B-2 Spirit. Image source: U.S. Air Force.

Costing "literally... its weight in gold" the Northrop Grumman (NYSE:NOC) B-2 Spirit stealth bomber is the most expensive warplane in U.S. history. In fact, the "B2 bomber" almost seems a typographical error. The Air Force might have intended to name it the "2B Bomber."

Because that's how much each B2 bomber cost to build -- $2 billion. Once you realize that, the implications for the Air Force's plans to build a B-3 bomber get pretty ominous.

Northrop Grumman "veiled" a new stealth bomber in a commercial at last year's Super Bowl. Image source: Northrop Grumman video still.

Introducing the B-3 bomber... eventually
Last month, the Air Force confirmed it is pushing back construction of a planned B2 bomber replacement, dubbed the Long Range Strike Bomber, or LRS-B. (But a lot of us are already calling it the "B-3.") Three companies are bidding to build it, too: a joint team of Boeing (NYSE:BA) and Lockheed Martin on one hand, and the B2 bomber's incumbent builder, Northrop Grumman, on the other.

Investors initially hoped to learn which team would win the LRS-B contract this summer. But as now reported by Military.com, the award has been pushed into September.

If it happens then, this will be a relief for the contractors who win the contract and the investors who own their stock. For months, we've watched this contract creep along at a stealth snail's pace, with an announcement always just months away -- and always postponed by a couple of months just before the news was due out.

Now, the waiting may finally over.

What comes next? The timeline
If a contract arrives in September, the LRS-B timeline will expand dramatically -- from months to decades. As detailed by Military.com, building the LRS-B will take anywhere from five to seven years from the "go" date of the contract award. LRS-Bs will begin landing at Air Force bases sometime in the mid-2020s, and construction of the entire fleet of up to 100 planes would conclude around 2040. After that, says Assistant Air Force Secretary for Acquisition William LaPlante, LRS-B "will be with us for 50 years."

That is, if it ever gets built at all.

Northrop Grumman built this B2 bomber for $2 billion. But will taxpayers ante up for a $3B bomber? Image source: Northrop Grumman.

What doesn't come next? The bomber
Now, here's why after all the waiting -- and even after the contract gets awarded -- I do not believe the LRS-B will ever get built: It costs too much. No mere "solid gold" B2 bomber, the LRS-B is on a trajectory that could turn it into a flying platinum-plated piggy bank for defense contractors.

The math works like this:

  • LRS-B was initially advertised as a $55 billion program. Each LRS-B was to cost $550 million, which, times 100 bombers, equals $55 billion.
  • That estimate was initially posited in 2010, though, so those were "2010 dollars." After inflation, $55 billion is $68 billion today.
  • And $55 billion/$68 billion is just the cost of construction. Research and development of LRS-B could cost $25 billion more, taking the total program cost to $93 billion.

In the best possible world, this means each LRS-B built will cost taxpayers nearly $1 billion, or nearly 10 times the advertised cost of an F-35 fighter jet.

The versatile F-35 comes with a high price tag -- but not as high as the price of an LRS-B. Image source: Lockheed Martin.

Now, imagine what happens when the media figure this out and begin running headlines about how the LRS-B program is nearly 100% over budget, and how the airplane, expected to cost $550 million, will now cost twice that.

In tight budgetary times, Congressional opposition to the LRS-B will be fierce, and calls to curtail production strident. Pretty soon, a program that initially called for construction of 100 stealth bombers will be rolled back -- to 50, to 40, or perhaps only 20 planes (equal in size to the U.S. B2 bomber fleet). 

Death knell for the $3B bomber?
Now, let's consider where this would leave LRS-B. With $25 billion in development costs spread over just 20 bombers, each plane would cost $1.25 billion just to develop. Construction costs, in present-day dollars, would add $680 million, resulting in a per-plane cost of $1.93 billion.

That would put the LRS-B within spitting distance of the B2 bomber's $2 billion price, even assuming no cost overruns. (Hint: Military programs always overrun on cost.) While not necessarily a "B-3" -- or "$3B" -- warplane, LRS-B could get pretty close to $3 billion per plane.

Now, could I be wrong about the LRS-B program, its cost, and its prospects? Absolutely. Much as we might wish it to be otherwise, investors, and defense writers, lack 20-20 clairvoyance. But the risks here seem real. My advice: If you're thinking about investing in one of the defense contractors bidding on LRS-B, don't count on getting any gold eggs before you actually see these birds hatch.

Six decades after its introduction, more than six dozen B-52s are still flying with the U.S. Air Force. Let's hope they're well maintained, because we might need them to fly another 60 years. Image source: U.S. Air Force.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.