The $75 Billion Question: Whose Fighter Will Win?Eric Schine
Last Sept. 29, Lockheed Corp. Chairman Daniel M. Tellep waited anxiously on the reviewing stand in Palmdale, Calif., near Edwards Air Force Base. With him were two Air Force generals. On the desert runway, Lockheed's new $1 billion YF-22 fighter had been motionless for half an hour. More minutes ticked by with everyone waiting in "pure agony," recalls Sherman N. Mullin, a top Lockheed executive who was on the stand. Finally, glitches in the plane's data communications system were fixed. Test pilot Dave Ferguson headed the YF-22 down the runway, allowing Tellep a respite from making small talk with the generals.
It was just another day in a five-year battle between Lockheed and Northrop Corp. over the last huge weapons contract of this century. The prize is $75 billion to $100 billion in orders over the next 20 years for the Advanced Tactical Fighter, the successor to the Air Force's F-15 long-range fighter. Lockheed, its partners Boeing and General Dynamics, and dozens of subcontractors have spent $1 billion to develop their prototype, the YF-22. Northrop, its main partner, McDonnell Douglas Corp., and their subcontractors have spent a like amount on their YF-23. During test flights, each company's pilots and crews worked side by side, separated only by a metal partition at their Edwards hangar. Each time one plane achieved a milestone--or courted disaster--the rival team was there to watch. Now, the moment of truth approaches. In late April, the Air Force will make its choice--and each company's future will be altered forever.
Both contractors need the ATF, but Northrop needs it most. More than 50% of its revenues come from the $865 million-a-copy B-2 bomber. The Pentagon has already cut that program nearly in half, to 75 planes, and Congress has authorized only 15 so far. If that's the limit, as some analysts predict, Northrop eventually could lose perhaps half its annual revenues of $5.5 billion.
The ATF is Northrop's best hope for offsetting this. It might produce $2.5 billion in annual revenue by the late 1990s, says analyst Lawrence M. Harris of Kemper Securities Group. Winning could also polish the image mf Northrop, which, like many military contractors, was sullied by defense-fraud scandals and cost overruns in the 1980s. "A win would amount to an Air Force endorsement that Northrop's problems are behind it," says Harris. A loss would be wrenching. Without the ATF, Northrop has few prospects for growth, though it contends that other defense sales, plus B-2 cancellation fees, would keep it in the black.
Lockheed is less vulnerable: "A loss is not about to break the corporation," says Tellep. Having shared more risk with its partners, Lockheed has less riding on a victory--$30 billion in new revenues, analysts say, and $2 billion in profits over the contract. Still, Lockheed needs a win to rejuvenate its aircraft business, which was stung in 1990 by cancellation of the $5 billion P-7A antisubmarine plane after a cost dispute with the Navy. With new work scarce, Lockheed's main aircraft plant in Marietta, Ga., has been nearly idle for two years.
NO MILK RUN. Given the stakes, the fly-off between the two planes at Edwards, which started last August, has been one of the most intense ever. It took more than 5,000 engineers, computer experts, and technicians to get two prototypes of each plane ready. The test flights have been fraught with peril as each team has pushed the edge of the envelope. Early on, wind blew over a hangar partition, ripping a large piece off the YF-23's tail; Northrop hurriedly patched the damage. Later, Northrop averted an explosion when technicians discovered a speck of rubber clogging a 1/8-inch gauge linked to the fuel tanks, which had caused the tanks to become overpressurized. Lockheed's YF-22 pilots, meanwhile, battled landing gear failures and an unplanned engine shutdown on one flight.
The drive to perform stems from the requirements the Air Force set for the plane. From the moment design work started in the early 1980s, the Pentagon wanted the hottest fighter ever. In tests, the prototypes went as fast as Mach 2 and proved they could cruise at supersonic speeds far longer than the F-15 did as it streaked over Iraq. Yet, the Air Force wanted the ATF to be as undetectable by radar as the first stealth plane, Lockheed's relatively pokey F-117A. That called for features such as engines that could maintain Mach-plus without using telltale afterburners. The fighter also had to have a powerful computer system to manage its hypersensitive controls and help pilots fire an arsenal of supersmart missiles. In 1986, Northrop and Lockheed prevailed over five other bidders.
As the project developed, the companies pursued divergent designs. Details are classified, but some have leaked out. In Northrop's latest version, 50% of the parts in the fuselage and frame will be made of composite plastics, compared with Lockheed's 35%. That could make Northrop's plane lighter, saving fuel and boosting range. Originally, Northrop envisioned less use of composites. But engineers soon found that mixing aluminum and plastic parts would cause problems as the two materials reacted differently to temperature. The solution presented a huge technological hurdle: Top brass feared that the expense involved in using more composites "would endanger the financial health of Northrop's aircraft division," says Martin J. McLaughlin, manager of manufacturing technology. Then, in an engineering coup, Northrop came up with tooling that cuts the cost of making such parts.
BUG KILLERS. Lockheed, meanwhile, was having big problems. From the start, it, too, struggled to make its plane lighter. And the YF-22 had too much drag. Two years into the process, Lockheed had to redesign the prototype's tail to smooth out its aerodynamics. That delayed assembly for more than six months and required scrapping millions of dollars in parts. But the end result, Lockheed claimed, would be a plane superior to any existing one in dogfights, since it could nearly stop in its tracks and head in a new direction without the spin or loss of control that plagues most fighters in such situations. To give the YF-22 greater maneuverability, Lockheed also designed an exhaust nozzle that swivels on its General Electric Co. and Pratt & Whitney engines, to help the plane turn quickly.
Putting theory into practice was tense, however. Software writers at General Dynamics and Boeing worked feverishly to de-bug the YF-22's flight control and avionics systems--which Lockheed's Mullin claims have supercomputer-like processing power. At first, Boeing engineers couldn't get the major systems--including those that control weapons and radar--to work at the same time. To fix that, Boeing's 300-member task force did six months of test flights over Seattle in a 757 chock full of computers and other equipment. This finally cleared up glitches last June--three months before the plane's test flights started. Lockheed, meanwhile, worked through the 1989 Christmas holidays on its redesign so it could start assembly in January, 1990.
As Lockheed stumbled, Northrop surged ahead. Test pilot Paul Metz simulated the YF-23's flight-control software in 1987 using an Atari joystick and an inexpensive TV monitor. Then, Northrop engineers developed a surface material that could withstand the 2,000-degree exhaust of the plane's giant engines. This made the plane stealthier, since the exhaust could be channeled over its upper surface and hidden from ground radar. While Lockheed was still building its plane, Northrop rolled out its version on June 22. Employees cheered when Northrop Chairman Kent Kresa delivered an upbeat speech to a crowd that included Air Force brass.
Kresa's confidence soon gave way to concern. The YF-23's first flight was set for early July, but nagging problems such as overheating of hydraulic and other systems kept it grounded. Metz finally took it up on Aug. 27. Paul Tackabury, head of Northrop's test flight program, called his Lockheed counterpart, an old friend, to rub it in: "Hear any sonic booms lately?" In truth, though, because of the delays, Lockheed was by then just 30 days behind.
Soon, moreover, Lockheed dazzled the Air Force. Its YF-22 fired AMRAAM and Sidewinder missiles that dropped out of the plane's belly--a must for stealth, since radar picks up underwing weapons. That's quite a feat, especially at supersonic speed, because missile exhausts can disrupt airflow to the plane's engines. Northrop's plane opened its weapons bays at times during test runs, but didn't fire missiles. Lockheed also flew 74 test sorties, vs. just 50 for Northrop.
It's hard to say who will win. Northrop's plane may be stealthier, experts say. Given stealth's success in the gulf, that's a plus. Still, Lockheed may have a political edge. It would build its plane in the backyard of Senator Sam Nunn (D-Ga.), chairman of the Senate Armed Services Committee. Northrop reminds California's congressional delegation that a victory for it would keep jobs at home.
After all the ups and downs, there may yet be a hitch. The Air Force will soon release a report on extending the lives of the F-15 and F-16. If Congress does this to save money, ATF output, now set for 1996, could wait until the end of the decade. But that won't stop the Pentagon from picking a winner this spring--and symbolically ending an era of unrestrained spending on defense.