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Lockheed Martin Wins Contract for New Fighter
Lockheed Martin Corp. beat out Boeing Co. to build the stealthy, versatile next generation of fighter jets in what promises to be the richest defense contract ever, the US Defense Department said on Friday.
First deliveries of the jet, to be known as the F-35, will begin in 2008 with six aircraft to the US Air Force and four to the Marines, officials said.
The US Navy and Britain will take later deliveries in a program expected to run decades at an estimated contract value of well over $200 billion. Many other nations have also expressed an interest in the new fighter, possibly spurring further orders that could double the value of the program.
"On the basis of the strength, weaknesses and degrees of risk of the program, it is our conclusion, joined in by our colleagues from the United Kingdom, that the Lockheed Martin team is the winner of the Joint Strike Fighter program on a best-value basis," US Air Force Secretary James Roche told a news conference at the Pentagon.
Under the announced contract, Lockheed will get $19 billion for the production demonstration phase of the fighter's development. Engine maker Pratt & Whitney, a unit of United Technologies Corp., will also get funding. "About $4 billion -- 4.8 I believe is the number," said Aldridge.
There had been speculation that the Department at the last moment might split the contract between Lockheed Martin and Boeing, but officials said they had decided against this.
"The winner-take-all strategy was the right approach," said Edward Aldridge, under secretary of defense for acquisition.
Boeing said the decision was "disappointing" but it still hoped to have a role in the fighter. Its stock fell to $35.50 a share in after-hours electronic trading on Instinet after closing at $37.68 on the New York Stock Exchange ahead of the announcement.
Meanwhile, shares of Lockheed Martin rose to $52 after hours, up from $49.92 at the New York close.
The Joint Strike Fighter (JSF) is to be a family of high-performance, low-cost "stealth" aircraft, designed to evade radar and to replace Lockheed's F-16, the world's best-selling fighter, and a host of other aging warplanes.
The United States and Britain, which has committed $2 billion of its own funds to development, plan to buy a combined total of 3,002 planes for their air forces, navies and the Marines in the case of the United States.
Lockheed Martin was widely thought to have an edge ahead of Friday's winner-take-all decision. Some experts predict the loser will exit the fighter business.
"I would not characterize it as a squeaker at all nor would I say by a mile," said the Air Force's Roche of the selection process.
The JSF concept is to build a highly modular, low-cost fighter-bomber for the Air Force, to supplement its top-of-the line Lockheed-built F-22 fighter.
A strengthened JSF version would be made for carrier landings for the Navy. Yet another would be capable of short take-off and hovering before landing for the Marines and the British.
The Congressional Budget Office puts the total program cost at more than $200 billion in 1994 dollars for a projected 3,002 aircraft. Of the total, the Air Force plans to buy 1,763, the Navy, 480, Marine Corps, 609, the British Royal Air Force, 90, and the Royal Navy, 60.
Each team had a long list of subcontractors, with 18 working with both teams, to supply avionics, special materials and other subsystems.
Denmark, Norway, the Netherlands, Canada, Italy, Israel, Turkey and Singapore have signed on to greater or lesser extent with an eye toward early purchase options.
Australia, France, Germany, Greece, Spain and Sweden are also "known to have expressed interest," Merrill Lynch analyst Byron Callan said in a report this week.
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