Skunk Works

In the end, the government’s B-2 decision cost the taxpayers billions. Northrop was supposed to build 132 B-2s at a cost of $480 million each—more than twice what we had originally estimated per airplane. But as those projected costs mounted drastically, Congress lowered the number of bombers to be built to seventy-five and the cost per airplane leaped to $800 million. The fewer the airplanes, the higher the cost is a reliable rule of thumb and a painful lesson about the awful cost of failures in the expensive defense industry business. Now the number of B-2s authorized by Congress is only twenty, and the American taxpayers are spending an incredible $2.2 billion on each B-2 being produced, making the B-2 the most expensive airplane in history. When one crashes—and new airplanes inevitably do go down—it will be not only a tragedy but a fiscal calamity. Northrop’s management is in large part to blame for all the delays and cost overruns, but so is the Air Force bureaucracy, which has swarmed over this project from the beginning. When we began testing our stealth fighter, the combined Lockheed and Air Force personnel involved totaled 240 persons. There are more than two thousand Air Force auditors, engineers, and official kibitzers crawling all over that troubled B-2 assembly building in Palmdale. What are they doing? Compiling one million sheets of paper every day—reports and data that no one in the bureaucracy has either the time or the interest to read.

The Air Force now has too many commissioned officers with no real mission to perform, so they stand around production lines with clipboards in hand, second-guessing and interfering every step of the way. The Drug Enforcement Agency has 1,200 enforcement agents out in the field fighting the drug trafficking problem. The DOD employs 27,000 auditors. That kind of discrepancy shows how skewed the impulse for oversight has become both at the Pentagon and in the halls of Congress.

Under the current manufacturing arrangements, Boeing makes the wings, Northrop makes the cockpit, and LTV makes the bomb bays and back end of the B-2 airplane, in addition to four thousand subcontractors working on bits and pieces of everything else. Because of the tremendous costs involved, this is probably a blueprint for how big, expensive airplanes will be built in the future. For better or worse, this piecemeal manufacturing approach—rather than the Skunk Works way—will characterize large aerospace projects from now on. With many fewer projects, the government will have to spread the work across an ever broader horizon. What will happen to efficiency, quality, and decision making? At a time of maximum belt-tightening in aerospace, those are not just words but may well represent the keys to a company’s ability to survive.