The United States Air Force is rebuilding its nuclear ballistic missile arsenal and that could mean a big payday for the local operations of two major aerospace companies.

Northrop Grumman Corp. was awarded a $328 million contract last month to design a replacement for the Minuteman missile system.

The job is the first phase of a bid led by the Falls Church, Va.-based company’s Redondo Beach aerospace systems unit to replace the nation’s chief land-based missile system.

Northrop is facing off against Boeing Co. of Chicago, which is designing and pitching its own replacement.

Aerojet Rocketdyne in El Segundo is a supplier of ballistic missile rocket engines to Northrop and Boeing, though its cut of the research and development deal was not disclosed.

The Air Force is due to decide on a replacement system in 2020.

The lifecycle and total costs for the missile program could be substantial – some $62 billion, according to the Air Force’s estimate. The effort is part of a larger nuclear strike capability upgrade begun under former President Barack Obama that could ultimately cost more than $1 trillion.

“Next to the F-35 (fighter plane) it will arguably be the largest defense procurement program out there,” said Richard Safran, director of equity research at the Buckingham Research Group in New York. “It’s definitely going to make sure the (winning) company is on the map for a long time.”

A spokesman for Northrop declined to disclose details of its bid, or any information on the potential boost to local employment.

Aerojet Rocket looks likely to benefit whichever company wins out, which is par for the course for the rocket engine manufacturer. The company builds rocket motors for the Minuteman III in its Sacramento facility and claims that its propulsion systems have been included in every U.S. intercontinental ballistic missile ever deployed.

Aging arsenal

Both the Obama and Trump administrations have said the need for the United States to rebuild its nuclear-armed ballistic missile cache has increased in recent years as the Minuteman III system has aged and as potential adversaries such as Russia, China and North Korea have increased the size and sophistication of their nuclear arsenals.

“It’s an important system for the strategic defense of our nation and it has to be upgraded,” said Bob Wood, senior consultant in Washington, D.C., with PA Consulting Group. “The deterrent aspect of the land-based ICBM is important because deterrents can be cheaper than all-out war.”

The earliest version of the Minuteman system was installed in the 1960s, and Boeing is the favorite to build the next iteration because it installed and maintains the Minuteman III system, according to Buckingham’s Safran.

“The issue is (Northrop is) basically not a missile manufacturer, but their legacy is they are a missile developer,” he said.

Safran also noted that Northrop’s TRW Inc. subsidiary helped engineer the nation’s first intercontinental ballistic missile system in the 1950s, but Northrop would need to bolster its missile manufacturing capabilities or outsource some of the work if it won the new contract.

“I think you’d have to assume there’d be decent chunks of the program that would be farmed out,” he added. “You’d have to think either Northrop would have to buy a company or develop it themselves.”

Northrop has beaten the odds-on favorite before, said Safran. Lockheed Martin was the favorite to win the B-2 stealth bomber contract from the Air Force because of its experience developing and manufacturing the nation’s first stealth attack aircraft, the F-117 Nighthawk, but in 1981 Northrop ultimately won due to a superior technology pitch, he said.

The missile system won’t likely impact the financials of its developer or subcontractors immediately, as it will take years before the military orders enter production. However, its long-term impact on the winning bidder would be substantial, according to PA consultant Wood.

“Obviously as technology advances and changes, there will be upgrades to the system,” he said. “This system will have to be supported as far out as 2075.”