Lockheed is a finalist for fighter Contract to build warplane could be largest in history

Boeing is also in running

$300 billion in work at stake

McDonnell Douglas is big loser

November 17, 1996|By Greg Schneider | Greg Schneider,SUN STAFF

The Pentagon has chosen Lockheed Martin Corp. of Bethesda and Boeing Co. of Seattle to compete for what could be the richest military contract of all time, the Joint Strike Fighter warplane, Defense Secretary William J. Perry said yesterday.

Military officials ignored a last-minute advertising and political blitz from troubled McDonnell Douglas Corp. of St. Louis, opting instead to put their faith in the world's biggest defense contractor, Lockheed Martin, and the world's biggest commercial airplane maker, Boeing.

"The end result when you rolled it all up was the best value to the government was embodied in these two proposals," said Rear Adm. Craig E. Steidle, the military's program director for the Joint Strike Fighter.

Boeing and Lockheed Martin will each get about $700 million to build prototypes of their proposals for the jet.

The Pentagon will chose one winner in 2001.

The program could be worth an estimated $300 billion over the next several decades.

The Joint Strike Fighter is intended to be an economical, standardized replacement for a wide variety of fighter planes now used by the Air Force, Navy, Marines and British Royal Navy.

Even though the roughly $40 million cost of each Joint Strike Fighter is significantly less than the cost of most current fighter planes, the prospect of delivering 3,000 jets to the armed forces makes the project's total value enormous.

While some politicians have questioned whether the nation can afford it, Pentagon officials insisted yesterday that the Joint Strike Fighter is no more expensive than simply continuing to build the multitude of aging planes it will replace.

Because the Joint Strike Fighter is thought to be the last fighter plane the military will order through the midpoint of the 21st century, the companies bidding for it had whipped up a lather of dire predictions that losing at all would mean being shut out of the warplane business.

Awaiting the word

At Lockheed Martin's Bethesda headquarters yesterday, about 20 executives, secretaries and other workers gathered to await word on the decision.

An expected phone call hadn't come by the time Perry began the noon news conference, so the workers watched C-SPAN with increasing anxiety as the secretary read a long preamble to his big announcement.

When the words "Lockheed Martin" finally crossed his lips, one executive said, the room erupted in cheers.

Later, the president of the company's Aeronautics Sector told reporters at a news conference that the joy of the victory was quickly overshadowed by the knowledge that the final decision on this project is yet to come.

"The game is not won by a long shot," James A. "Mickey" Blackwell Jr. said.

"It doesn't take long for you to sober up and get ready to go after Boeing."

Boeing, having not been the prime contractor on a fighter plane since World War II, has cooked up an eye-catching entry that features a single delta wing.

The company also took a simple approach to the trickiest aspect of the Joint Strike Fighter, which is to land and take off vertically for the Marine and Royal Navy versions.

Boeing opted to simply redirect main engine thrust.

Lockheed Martin, by contrast, proposed a giant fan in the middle of the plane for vertical lift.

Drawing on its experience building the super-advanced F-22 fighter and the reliable F-16, Lockheed Martin offered a distinctly conservative entry in the Joint Strike Fighter contest.

"I would call it low-risk," Blackwell said.

The Joint Strike Fighter is different from past warplane efforts, he pointed out: With the F-22, for example, the Air Force asked for the best technology imaginable at the best price possible.

Price is top priority

In the case of the Joint Strike Fighter, the priority was affordability first, technology second, he said.

Many industry analysts had handicapped the race with Boeing as the favorite for innovation and Lockheed Martin as the reliable counter-balance.

McDonnell Douglas, which had teamed itself with Northrop Grumman and British Aerospace, simply offered too many unanswered questions with its late-developing design.

"They spent so much effort trying to put together an unbeatable industry team that they distracted themselves from the task of putting together a design," said Bill Sweetman, who has chronicled the Joint Strike Fighter for Jane's International Defense Review.

After suffering a protracted labor strike over the summer and announcing this fall that it was abandoning its major commercial aircraft effort, McDonnell Douglas badly needed the win.

"It didn't turn out quite the way we expected it this morning, that's probably putting it mildly," Chief Executive Officer Harry Stone-cipher told the Reuters news service yesterday.

"This was clearly a surprise to us."

No shortage of work

But with more than a decade of work ahead of it producing the F/A-18E/F fighter plane for the Navy, McDonnell Douglas is not going to be crippled by the loss, analysts agreed.

"They still have quite a bit of business out there," said Mark Biagetti, vice president of the First Equity investment bank in Stamford, Conn.

Biagetti said one line of thinking held that McDonnell Douglas should have been one of the two finalists, though, simply because Boeing and Lockheed Martin are so big already and the nation needs to keep its industrial base diverse.

But Rear Admiral Dennis McGinn, director of air warfare for the Navy, said such an argument was not considered.

"There's an awful lot of work out there," McGinn said.

"I think that the predictions of loss of industrial base and the demise of any of these three superb companies was very, very premature."

Pub Date: 11/17/96

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