Lockheed 'the clear winner,' cool to including Boeing in JSF production
Seattle Times aerospace reporter
Unfortunately for Boeing, the final decision was not a close call.
"The Lockheed Martin proposal, the Lockheed Martin team ... emerged continuously as the clear winner," Secretary of the Air Force James Roche said yesterday as he announced Lockheed, not Boeing, will now lead the program's systems development and demonstration phase.
The win by Lockheed had been predicted for weeks, and at least one stock analyst said Wall Street has been betting on it for a year.
The betting also has been that Boeing would become a major subcontractor if it lost to Lockheed. That did not sound like a sure thing yesterday.
Undersecretary of Defense Pete Aldridge said Lockheed should decide for itself how to structure its team.
"If Lockheed Martin wants to use the unique talents of Boeing, they are free to do so," Aldridge said. "We are not forcing them."
Several politicians have been pushing for a split of the JSF contract to strengthen the military industrial base, most notably Republican Sen. Christopher Bond and Democratic Rep. Richard Gephardt, both of Missouri, where Boeing would have built the JSF.
Lockheed expressed little desire to bring Boeing on board. Dain Hancock, president of Lockheed's aeronautics division in Fort Worth, Texas, said Lockheed and its chief subcontractors, Northrop Grumman and BAE Systems of the United Kingdom, have built an integrated unit they are anxious not to disrupt.
"We'll do what the government would like us to," Hancock said. "Boeing is not part of our team."
Boeing was clear about its desire to remain involved.
"We are ready to bring our capabilities and our skills to Lockheed Martin's team if they chose to do so," Boeing Chairman Phil Condit said.
Boeing received few explanations of where it came up short. The Pentagon plans to brief both companies Monday on the reasons for its decision, and Air Force Secretary Roche said he was reluctant to go into specifics until then.
He did, however, reject a popular rumor that the Air Force picked Lockheed because it had a snazzier JSF design.
"There was no beauty contest," Roche said.
Condit put his best face on the loss and gave an upbeat assessment of Boeing's work on other military projects as well as the long-term promise of its core commercial aircraft business. But in the wake of the downturn in air travel that has prompted Boeing to cut up to 30,000 jobs in commercial airplanes, the news is undoubtedly a tough blow.
It also has bottom-line implications. Boeing said its 2002 sales will now be $1 billion lower than anticipated, though it expects its cash flow and profit margins to remain the same.
"The Joint Strike Fighter decision today obviously is a real disappointment to us," Condit said from the Washington, D.C. area, where he heard the news with Jerry Daniels, head of Boeing's military unit. "We learned a great deal and we are ready to go forward."
Condit and Daniels suggested Boeing will support moves by Congress to require the Pentagon to change the winner-take-all policy so Boeing can retain its fighter engineering and design expertise.
"How do you protect that skill capability?" Daniels said. "I think that's for a debate to occur on the Hill."
Boeing will get support from the Washington state delegation. Even though it had planned to produce the JSF in St. Louis, Boeing planned to hire up to 3,000 engineers and program managers in Puget Sound. Those jobs would have mitigated at least some of the local job cuts now under way.
"It's a big blow, but we've just got to go on," said Rep. Norm Dicks, D-Bremerton.
"I still hold out some hope that Lockheed will realize — and the Defense Department will realize — that Lockheed should bring Boeing onto their team," Dicks added.
"I am confident the Pentagon will find ways to use Boeing's proven expertise to help keep this project on schedule and under budget," agreed Sen. Maria Cantwell, D-Wash.
Dicks said the JSF decision made it even more crucial to keep pushing for a plan to replace aging Air Force refueling tankers with new Boeing 767s and to promote the company's development of an unmanned fighter aircraft.
"There's going to be other things that they can be involved in," Dicks said.
Washington lawmakers have been working with the Pentagon and Boeing to win approval for the Air Force to lease as many as 100 new 767s at a cost of up to $20 billion over 10 years.
Condit said yesterday he has great confidence Boeing will secure that contract soon. "The issue is more one of timing," he said.
Both Aldridge and Roche cited the tanker contract as well as Boeing's leading-edge work on unmanned aircraft and other jets, such as the F/A-18E/F, to underscore that Boeing will remain involved in the military-aircraft business irrespective of JSF.
Merrill Lynch aerospace analyst Byron Callan concurred, and said Boeing's best response to the JSF disappointment is to squeeze all it can from the projects left on its plate.
"I don't hold high hopes that they'll get a portion of the (JSF) program," Callan said. "I think they'd be better off trying to concentrate on some of the things they do best (in commercial) and on the unmanned combat vehicle, to try to offset some of the loss."
Seattle Times reporters John Hendren and Kevin Galvin in Washington, D.C., contributed to this report.