Boeing Wins Contract to Build Navy Fighter Jets

Boeing Co. on Thursday received a five-year, $8.9-billion Pentagon contract to build 222 new F/A-18E/F Super Hornet fighter jets for the U.S. Navy, despite concerns about noise and vibration problems raised by some federal auditors.

The contract, which had been expected for at least a year, is the largest military aviation program for both the Navy and Boeing, the second-largest U.S. defense contractor and the largest private employer in Southern California.

The middle and rear sections of the carrier-based planes will be built by subcontractor Los Angeles-based Northrop Grumman Corp. at its El Segundo plant, which will produce an estimated 40% of the plane’s parts. The remaining 60% will be made by Boeing workers in St. Louis. The planes also will be equipped with a new version of the APG-73 radar made by Raytheon Co.’s El Segundo-based sensor and electronic systems division.

The jets, originally built by McDonnell Douglas Corp. before its purchase by Seattle-based Boeing, will cost about $85 million each, including operations and maintenance costs, Navy documents said.

The announcement came after U.S. markets closed. Earlier, Boeing shares rose $1.56 to close at $40.38 on the New York Stock Exchange.

The U.S. General Accounting Office recommended last month that full production not be approved until noise and vibration problems were fixed. But the Pentagon’s testing office said the Navy has an adequate plan to fix the problems.

A spokeswoman for Boeing in St. Louis, Jo Anne Davis, said the purchase “validates the entire Hornet industry team’s work on the aircraft.”

Shortly before the Pentagon announcement, Boeing had announced plans to sell a parts fabrication unit in St. Louis, employing 1,700 of its 17,500 local workers, in an effort to streamline operations.

That unit, currently running at 40% capacity, might expand under a new owner that could use it to build parts for other manufacturers as well as Boeing, Davis said.

The Super Hornet is designed to replace the Navy’s current F-18C and aging F-14 attack jets and will include longer-range, more-advanced weaponry and better defense against enemy groundfire and air threats. But new Defense Department fighter programs have sparked major questions and cost criticisms in Congress.

The Super Hornet is being bought at the same time that the Air Force is preparing to build its expensive new radar-avoiding F-22 stealth fighter and the Pentagon is planning a Joint Strike Fighter to be shared by the Air Force, Navy, Marine Corps and British navy.

The Navy wants to buy as many as 548 of the fighters. Thirty-six were approved for this year; the Navy wants 42 in fiscal year 2001 and 48 in each of the following three years. The remainder would be built later, under another contract.

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Bloomberg News and Reuters were used in compiling this report.