Lockheed Martin Corp. yesterday won the contest for what could be the biggest Pentagon program ever, beating out Boeing Co. for the $200 billion effort to design and build nearly 3,000 Joint Strike Fighter warplanes for the U.S. Air Force, Navy and Marines and the British Royal Navy.
Air Force Secretary James G. Roche, who announced the award, said Lockheed Martin's design was the "clear winner" because it had more strengths, fewer weaknesses and less risk.
As the last manned fighter plane on the Pentagon's drawing boards, the Joint Strike Fighter would replace a number of current aircraft with one that can fly at supersonic speeds, maneuver against other fighter planes, hit ground targets, evade radar and even -- in one version -- hover.
Another 3,000 sales are possible to overseas military forces, making the Joint Strike Fighter potentially the world's dominant all-purpose fighter plane over the next half-century, if it can survive a long gantlet of politics and competition for funding.
The victory means that Lockheed Martin "owns the manned-fighter airplane business," said Byron Callan, a defense industry analyst with Merrill Lynch & Co. in New York.
Members of Congress and officials at Boeing lobbied hard in advance of the announcement to have the work split between the two competitors, regardless of whose design won. But Pentagon officials said they do not plan to require any work sharing.
"It seemed somewhat unfair to tell the winner, 'You now must absorb the loser,' " said E. C. "Pete" Aldridge Jr., undersecretary of defense for acquisitions and technology. "We're opposed to forcing the contractors into a merged plan."
Vance D. Coffman, chairman and chief executive of Lockheed Martin, said in an interview that he has no immediate plans to bring Boeing on board, but he left the door open.
"That's not a decision we can make right now," Coffman said, adding that he wants to consult first with Pentagon decision makers, probably next week.
Boeing Chairman Phil Condit said in an interview that he will not challenge the award and that he does not know whether the company can expect a piece of the work. But he said he expects the political debate over work sharing to continue. "The issue is an industrial-base issue," Condit said.
Coffman said the victory "feels wonderful. . . . It means a solid future in aeronautics."
While analysts and insiders had been saying for weeks that Lockheed Martin was the favorite, company officials were anxious about the announcement. A loss could have put the company out of the fighter plane business by 2012, when orders for F-16s and F-22s will have run their course, and jeopardized about 11,000 jobs at the company's fighter plane factory in Fort Worth.
Coffman got word of the decision about 10 minutes before it was announced at 4:30 p.m. at a Pentagon news conference. Sitting in his office in Bethesda, joined by company President Robert J. Stevens and other executives, Coffman got a call from Roche, who dragged out the tension by saying, "I suspect you know what this is about," before telling him that Lockheed Martin had "won and won convincingly."
In Fort Worth, hundreds of workers had come in on their day off to watch a closed-circuit broadcast of the Pentagon news conference. All was almost silent until Roche made the announcement, program spokesman John Smith said, and then: "It was a hoot. I mean, jeez, it was like a Super Bowl touchdown type of thing -- hands in the air, hugging, patting, the whole thing. There was a wave all the way around all at once."
Coffman put in a call to Kent Kresa, the chairman of Northrop Grumman, which has a 20 percent share of the team's work on the Joint Strike Fighter. Kresa, who was on a corporate jet heading back to California from his company's shipyard in Mississippi, said he was "thrilled . . . total elation."
Northrop Grumman expects to add about 400 jobs to its electronics plant outside Baltimore during the initial phases of the contract, along with about 1,200 jobs at facilities in California.
Lockheed Martin has said it will add about 4,500 positions in Fort Worth at the peak of development.
For all the celebrating, the Joint Strike Fighter still has a hard road to travel before its scheduled service date of 2008 and through its final planned production run in 2040.
"This really should be considered a 40-year marathon, and we're nowhere near the finish line," said Jon Kutler, an industry analyst and head of Quarterdeck Investment Partners Inc. in Los Angeles.
The General Accounting Office, the investigative arm of Congress, has repeatedly warned that the program's technology is not sufficiently developed and that the program should be slowed down.
In addition, the sheer size of the program will be a liability as the various services look to fund other weapons systems. For instance, the Air Force, whose projected buy of more than 1,700 planes makes it by far the largest customer for the Joint Strike Fighter, openly rates the F-22 air-to-air fighter as a more important program.
Arms control advocates oppose the idea of selling the advanced plane to foreign military services because it could amount to arming possible enemies. "We do have concerns about the United States getting in an arms race with itself," said Luke Warren of the Council for a Livable World.
Finally, Lockheed Martin and its team will have the difficult task of holding the program to tight cost requirements. The Pentagon wants the Joint Strike Fighter to be a relatively cheap plane but is still demanding extraordinary capabilities from it.
Because of those challenges, Kutler said, Lockheed Martin will almost certainly have to find a way to bring Boeing on board. The two companies already work together on the F-22, with Boeing building a third of the plane in Seattle.
"That will enhance the ability to make sure this program goes forward from a political base standpoint, and will probably pay dividends over and above the work share that has to be given to Boeing," Kutler said.
Most analysts agree, though, that Boeing is better able to absorb the loss than Lockheed Martin would have been, despite the 30,000 jobs Boeing plans to cut from its commercial aircraft side because of the current slowdown in air travel.
"It's a larger, more diversified company," analyst Callan said.
Condit said the loss highlights the very reason Boeing has ventured into space, electronics and even online services in recent years.
"We don't want to be dependent on any one thing," Condit said, noting that the military side of the company expects new business building C-17 transport planes and tankers and surveillance planes. "Clearly [the Joint Strike Fighter] is a disappointment. But then we take that, learn what we can and move on."
Lockheed Martin's Joint Strike Fighter, with multiple capabilities, is intended to replace several current aircraft.
