, recently pointed out that even the initial $55 billion estimate didn't include the cost of developing LRS-B. Adding projected development costs of $25 billion to the $60 billion inflation-adjusted estimate, we're now already up to $85 billion for 100 Stealth Bombers.

Which brings us to the final nail in the LRS-B's coffin: Sticker shock. As Stars and Stripes pointed out earlier this week, the last time the Air Force tried to build a stealth bomber (Northrop's B-2), "it planned on buying 132" planes. Skyrocketing costs, however -- such as we're already seeing for LRS-B -- forced a dramatic rethink. In the end, the Air Force ended up buying only 21 B-2 bombers from Northrop -- for $2 billion apiece.

At that price, says director John Pike, the B-2 "literally cost its weight in gold."

What it means to investors
Make no mistake: Defense contractors Northrop Grumman, Lockheed Martin, and Boeing would all be more than happy to build the U.S. Air Force a new stealth bomber, at any cost, and gold-plated or otherwise. That's the scenario that investors are counting on happening today. But consider what happens if LRS-B follows the same track of previous big-budget Pentagon acquisitions projects such as B-2.

If the number of planes to be bought gets pared back similarly (132 down to 21 -- that's an 84% reduction in force), we could easily end up with not 100 stealth bombers being built, but just 16. Development costs alone would price each stealth bomber at a base cost of $1.56 billion. And the inflation-adjusted cost of building the planes would add $600 million to that figure: $2.16 billion per plane. (And since even the $600 million figure is predicated on the contract winner enjoying the benefits of scaled production, the per-plane manufacturing cost could easily be higher than that).

With so much still unknown about the LRS-B stealth bomber, it's not hard to see how the rapid rise in estimated costs could quickly convince Congress to kill the project outright. In which case, not only will America get no new strategic bombers, but Northrop Grumman, Lockheed Martin, and Boeing will get no new strategic bomber contracts -- and investors will get no profits from those contracts.

Hope springs eternal
Of course, in the best-case scenario (for the Air Force and for investors), even the tippety-top of our cost estimates for LRS-B -- $55 billion for manufacturing, plus $5 billion inflation, plus $25 billion development, or $85 billion total -- still results in a per-plane cost of less than $1 billion per LRS-B when spread across 100 stealth bombers. That's a lot of money, but it's still less than half the price of the plane's B-2 predecessor.

So the moral of this story? If the Air Force really wants its new stealth bomber, it must buy it in bulk. The price will be high, but unless we want to still be flying B-52s 60 more years from now, it's a price we'll have to pay.

Northrop Grumman revealed its version of a new stealth bomber in a commercial at the Super Bowl. But when the curtain is finally drawn, will there be anything underneath? Northrop Grumman video still.