Navy Awards Contract for New Attack Jet
The Navy on Wednesday selected General Dynamics Corp. and McDonnell Douglas Corp. to jointly develop a new attack jet, thus handing a defeat to Northrop Corp. and Grumman Corp. in a program that may be worth $35 billion over the next decade.
The Navy announced few details of the award, but Navy officials had said earlier that it wants to buy about 450 of the jets, which will be based on aircraft carriers and fly long-range attack or bombing missions.
Major Funding Needed
The attack jet, known as the advanced tactical aircraft, or ATA, ranks among a handful of huge aircraft programs that will be entering production in the early 1990s and will require substantial new funding. Its political future in an era of budget cutbacks is in question, however.
Northrop executives said they had no comment on the loss of the contract, but securities analysts and aerospace recruiters said Wednesday that the defeat will likely result in elimination of several hundred jobs at the firm’s advanced systems division in Pico Rivera.
Meanwhile, McDonnell Douglas and General Dynamics said they would hire 13,000 employees for the ATA and split the development and initial production work equally. Eventually, the Navy plans to have McDonnell compete against General Dynamics for production contracts. McDonnell has its plant in St. Louis and General Dynamics in Fort Worth, Tex.
In addition, an estimated 4,500 jobs will be created at 40 major subcontractors in 35 states around the nation. The identities of those subcontractors were not disclosed, but historically a large proportion of such subcontract work is done in Southern California.
The Navy has never disclosed the cost of the ATA program, but some officials have obliquely indicated it would be roughly $35 billion over more than a decade. Some aerospace analysts have estimated the program will reach $50 billion.
In either case, the ATA will be one of the most expensive aircraft ever deployed by the military. If the 450 aircraft cost $50 billion, the cost for each ATA will exceed $110 million, about the cost of a Boeing 747 jumbo jet. Inflation might add to that cost.
Historical Patterns
An analysis issued by the Congressional Budget Office only last month questioned whether the Navy has been unrealistic in its cost estimates for the ATA, noting that “substantial” shortage of aircraft could occur if historical patterns of cost increases occur on the ATA.
Even under the best circumstances, the CBO report said, the Navy will not have enough aircraft for all of its 15 aircraft carriers. A current shortage of 110 combat aircraft will grow to 176 aircraft by 1994. In its budget plans, the Navy is assuming it will be able to increase its $10-billion annual aircraft spending by 50% over the next five years at a time when budgets are supposed to be going down, the report found.
The Navy has sharply disputed such assessments, saying the unit costs of its aircraft have dropped by an average of $8 million each over the last five years. Earlier this year, Navy officials said aircraft shortages will not affect its ability to deploy its carriers.
ATA’s Future Unclear
Nonetheless, the political future of the ATA remains unclear. The Navy itself acknowledged Wednesday that the initial development contract will not be awarded until after “a formal review of the program by the Department of Defense.” That raises the possibility that the program may be canceled before it begins, according to aerospace analyst Wolfgang Demisch at First Boston Corp., a Wall Street securities firm.
In the interim, the Navy gave General Dynamics and McDonnell Douglas only $241,000 for advance engineering work on the ATA until the Pentagon review is completed.
In a move to contain aircraft costs, the Navy recently decided to cancel its A-6F program; that craft is an updated version of the A-6E, which the ATA will eventually replace. The ATA is expected to be substantially superior to the A-6, which is built by Grumman on Long Island, N.Y.
A joint statement by McDonnell Douglas and General Dynamics said the ATA would “exhibit significant improvements in aircraft performance, particularly in the area of survivability,” an oblique reference to its stealth characteristics, or its capability of avoiding detection by enemy radar.
A Two-Man Crew
The aircraft will carry a two-man crew--a pilot and bombardier/navigator. The Navy said the jet will be powered by a General Electric F404 engine, which is currently in use in the Navy FA-18 jet.
The ATA is not to be confused with the Air Force’s new advanced tactical fighter, or ATF. The programs are separate development efforts for new stealth aircraft, but eventually the two services may buy some of each other’s airplanes. The services signed a memorandum of understanding covering such purchases several years ago.
The award of ATA to McDonnell and General Dynamics is a severe blow to Grumman, which has been the Navy’s principal supplier of carrier aircraft for decades. After Grumman’s F-14, E-6 and E-2 programs are completed in the 1990s, the company may be out of the aircraft production business, according to Demisch.
The loss to Northrop is not as severe. It remains the prime contractor for the stealth bomber program and one of two competing prime contractors on the advanced tactical fighter. Nonetheless, it does mark the first time that a major stealth aircraft program was awarded to a contractor other than Northrop and Lockheed, two firms that have been leaders in the technology.
“Northrop is saying that before they lost this contract they had planned to do some significant hiring,” an aerospace industry recruiter said. “Their plans for hiring have been put on the shelf, and there may be some folks that will be moved out of the division.”
