Northrop in New Bid to Sell F-20 Jets : Claims Air Force to Save $5.7 Billion Over Cost of Rival Aircraft

Northrop Corp. said Thursday that it has asked the Air Force to consider buying 396 F-20 Tigershark fighter jets at a price that the Los Angeles company says would save the Pentagon $5.7 billion over the cost of rival aircraft.

The unsolicited $7-billion bid, which the Air Force quickly said it is unlikely to accept, was submitted to the Pentagon on Wednesday. Northrop Chairman and Chief Executive Thomas V. Jones said it is Northrop’s attempt to win its first sale of the Tigershark--and elbow into a market dominated by General Dynamics Corp.’s F-16 fighter--before Congress completes the budget for fiscal 1986.

Without government funding or purchase guarantees, Northrop has spent $800 million to develop and build the F-20, making it the most expensive privately developed aircraft program in defense history. In three years of trying at home and abroad, Northrop has not sold a single Tigershark.

Under the plan released Thursday, Northrop would sell the 396 fighters to the Air Force under a fixed-price contract of $15 million each and would undertake to supply spare parts at a fixed price of $2.8 million per plane. Jones said the company was responding to recent pleas from the Pentagon for greater competitiveness among defense contractors.

The fixed-price contracts would save the Air Force $4.4 million on the purchase price of a jet and about $10 million for spare parts over each aircraft’s 20-year life, he said.

Northrop originally intended to sell the jet primarily to Third World countries as a simpler, less-expensive alternative to the United States’ top-of-the-line F-16s and F-18s. Northrop officials said a sale of the jet to the Air Force would provide the “stamp of approval” that foreign countries usually want before putting their money down.

General Dynamics had no comment, but Air Force Secretary Verne Orr said he has no intention of changing the Air Force’s current budget plan. Orr said that Northrop’s offer has been passed to chairmen of the House and Senate appropriations and armed forces committees, but that “it would be very difficult to attempt any alteration . . . for the coming year.”

For fiscal 1986, which begins Oct. 1, the Air Force has asked Congress to buy 792 of General Dynamics’ F-16s over four years. The Air Force, which plans to buy 2,795 of the F-16s, has signed contracts for 1,859 of the craft and has accepted delivery of 845.

Northrop’s plan would divide the proposed jet-fighter funding now before Congress between the two companies.

Gordon Adams, director of the Defense Budget Project, a nonprofit research group in Washington, said he thinks the plan “has less than a .01% chance of being accepted.”

“And I’m willing to give it that much only because Congress is up in arms about the way the Pentagon is doing business,” he said. “It sounds like Northrop is pitching this to Congress, not the Pentagon.”

Adams said that, although the F-20 is considered a “very capable aircraft,” the F-16 is generally considered to have outperformed the F-20 in tests.

Switching to the F-20 is unlikely, he said, because several NATO countries help produce parts of the F-16 in exchange for agreeing to buy the jet. The Pentagon could not disturb that arrangement easily, he said.

Last fall, Defense Secretary Caspar W. Weinberger said the Air Force didn’t buy the F-20 because “we need to have planes at least as good or better than the latest version of the Soviet planes.” Northrop said it since has upgraded the jet.

Northrop’s Jones said that, even though Northrop has no orders for the F-20, “we’ll build it as long as we see a need and think our product is the best.”

He said the F-16 and the F-20 are comparable but that the F-20 costs less. He said the jet also costs half as much to operate because it requires half the manpower needed to run the F-16.

Until last year, the U.S. government, which acts as executive agent in aircraft sales to foreign governments, did not include the Tigershark in its literature on available planes.

Industry officials have suggested that the government was pushing F-16s and F-18s because the more foreign orders come in, the more contractors can hold down their prices to the Pentagon.