WASHINGTON — Lockheed Martin was tapped by the Pentagon on Friday to design and build as many as 3,000 jet fighters that will form a key leg of U.S. military strength over future decades, dealing a serious blow to rival Boeing Co.
The award, which could be the biggest military contract ever at a projected $200 billion, culminates an intense four-year battle between two of the world's largest defense contractors.
Variants of the plane will be supplied to the Air Force, Navy and Marine Corps, as well as Britain's Royal Air Force and Royal Navy. Potential foreign sales are estimated at an additional $200 billion.
The program also carries enormous economic consequences across the U.S., creating thousands of jobs at Lockheed's plant in Fort Worth as well as at major subcontractors in Southern California. Boeing acknowledged Friday that it may have to lay off employees at its military aircraft unit, headquartered in St. Louis.
Versions of the Lockheed jet, equipped with state-of-the-art radar-evading technology, can take off on short runways, reach supersonic speed and then land vertically--a set of capabilities that no current fighter aircraft has.
It eventually will replace the aging fleet of U.S. fighter jets, including the Air Force's F-16, the Navy's F/A-18 and the Marine Corps' AV-8B, and it will be the only new aircraft to enter production in the next decade.
"This really is the contract of the millennium," said Christopher Hellman, analyst with the Center for Defense Information. "Nothing has or will come close."
Lockheed will receive an initial $19-billion contract to build 21 prototype aircraft over the next four years, during what is termed the engineering and manufacturing development phase. Full-scale production will not begin until 2008, which will require funding approval from Congress. A separate $4-billion contract was awarded to Pratt & Whitney to develop the engines for the aircraft.
Because of its size and with no other new fighter program planned for the foreseeable future, analysts believe the contract will set the agenda for the aerospace industry for several decades.
"This program is so big that it rearranges the entire landscape in the military aircraft business," said Loren Thompson, managing director of the Lexington Institute, an Arlington, Va., defense policy think tank. "Lockheed will dominate the sector, and Boeing will become an afterthought."
Pentagon officials said they picked Lockheed's contender, the X-35, over Boeing's X-32 because it was a "clear winner."
"I would not characterize it [the race] as a squeaker at all, nor would I say by a mile," said Secretary of the Air Force Jim Roche, who made the final decision. "It became clear as we went through this process that the case built more and more strongly that the Lockheed Martin team was a clear winner from the point of view of best value for the government."
Though Lockheed plans to assemble the plane, to be known as the F-35, in Fort Worth, Southern California aerospace companies are heavily tied to its design and production.
Amid all the layoff announcements, particularly among technology firms, "this will provide a nice boost," said Jack Kyser, chief economist for the Los Angeles County Economic Development Corp.
The competing planes were developed at Palmdale's Air Force Plant 42, and Lockheed and Boeing conducted concept demonstration flights there and at Edwards Air Force Base over the last year.
"It's the largest purchase of fighter aircraft ever," said Rep. Jerry Lewis (R-Redlands). "And it's going to have a very positive impact on the California economy, particularly among the state's aerospace subcontractors."
Rep. Howard P. "Buck" McKeon (R-Santa Clarita), whose northern Los Angeles County district is home to the Lockheed's famed Skunk Works where the X-35 was developed, said the selection of the Lockheed team will mean more jobs for California than would have been created if Boeing had won the contract.
"We knew there would be winners and losers," McKeon said.
Those jobs will include engineers, designers and craftspeople, who will design software, engineer new stealth technologies and fabricate parts for the aircraft.
Century City-based Northrop Grumman Corp. will be responsible for 20% of the work on the aircraft, meaning its work has a projected value of $40 billion, which would be a huge program in the defense industry by almost any standard.
Northrop said it will need to hire 1,600 people in California, of which 1,200 will be based in the Southland, over the next 18 months. Northrop, which will build the center section of the fuselage and the weapons bay, as well as developing computer software and other electronic equipment, will locate the jobs in El Segundo, Hawthorne or Palmdale.
"It's a fabulous win," Northrop Chairman Kent Kresa said. "What can I say, it's the largest defense program ever. We're delighted."