An Air Force request for proposal (RFP) for the next generation stealth bomber is about to hit the street. The contract is worth an estimated $55 billion.

Aerospace giants Lockheed Martin Corp. and Northrop Grumman – both of which have a major presence here in California – are in a dog fight for the federal contract. Lockheed Martin is teaming up with Boeing, which also has major operations in the Golden State.

However, the Legislature last week voted to grant Lockheed Martin a $420 million tax break to sweeten its bid to build 80 to 100 of the state-of-the-art long-range bombers.

“This tax credit is exactly what the aerospace industry needs to remain competitive for the next decade,” said Assemblyman Steve Fox, D-Palmdale, author of Assembly Bill 2389, which created the Aerospace Industry Tax Credit.

But Northrop Grumman, which was headquartered in Los Angeles until 2011 (when it moved to Northern Virginia), which remains the Golden State’s largest aerospace employer, strenuously disagreed with Fox.

The defense contractor said it was “extremely disappointed” the legislation fast-tracked by Fox and his fellow lawmakers to Gov. Jerry Brown’s desk – “a jam job,” Senate Appropriations Committee chairman Kevin de Leon, D-Los Angeles, criticized –  “favors only one aerospace company.”

Fox maintains the Legislature’s $420 million tax break to Lockheed Martin “will create and retain aerospace jobs in California.”

Indeed, the Bethesda, Maryland-headquartered Fortune 500 company said the gift from Sacramento will result in 1,100 California jobs (provided, of course, that it outbids Lockheed Martin). Some 750 of those jobs would be created, while 350 existing California jobs would be retained.

Even without a state tax break, said Tom Vice, president of Northrop Grumman Aerospace Services, his company would create 1,500 new jobs in Palmdale if it wins the Air Force contract.

Underbid

However, it is unlikely Northrop Grumman can beat out its competition when the $420 million its rival Lockheed Martin was gifted by from Legislature enables Lockheed Martin to underbid Northrop Grumman.

Meanwhile, the Legislature has tacitly acknowledged its unwise decision to favor one aerospace company over the other. Fox and his fellow lawmakers assured Northrop Grumman they will consider a tax break for the company as soon as they return to Sacramento from their summer recess.

Lawmakers can debate the prudence of bestowing as much as $840 million in tax subsidies to two of the nation’s largest aerospace companies to bid on an Air Force contract.

But all can agree that, if the state is going to award tax credits, it should not pick winners and losers among competing companies.

Expense

The proposed bomber has been criticized for its high cost, as much as $550 million per plane before the usual cost overruns. DoD Buzz.com reported in April:

“The figure refers to the estimated unit production cost of the Long-Range Strike Bomber, or LRS-B, and doesn’t include research and development expenses, which are likely to be significant. [Undersecretary of the Air Force Eric] Fanning declined to specify what the latter might be, only that they wouldn’t ‘double’ the overall cost of the plane.”

So the Air Force admits the final cost could soar to $1 billion per copy.

It’s possible the new bomber could be canceled in favor of keeping the aging B-2 Spirit, which first became operational in 1997. In June, the B-2 was granted funds for upgrades to keep it flying until 2058.

And in May, the even older B-52 bombers, which flew their first missions in 1957, were given their first new communications system since the 1960s.

The home team, a partnership between Boeing and Lockheed Martin, is asking California lawmakers to approve $420 million in corporate tax breaks over 15 years that would apply exclusively to “a major first-tier subcontractor awarded a subcontract to manufacture property for ultimate use in or as a component of a new advanced strategic aircraft for the United States Air Force.” A vote in Legislature could come today.

If that language sounds vague yet oddly specific, it’s because Assembly Bill 2389 was drafted at the behest of Gov. Jerry Brown to help Boeing and Lockheed Martin’s joint effort to win a contract to build the next-generation of stealth bombers. The project is so secretive that state lawmakers are rushing to pass the bill because even the timeline can’t be disclosed. Defense industry experts say that lawmakers need to act before the summer recess.

As the Los Angeles Times’ Marc Lifsher reports, “Although the program isn’t specifically named, it is clear to aerospace industry insiders that it’s a reference to the military’s hotly contested competition to build as many as 100 new nuclear-capable bombers.”

The bill, which passed the Senate Governance and Finance Committee on Tuesday, would give Lockheed Martin and Boeing the advantage in the bidding. It’s written so narrowly that even other aerospace companies wouldn’t qualify. If Boeing and Lockheed Martin land the project, it could lead to thousands of quality jobs in California.

“State leaders recognize that aerospace is a critical industry to retain and grow well-paying jobs for Californians, especially highly skilled engineering and technical jobs,” Gordon Johndroe, a spokesman for Lockheed said.

AB2389: No jobs, no tax credit

According to the Legislature’s committee analysis, the special corporate tax breaks are contingent on the jobs coming to California and the federal contract going to Boeing and Lockheed Martin.

“While AB2389 requires a significant leap of faith,” the State Senate’s committee analysis of the bill observed, “the taxpayer doesn’t claim any credits unless they win the subcontract, and employ individuals in the state to perform the subcontract.”

The entire deal has understandably drawn the ire of Boeing and Lockheed Martin’s biggest competitor for the contract, Northrop Grumman, which says California is essentially picking sides.

“Legislation that favors only one company is detrimental to California’s future aerospace industry,” Northrop spokesman Tim Paynter wrote in an emailed statement to the Times.

That message is part of a last minute lobbying effort by Northrup to gum up the works for a bill that passed the Assembly on a 72 to 2 vote. State Senators are also quibbling with the governor over how to pay for the corporate welfare. According to the Sacramento Bee, Senate leaders want any tax credits to come from “California Competes,” an already-established fund to subsidize investments in businesses that create jobs.

Northrup “cements our strong partnership with Florida”

But there’s one big question that no one in Sacramento or the media has bothered to ask: Has Northrup Grumman already made its taxpayer-subsidized home in Florida?

Earlier this year, when Northrop announced its own deal with the state of Florida, the company promised that the agreement “further cements our strong partnership with Florida.”

“We’re extremely appreciative of the support we’ve received from the state of Florida and the local community in our continuing effort to drive our affordability and competitive position,” Tom Vice, Northrop Grumman corporate vice president and president, Aerospace Systems, said in a May 2014 press release, titled, “Governor Scott announces major Northrop Grumman expansion in Brevard County.”

He added, “This expansion further cements our strong partnership with Florida, and will greatly benefit our employees, customers and shareholders.”

To which Scott gleefully replied, “This is a huge victory for families on the Space Coast. We are excited that Northrop Grumman has decided to expand here in Florida, which could bring up to 1,800 new jobs to Brevard County.”

Florida’s deal with Northrop included reimbursable grants for employee training funded through Enterprise Florida, its public-private partnership program to lure investment to the Sunshine State.

“This highly competitive project was more than two years in the making, and we are excited to once again partner with Northrop Grumman to bring jobs to Florida,” Secretary of Commerce and president & CEO of Enterprise Florida, Gray Swoope, said in the May press release.

“The year of big corporate subsidies”

That makes Northrup’s recent concerns about California’s legislation and its detrimental effects on “California’s future aerospace industry” seem disingenuous.

Regardless of who wins, the whole thing stinks for taxpayers and believers in free market principles. While the California Legislature ponders new regulations on Uber and other ride-sharing companies of the new economy, it’s considering sweetheart deals for defense contractors from the old economy. Other industries will no doubt copy the model and play state governments against each other to provide them with more corporate welfare.

“This appears to be the year for big corporate subsidies,” Sacramento Bee columnist Dan Walters astutely notes. “A big tax break for the movie industry is moving through the Capitol, and Brown and legislators are working on ‘incentives’ to persuade Tesla tycoon Elon Musk to locate a big battery factory in the state.”

Both states are in the corporate welfare business. It just comes down to which state can offer more “incentives” to get the jobs. Which team are you rooting for: the Florida Northrup Grummans or the California Boeing Lockheed Martins?