Across the defense industry, the only sound was the discreet click of fingernails being bitten. The declaring the winner of a “flyoff” competition between two prototype advanced tactical fighter planes. Finally, Air Force Secretary Donald Rice announced it was the YF-22 Lightning 2, to be produced by Lockheed, Boeing and General Dynamics. In Burbank, Calif., where several hundred members of the Lockheed team had gathered to watch the televised announcement, the room exploded. “People were hugging, crying. No one heard another word of the speech for five or 10 minutes,” says Lockheed spokesman Richard Stadler, who recalls hugging the caterer.
In Hawthorne, Calif., Northrop CEO Kent Kresa had only bad news for staffers at the Product Development Center, where the YF-23 was designed with McDonnell Douglas. His words were met with silence, then groans. “Five years in the making,” muses Northrop spokesman Tony Cantafio, “and it was over in five minutes.”
The stakes don’t get much higher than this. The winner stands to make 648 planes for $93 billion or more; the loser would eat much of the $1 billion-plus development costs, not to mention a healthy portion of crow (box). But while the workers worried, among defense lobbyists and Capitol Hill junkies the outcome was never in doubt. Though critics say the new plane, a replacement for the F-15 Eagle, isn’t needed–and still faces eventual budget battles in Congress–the flyoff marks one of the last major defense contracts up for grabs through the end of the century.
Either plane gave the Air Force what it had asked for. Said Rice, “We were dealing with shades of differences.” Both incorporated “stealth” radar-evading technology, and each could “supercruise”: their powerful engines can fly at about twice the speed of sound without resorting to afterburners, which gulp fuel and leave a bright radar signature. Compared with present fighters, the ATF’s longer range, greater maneuverability and souped-up avionics package could let pilots engage enemy planes from farther away, giving its pilots “first look and first kill,” says Rice. Dogfights could practically become a tactic of the past.
Why did Lockheed win? Military sources and analysts say Lockheed put on the better show. The company made its prototype more like a finished product; says Lockheed’s Stadler, “We were offering proof, not promises.” While Northrop used an F-15 cockpit, Lockheed started anew. Northrop never tested its missile-deployment systems; Lockheed successfully fired some missiles. “We flew more flights and we froze our technology later,” Stadler says. “Risk reduction is the hot button these days, and you have to prove what you can do.”
Lockheed had something else on its side: trust. The company shone in the Persian Gulf War, thanks to its F-117A stealth fighter. Rice noted that the Lockheed team’s proposal “offers greater capability to execute this program successfully”–a polite way of saying that the Air Force wasn’t confident the Northrop-McDonnell Douglas team could do the job without giving the service headaches. Northrop has faced investigations of its billing procedures for the B-2 bomber and its management of the MX program, both of which have been in constant danger of cancellation by a hostile Congress. McDonnell Douglas had also felt some heat. Rice has said the company may be as much as $900 million over budget on the C-17 transport plane, and Defense Secretary Dick Cheney had already pulled the plug on McDonnell Douglas’s A-12 attack plane for the Navy.
Lockheed also had the best connections. Rice insisted that the selection had been free of strong-arm lobbying: “I did not receive any pressure or inquiries or suggestions about it from anywhere above my pay grade. I didn’t even get significant pressure from members of Congress, if you can believe that.” In fact, both teams stuck to performance statistics and test results instead of lavish parties and weekend retreats. Still, the clout of the Lockheed team was obvious. When appropriations time rolls around, the Air Force will need friends who can get the plane off the Beltway, not just the runway. The YF-22 had very good friends. Georgia Sen. Sam Nunn is chairman of the Senate Armed Services Committee, and Lockheed deftly announced last year that it would build its ATF in Marietta. Sen. Lloyd Bentsen of Texas (home of General Dynamics’ plane works) chairs the Finance Committee, and House Speaker Thomas Foley hails from Boeing’s home state, Washing-ton. California-based Northrop and St. Louis-based McDonnell Douglas did not have such powerful champions. That made the Air Force’s choice simple, says Prudential Securities analyst Paul Nisbet, who preferred the Northrop fighter: “Better to choose a damn good airplane that you could fund than a better airplane that you can’t.”
It is an expensive victory; Lockheed won’t make back its investment for years. Despite the team’s clout, the future of the ATF still isn’t completely secure. America could be in for a dose of sticker shock as inflation sends the plane’s cost over $100 million apiece. Already, skeptics say the pricey fighter might be unnecessary–and could weaken the military. A Congressional Budget Office study out last week concluded that severe cutbacks could lead to a scaled-back Air Force with a third of the tactical planes of today’s fleet, which “would probably be unable to carry out future missions such as those required in the Persian Gulf War.” Rice dismissed this worst-case scenario as unrealistically gloomy. But with a diminished Soviet threat and a growing budget threat, the Air Force is sure to feel a squeeze. For the Lightning 2, the fiercest battles ahead won’t be fought in the air.
If it was an act, it was a very good one. Thomas Rooney, director of the ATF program for Northrop, was ebullient as he made the rounds of the press shortly before the Air Force chose the rival fighter; Rooney and a public-relations aide passed out YF-23 tie tacks and bragged about the stealthy plane.
Those pins are collector’s items now. But what happens to Northrop? Two thirds of its 600 ATF workers will soon be laid off. The southern California airplane maker still has an orders backlog of $6.5 billion, but “it’s pretty serious,” says analyst Reed Gardiner of Price Waterhouse Southern California. “They’re down to the B-2 … If to balance the budget it’s a choice between raising taxes or eliminating the B-2, it’s easy to see Congress eliminating defense programs.” Immediately after the ATF announcement, partner McDonnell Douglas announced that it would lay off 500 employees by the end of the year. It has seen programs like its A-12 plane canceled, though it still has the popular F-15 Eagle as well as the F/A-18 Hornet and C-17 transport plane. Last Friday the Pentagon announced an order for 210 F/A-18 Hornets.
Does the Lockheed choice signal a Pentagon shift? Future tight budgets mean “they’re going to go with the strongest performers,” says Gordon Adams of the Defense Budget Project; Air Force Secretary Donald Rice even spoke of “market forces” at the ATF announcement. Don’t expect free-market miracles, though. Old hands see crafty Pentagon logic in the Lockheed pick. Northrop’s B-2, they say, is safer now because killing it would kill Northrop, too; Lockheed partner General Dynamics, on the other hand, needs a bailout because it also worked on the canceled A-12 and the Air Force is due to stop buying its F-16s in 1993.
Northrop’s two prototypes sit in storage at Edwards Air Force Base and might never fly again. The jaguar-sleek curves could someday see production, perhaps as a next-generation Navy fighter. If not, Northrop has lost more than a contract. Once the company shuts down the ATF program, it could be prohibitively expensive to build another one.
