There are a lot of very old commercial derivatives in the military world out there, e.g. E-3 AWACS (on a Boeing 707 frame) or OC/RC-135 on a C-135 frame. There is a need for replacement and Boeing thinks the Boeing B737 is the best choice to do so.
The B737 is one of the largest commercial fleet worldwide, with 9,000+ in operation and another 4,000+ on order. There are 50+ airframes built each month. So far 180+ B737 derivatives are delivered for the Military Forces. Using the B737 airframe give you a minimize development risk and cost. It provides a great sensor/antenna size and placement.
And it enables future growth capabilities as historical 20-40% growth for DoD commercial derivatives programmes is already planned in. It offer a reduced militarized aircraft performance impacts with a significantly less range and altitude impact penalty and less airframe/engine stress with a higher mission payload and range. According to Boeing the commercial B737 has a availability of 99% (MIL 95%) with a 80% less depot time compared to business jets, also used for those purposes. The B737 is designed for high tempo and long life (30+ Years). Maintenance sites (400+ B737 service centers, 1,500+ airports with B737 operations) and spare parts are easily available around the world. That means lower (overall Operating) costs, especially when fuel costs are part of the calculation.
One of the main counterparts at the moment (on the US market) is the Gulfstream G550 for ISR-/C2-capabilities. The only official program is the “Joint Stars” (for the E-8 JSTARS on B707 produced in 1967) in the US, contracts are expected by the end of the year. Next a replacement of the RC-135/W RIVET Joint should come up down the timeline. But also smaller Airbus frames are in mind in other parts of the world. But also the NATO E-3 stationed in Geilenkirchen, Germany have to get a life time extension and upgrade or being replaced, or the OC-135 Open Skies.
Available are the “normal” B737 NG (New Generation), but also the B737MAX. According to Boeing customers are looking at a transition to the MAX, maybe with a mixed fleet for some while. Boeing could even partner with other companies, just delivering the platform and partners doing the integration and sensors.
Boeing is not only using the B737, but also the B767 for military derivatives, e.g. for the tanker role or the AWACS of Japan.