In This Dogfight, Boeing's Gutsy Maneuver Paid Off

How its faith in a risky design won it a shot at a huge contract

Sometimes a gutsy gamble pays off. Four years ago, Boeing Co. secluded 15 engineers at its military aircraft development office in Seattle, where they scratched their heads trying to come up with a proposal for the next century's fighter jet. Within just six weeks, they whipped up a jet design with an unusual modular wing, a front-mounted engine, and stealth capabilities. Unfortunately, in early 1993, the Defense Dept. rejected the research proposal as too risky. But Boeing thought the approach had merit and continued to pump research dollars into it anyway.

On Nov. 16, Boeing's faith was redeemed when that same basic design was chosen by the Pentagon as a finalist in the competition to build the Joint Strike Fighter, the proposed standard for fighter jets in the 21st century. The other finalist is Lockheed Martin Corp., which took a conventional, low-risk approach with its JSF design. McDonnell Douglas Corp.'s more middle-of-the-road design was the loser.

Boeing's saving grace: From the get-go, its engineers tried to slash costs as well as boost performance. For instance, they adapted many of the computer-aided design processes used on commercial planes. "Early on, it was judged a high risk. But we have continually made refinements, conducted 12,000 hours of testing, and are really comfortable with the design," says Mickey O. Michellich, JSF program manager.

The win shows how Boeing--in contrast to many of its rivals--has been able to develop synergies between its civilian and defense businesses. It was the company's second recent big defense success: On Nov. 12, it won a $1.1 billion contract for an airborne laser system to be mounted on a 747. Just as important, benefits are flowing from Boeing's defense to its civilian business. On Nov. 18, it and partner Textron Inc. announced that they plan to develop a commercial version of their tilt-rotor military helicopter.

BIG ENCHILADA. The fighter competition, however, is the big enchilada. Assuming defense spending doesn't dry up too much, the winner could be the Pentagon's main supplier of military fighters for decades to come. Boeing and Lockheed now have four years to prove out their respective designs. Then the Pentagon will chose one winner, which will start producing 3,000 fighter jets in 2008. The contract's estimated value: $100 billion for domestic forces alone. "Boeing's approach is truly innovative and will keep costs down," says Paul H. Nisbet, an aerospace analyst with JSA Research Inc. in Newport, R.I. "It has a good chance of beating the more conventional design of Lockheed."

Lockheed's design uses many elements of the F-22, a bigger fighter the defense giant is developing. It has conventional wings and fuselage. Boeing's fighter jet, by contrast, has one composite wing that blends into the fuselage, creating what is known as a Delta shape. Different versions are being developed for each service branch. On the Marines' version, one set of nozzles in the plane's center can point downward and vertically lift the jet off a carrier. Once liftoff is completed, the nozzles retract. The plane is designed to reach supersonic speed.

But the competition may ultimately be won on cost. The Pentagon outlined a target price of $28 million to $38 million per plane, about the cost of a Boeing 737. That's a price range Boeing deals with daily. In fact, its expertise in building mass quantities for airlines efficiently is what gave Boeing an edge despite not having been a lead contractor on a defense plane for 30 years. Plus, the Pentagon is acting more like a commercial buyer. "They are looking at costs and outlining requirements without dictating exactly how to build the plane," says Peter S. Jacobs, an analyst with Ragen MacKenzie in Seattle.

The fighter design could eventually help Boeing in other aspects of both its defense and commercial businesses. The wing is the first all-composite, modular wing Boeing has built. Knowledge gained from creating one wing mass and working with a thermoplastic composite could be transferred to commercial planes, analysts say. And the aircraft's supersonic ability could be applied one day to a high-speed civil transport.

Michellich says he knew the design was a winner, but his heart skipped a beat during the Pentagon's Nov. 16 press conference because Lockheed was named first. The winners are usually given in alphabetical order. But then it looks like the Pentagon is out to break tradition.

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