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U.S. Air Force says new bomber essential, vows to control costs

By Andrea Shalal

WASHINGTON, Feb 27 (Reuters) - The Air Force urgently needs a new long-range bomber to replace its aging fleet and will keep costs at or below a $550 million cap for each warplane, top U.S. officials told lawmakers on Friday.

Air Force Secretary Deborah James said the Air Force understood that runaway costs had to be contained, and noted that a sharp reduction from the planned purchase of 80 to 100 bombers would send the price of each aircraft spiraling higher.

"We've kind of learned some lessons from the not-too-distant past about what happens when you don't keep stressing affordability, affordability, affordability," James told the defense subcommittee of the House Appropriations Committee.

A Boeing Co-led team that includes Lockheed Martin Corp is competing with Northrop Grumman Corp for a contract valued at $50 billion to $80 billion to design and build the new bombers.

The Air Force plans to award a contract in late spring or early summer.

James told the committee the cap did not include the cost of developing and operating the bomber.

The Air Force saw huge increases in the cost of its B-2 bomber, built by Northrop, in the late 1980s and 1990s. The program was truncated to 21 aircraft at the end of the Cold War, instead of more than 120 warplanes. Including development, each aircraft cost about $2.1 billion.

Air Force Chief of Staff General Mark Welsh said the bomber program was based on the number of aircraft needed for "nuclear deterrence alert" and to win a major theater war.

It was absolutely critical to move on the new bomber program or the Air Force would soon be left with only 16 B-2 bombers, or a fleet of 100-year-old B-52 bombers by mid-century, he added.

Welsh, the service's top uniformed officer, was confident the Air Force could meet the cost cap for the bomber, or even undercut it.

Details about the Air Force requirements for the bomber have not been released because the program is classified.

Industry executives have said the service is looking for more mature technologies and components to speed up development and deployment, and keep costs from rising sharply.

(Reporting by Andrea Shalal. Editing by Andre Grenon)